若边缘映射加速推进、且车队运营方的单位经济性被证明可行，Cybercab 的开箱式制造将带来高量产的上行空间。

Let's break down how Tesla could potentially achieve five times the speed of manufacturing cars with their unboxed Cyber Cap product, which I've been really impressed by with its launch in Austin.

And so, what we've done is we've made a pros and cons sheet for Tesla stock via the Cyber Cap launch. but there's an interview that we did about 3 years two and a half years ago with Arc Invest's Brett and we talked about the future of the Tesla robo taxi service and what it would likely look like.

I think going back to dive into some of the expectations then is actually really important because there's a little warning inside of there for us. Now, that doesn't make me less excited about the CyberCap roll out.

it reminds me of what I felt in 2022 when I argued that Tesla should do everything in their power to copy and paste their manufacturing and just sell more Teslas.

Elon later argued that he actually wasn't the fan of a copy and paste model. And what we noticed is that may have been because of declining sales in the S and the X, the Model 3 and Y were growing, but also a very kind of depressing launch of the Cybert truck.

Not selling a lot of vehicles. But that said, the launch of its sales to other people, you know, maybe I'm a weirdo and willing to drive in the Cybert truck, but the launch of it sales to other vehicles just hasn't justified a copy and paste strategy where you want to mass manufacture vehicles.

Now, what makes me so enthusiastic though about the cyber cab is that it's possible that the cyber cab could go back to what I felt in 2022 when I said, "We can mass manufacture this. Let's get to 10 million vehicle sales. Everybody should have these. Get the cost down and mass manufacture."

The cyber cab could be the tool that actually achieves that dream not only through the unboxed manufacturing process but through the actual utility of the vehicle. Now the unbox unboxed manufacturing process and when I say my 2022 vision just to be clear the 2022 vision was actually a vision that I had after visiting Giga Texas about wow we could scale this we can copy and paste these this this you know manufacturing process.

The unbox manufacturing process is actually part of master plan 3. next phase. And the way it essentially works is rather than assembling a car uh like this where it goes down an assembly line and the whole thing rolls down this very long facility and slowly gets all of its pieces added to it. Rather than that, we're going to utilize this what they call unboxed facility where rather than moving the entire car down the line, we're just going to move the various different components down the line and then puzzle it all together like Legos.

Elon today quotes that the unbox manufacturing process could accelerate vehicle production by up to five times. That would mean taking an average Model Y production of one vehicle every 45 seconds off of the line uh down to somewhere around 9 seconds.

And some people are estimating currently, though it's hard to find official statistics on this, but some people are estimating they could potentially get down to 5 seconds per cyber cap through this unbox strategy.

And they call it 30% more space time efficient, mostly because the assembly line is about 50% smaller in size. And of course, we still got to prove this out. We'll talk about that in risks in just a moment.

But the idea is that if you could manufacture these vehicles five times as fast, you could potentially produce five times as many of them with more operating efficiencies. And that's where you could see here in 2023, they were calling for not only smaller footprints, uh, but also potentially a 50% reduction in cost, which would translate to an increase in margins for Tesla, which is very exciting.

Uh, of course, we also had the announcement about no rare earths in the cyber cab. This was something that was part of master plan 2023. Now, it's been a long time coming. This was 3 years ago now, 3 and a half years ago that we got this sort of master plan information.

So, where do we sit now? Well, now we sit in a place where people are starting to forecast massive enthusiasm around how quickly you could run one off the line, one off in every 10 seconds. theoretical long-term one in every 5 seconds.

You've got people therefore now projecting that the Cyber Cap via an unboxed strategy could go and annually produce somewhere around 2 to 3 million units a year, maybe even up to 5 million units a year at a 5second cycle.

This obviously changes the dynamics for investing in Tesla stock because to me it's always been about mass manufacturing the cars. It's always been about get these cars into as many hands as humanly possible. Be the next Toyota where you could sell 20 million vehicles a year because you have the cheapest vehicle, the safest vehicle, the most reliable vehicle.

Once you combine all those packages, you you get really good sales. This is I think how Toyota has cheap done so well. High quality, high safety, reasonable cost.

The only way you can compete with Toyota is by competing on those three core components. And the Cybercap might be able to pull that off. Some risks associated with it. Let's talk about those and then we'll talk about uh some pricing projections as well as what ARC mentioned and what the warning was about the cyber cap.

Going back to the interview that we did three years ago, it's really exciting. So, let's look at the pros and cons. So, here's the pros and cons table that I made.

Uh the first thing 5 to 10 second cycle time, five times faster production. The con is can we actually scale to that speed? If the theoretical long-term is 5x faster, potentially getting to, you know, 5 to 9, 5 to 10 seconds per vehicle. Uh can we actually get there through the unbox process? That's untested.

I actually think there's a good chance they can achieve this because even though that sounds really fast, I don't think it's that unreasonable. Look at a the math from a Model Y line. And keep in mind that Tesla has the experience, but look at the math for a Model Y line.

Hopefully I did this right. 365 days times 24 hours in a day times uh 60 minutes per hour times 60 seconds in an hour divided by 45 seconds per production gets me about 700,000 vehicles per year.

But that sounds reasonable. You know, if I've got two lines, that's 1.4 million vehicles, right? So that actually sounds relatively accurate. So, if I could 5x that, that would mean I could get to about three and a half million vehicles produced of cyber cabs per year.

I actually think the production is not going to be the problem. I think they could pull this off because even if they had a cycle time that was 20 seconds, so you know, twice as fast or frankly even if the cycle times were the same, it doesn't matter. Then just have another line as long as you're getting the margin out of the vehicle.

I'm not really worried about how fast we could produce them. Yes. If we can produce them faster, that's more upside to margin. Great. Lower cost. Time is money. We all know that.

Anyway, uh the start of scaling is the moment where people price in their most rapid enthusiasm for Tesla stock because then the sky is the limit.

eventually we'll hit some kind of end of the S curve where it's like all right we're going to settle around one every 20 seconds or one every 30 seconds whatever I don't think that part matters because I think they've got the experience and I don't doubt Tesla's ability to do that

what makes me nor more concerned is we're going to see margins start growing when these cyber cabs really start getting to scale not immediately they'll hurt margins at first as they're scaling

you see the ramp of margins coming up the impact of cyber cabs will help lift margins across Tesla's fleet. And then the question will be how long can we go with lifting those margins? That's going to be dependent on volumes growing, which we can only grow volumes when we finish edge mapping.

So my thesis is edge mapping is probably one of the most critical factors for Tesla.

We've talked about this in another video, but basically the bottom line is how long is it going to take to edge map? So this is not like scanning the whole city and mapping it. It's going through all the edge case scenarios in that city. So it's sort of like mapping light if you will.

Edge mapping took Austin or it took about one year to edge map in Austin. Can we get that down to six months per city, three months per city, one month per city? I don't know. That is the critical thing that we have to solve is how fast can we edge.

Okay, we want to get through the edging phase and we want to get to completion. Once FSD gets to completion and we could really sell these vehicles at scale, then the question of how many volumes we can sell long term isn't going to come down to manufacturing or full self-driving. It's going to come down to profitability.

And this is where there are a lot of unknown variables. So let's assume that in the long-term average, if you're selling three and a half million of these vehicles a year, we end up compressing the value per ride to $1 per mile.

The current Uber, you know, runs about $1 to $2 per mile. There are only 3,700 Whimos that operate primarily in dense cities. So their cost per mile is much higher, but I think that's because there's a limited quantity of them. There's a novelty effect. And they're in big cities. You know, if you're driving a mile in Santa Monica could potentially take you an hour. It's not like driving a a highway mile as in Texas, right?

So if we now introduce three and a half million, let's say, robo caps, we're going to compress this to a dollar or less.

That's where we run into some potential problems because if we're going to spend about 30 cents per mile on charging, call it 5 cents for cleaning and wear and tear, call it 10 cents for insurance, I think that insurance will be provided by Tesla. I don't think other insurance carriers will be able to underwrite it and Tesla should honestly take the profits on it because I I think the cars will be very safe.

That leaves you with a potential gross profit of 55 cents per mile. So, what I wanted to do is figure out what would it cost on an interestonly loan to buy 10 of these. An intereston loan on 10 of these for $35,000 a piece, which is what I think the price will end up being.

I get there by adding about 35% inflation to the $25,000 car. So, you still have the $25,000 car, but with 20 or 35% inflation after all the COVID money printing, you're at about 33750. So, call it 349 is what these things will sell for. That would be my guess. And it' honestly be reasonable to say it's an inflationadjusted $25,000 car.

But anyway, these vehicles need to crank me money. If I go finance these at 7% interest, hopefully rates come down, right? This is why we argue Tesla does have some interest rate sensitive risks to it.

But now my unit economics are such that on an annual basis, my fixed costs on that interestonly loan are going to be about $20,000. It's about $18,300 for the loan plus FSD for each of those vehicles, which is a subscription. You know, call it 20 grand a year.

So, divided by 12. Add that to the cost of interest. That's with no principal payown, right? No principal pay down. Oh, look. Pee. With no principal payown, uh $20,000 in cost.

My potential gross profit after these sort of variable costs is about 55 cents assuming a dollar per mile, right? I got to break now I got to cover my fixed cost. So to cover $20,000 of fixed cost with gross profit of 55 I need to drive 36,000 miles. That's per month. That means per car I need to drive 3600 miles per month, which is an average of 121 miles per day, which sounds really reasonable if they can operate 24/7, but they can't operate 24/7 because we got to charge and clean them.

And this is where we get to an average Whimo ride per day as our only comp right now. Maybe Teslas will be a whole lot more efficient, but our average Whimo comp right now is that an average Whimo does about 18.4 rides per day.

Now, in fairness, maybe that's because it's in a city. I don't know. But that's dangerously close to the break even that we have here. 20 rides at an average Uber distance of 6 miles on average. Average Uber ride is 6 milesi on average. Uh which means our break even is about 20. We start making money after 20 rides per day. So we need to be more efficient than Whimo to start profiting. Need to beat Whimo efficiency.

But even if we start beating Whimo efficiency, which I think we will do, if this compresses, this $1 per mile compresses, I mean, it could be more. It'll be more initially, but if that compresses, that's going to kill our ability to generate volumes on on uh cyber cap sales.

So that suggests that in the long run for volumes to really keep growing at Tesla, you need to have a business case that makes sense for a business owner. And the variables for a Tesla investor to look at are going to be what can be charged on a robo taxi per mile. A dollar per mile is what you want to average out at at bare minimum. The more you grow above a dollar, the better it is. the more you fall below a dollar, the more of a risk you end up with Tesla sales missing.

Uh and then when we actually look at uh the the loan payback periods, you know, this is without principal payown, we need to beat the averages that robo taxes are doing today. I think we can, but even if we double this now, we're only getting back to paying back principal.

Now, in fairness, you got a tax benefit, and that's the big element that I think adds to margins at Tesla. I think Tesla could potentially get back to 30% gross margins because they're able to sell this vehicle to somebody who's able to write the whole thing off as a business expense thanks to Donald Trump's capital expenditures being 100% tax write-offs.

That's where the real potential is for Tesla. But it does give us some more clarity on the risks. Risk number one, benefit per mile. Risk number two is even if we get to this unboxing strategy, how many of these can we actually sell? How many fleet operators can we actually sell to? Or we just open this up to consumers, right? Everybody wanting their own. That might be the better strategy. But then can you sell it for $35,000? Probably not because it's a twodoor vehicle with a two seat uh you know setup and that's not going to be functional for most people. So it's going to be harder to sell that to a consumer.

And that's where we get to the timing issue which is what was brought up. uh right here in the interview with uh Arcs Brett. >> Taxis above basically two people in a taxi uh and you're really into cars. I mean, are people going to be into two seat robo taxi? Does it matter how many seats there are? And remember, this is the idea of owning a car is what we talked about versus renting a car.

And this is just as we just said. Hey, are people going to want to buy a 2C car? Probably not. Will you ride in one? Probably.

>> I mean, I think from a the the general idea, and this is uh something that Sam Cororus, who's our batteries analyst, and I have been discussing a lot, is that probably optimum strategy for Tesla uh for uh robo taxi is a two-door vehicle. Might be four seats, but it's really like a two seat vehicle.

Nailed it. Um because like >> Good job, Brett. If you're if you can deliver robo taxi service to your vehicles, you want to minimize your manufacturing cost and maximize your unit volume so you can basically maximize ride liquidity like maximize the number of places markets that you can service and maximize your data intake rate.

>> So, and and I think this is back when they were still thinking about, you know, Tesla owning all of the fleet. >> I personally think they subcontract it all out. All the low margin stuff goes to the subcontractors. let them take the tax benefit. Tesla takes the profits up front. That's my thesis.

>> It's not, you know, it's not true that like a four-door vehicle costs twice as much as a two-door vehicle, but it definitely costs more than a twodoor vehicle.

All right. So, um it seems likely to me that the platform they developed for robo taxi is a twodoor car. The the issue is if um somebody doesn't believe that robo taxi is possible and they find out Tesla's nextg $25,000 car is a twodoor car, uh traditional analysts will conclude, well, there's no market for twodoor cars. Like there's no

Like there's no >> right, this is an important warning because it aligns with what I just said. You need demand from fleet operators who are going to be business owners who are going to look at the unit economics of a Robocap. If the unit economics don't make sense, your buyer pool diminishes. And that's where then people say, "Okay, well, who's going to buy the cyber cap to use themselves?" Well, some people will for fun or sport or whatever, and it's cool, but most people won't. So, that's an important warning. So far, Brett was right about two doors. And I think he's right about this warning as well. It has to make sense for the end buyer.

>> Mass, you know, it's not like the Honda Civic is two doors. That's a four-door vehicle. And they'll conclude that oh, you can't like this will actually kill the sales demand for the vehicle if you don't believe in robo taxi.

Now, one, I think that every market that Tesla's entered into has been a market that didn't actually really previously exist. as in when they launched the Model X even like SUVs at that price point were not a thing, right? And and actually they move people up market into it. There are kind of uh and in and expanded the category meaningfully like there is like a neighborhood electric vehicle category that's lying nent. There's like smart cars that you know are fun except if you're driving around with a bunch of SUVs, you might get like panc on the road. Um, and I suspect that kind of like even ex robo taxi Tesla launching a $25,000 vehicle if it has two doors will actually sell like quite well.

Um, but you know, our expectation is robo taxi will commercialize basically this year or next year. And then that that >> that was another warning that was this was filmed at the beginning of 2024. The argument was that it would commercialize 2024 2025. We're at the end of 2026, man. And and we're not at commercialization yet. That's another warning. So, it's not just the end buyer, it's time.

>> Commercialization event will, you know, transform the economics of Tesla and then it will >> ex on margins specifically. Completely agree that it'll transform the economics. I think they think because Tesla's going to keep maintaining and driving the cars. I think because they're gonna sell them,

>> you know, um mean that that kind of mass market type vehicle is probably not even being sold into individuals in a material way. It's being acquired by operators who are trying to operate it as part of a robo taxi network and then with a two two even a two seat vehicle you can make you can meet more than 90% of the demand for kind of robo taxi and ride hail.

um >> what totally agree and that is exactly where the EU net economics have to make sense. Uh and I think they they might hopefully as rates come down but you don't escape the rate sensitivity of this because I think a lot of fleet operators are going to end up financing this.

So there's a lot to unpackage here, but I think the bottom line is when we go to a forecast on Tesla, you know, when we say that the bull case uh for this this stock is $775 per share, you know, at the end of 2030, that does not include Optimus revenue. I purposely set that to zero and I purposefully set semi-truckss to zero. I'm not saying they're not going to make money from those things. I'm just trying to be conservative.

You know, if I go put a billion bucks or I'll put 1.5 billion dollars back into here. Hold on a sec. Let me um let's just I don't know. Let's pick uh a number over here. If I go back in and I throw $1.5 billion in here and I throw $ 1.5 billion in for the Tesla bot, let's just say really quick, you know, now all of a sudden we could get to 800 bucks, right?

So that's not actually that big of a mover because a 30% margin on this top line, that's the big mover. The cyber cap is where the Dalah halas are for the next decade. And the pros and cons are clear. The economics have to make sense. The cost per mile has to make sense. And it all starts with number one, which is edge case mapping. Always start by edging.