Tesla Master Plan 3 + Investor Day // What to Expect
Welcome back everyone! I’m Jordan Giesige and this is The Limiting Factor. What should we expect from Tesla’s Master Plan Part 3 and Tesla Investor Day on March 1st? In this video I’ll share my thoughts. Before we begin, a special thanks to my Patreon supporters and YouTube members. This is the support that gives me the freedom to avoid chasing the algorithm and sponsors. As always, the links for support are in the description. Let’s start by reviewing what Elon’s said so far about Master Plan part 3. If you want
to get straight to the analysis, feel free to skip this part and jump to the next timestamp, which is titled “Elon’s Brain”. I’m going to read through Elon’s quotes from the last in year rapid fire in chronological order, and then I’ll lay out my interpretation. These will get repetitive, but I think it’s important to see which things have been repeated the most. First, on Twitter last march: “Main Tesla subjects will be scaling to extreme size, which is needed to shift humanity away from fossil fuels, and AI. But I will also include sections about SpaceX, Tesla, and The Boring company” Next, the Q1 2022 earnings call: “At 5, 10, 20 million vehicle levels, you really have to analyse the macroeconomic, the tonnage of lithium that you need, of nickel, of iron phosphate, of graphite, separators, electrolytes. It looks like really just macro tonnage”. “And when we need to think about this for the world as a whole, what are the limiting factors for accelerating the advent of a sustainable energy future.
Whatever the most limiting factors are, Tesla will take action on those limiting factors.” Next, in the annual meeting in Early August: “Big picture what does it take to make earth fully self-sustaining? From an energy standpoint just map it out. Tesla will try to be useful as possible in this regards and hopefully lots of other companies can join in and help”. Then, later in the meeting: “Master Plan 3 is going to be fundamentally about scaling, just looking at the overall problem from a global macro-economic standpoint and saying what are all the things that are needed to achieve a fully sustainable economy. I think a lot of people don’t really know what tonnage of lithium, of cathode, anode, separator, electrolyte, electronics. What are all the things that need to be done. The sooner we do that,
the better for the planet.” On August 10th: “Part 3 is about scaling sustainable energy at a civilizational level to enable a bright future for earth.” Then, in October: “Master Plan Trois is all about tonnage” Then, three weeks ago: “Master Plan 3, the path to a fully sustainable energy future for earth will be presented on March 1. The future is bright.” And finally, two weeks ago: “Looking forward to investor day. By this we mean the broadest definition of investor, as in the people and life of earth. It will be a message of good hope and positivity for the future.”
For me, these comments tell us as much about Elon as they do about the Master Plan. And that matters as much as what’s in the plan itself because it’s the glue the holds everything together. His wording is optimistic and consistent, and he has a great track record of delivering on his Master Plans. They’re not abstract thought pieces but rather actual business plans.
Why’s that important? Because Elon creates inspiring narratives that people want to get behind and then he works insane hours along with those people to make the impossible, possible. It’s leadership. Beyond that, Elon wants to give hope for the future. He’s said a number of times that it depresses him that people think the world is doomed due to climate change. The reality is that climate change is solvable if we can let go of the pessimism, embrace a plan, and take action, and Elon’s coming to the table with hope, a battle plan, and an army. But besides the classic hallmarks of leadership, there’s also a philosophy at play here. There’s a sense of urgency that underlies everything
that Elon does and it’s no mistake that Tesla’s mission statement says “accelerating” the world’s transition to sustainable energy. There’s a book that Elon’s recommended called “What We Owe the Future” that basically says that the more you can do and the sooner you can do it, the greater the magnitude of your total impact over time. Or, put another way, it’s the area under the curve. For example: if we compare a materials constrained vs unconstrained forecast for EV growth, the difference is roughly 400 million EV’s produced by 2035 vs about 700 million that could have produced. Not only that, the earlier each of those vehicles is produced, the longer they’ll be on the road reducing carbon emissions. That is, it’s not just about transitioning the
world to sustainable energy, it’s about doing it as quickly as possible because every year counts. The faster that the transition happens, the lower the likelihood that we suffer the worst potential consequences of climate change deep in the future. So, with that philosophy in mind, Elon’s sense of urgency makes a lot more sense. He’s been pushing the sustainability stone up the hill as fast as possible because he realizes the impact of every single year on the next 50-100 years. That brings us to the Master Plans. Master Plan Part 1 was about building enough scale
to make electric vehicles commercially viable. Master Plan Part 2 was, on a surface level, mostly about self-driving vehicles. However, during that time, Tesla’s biggest achievements have arguably been radically improving the manufacturing of vehicle and energy storage products, while on the software end creating grid management tools and mastering AI software and infrastructure. Now, Master Plan Part 3 will be about solving the extreme materials challenge
of shifting the world to renewable energy, and that primarily means battery materials. An analogy that comes to mind with the Master Plans is strategy games, where your first priority is to survive, then it’s to build out your skill trees and resilience, then it’s about collecting massive amounts of resources to deploy assault forces to sweep the board. The problem is that in the strategy game called reality, the difficulty is currently set on hard. Past 2025, the growth of global battery supply is forecasted slow to an anaemic 16% per
year. That’s a problem if Tesla wants to grow from 100 GWh of cell consumption last year to 3,000 GWh of cell consumption in 7 years, which is on average a 53% annual growth rate. To put that in perspective, here’s Tesla’s growth rate plans in comparison to global battery supply forecasts. It’s clear that if Tesla only focuses on their own needs, they’ll quickly outstrip global supply. So, in my view, Master Plan part 3 will be an action plan at a planetary level rather than a company level. There were four clues to this in Elon’s comments over the past year:
First, his wording around mapping the transition to sustainable energy and how Tesla can be useful as part of that. Second, his repeated use of words like macro-economic, global, earth, and civilizational. Third, his call to arms for other people in the industry to also pitch in to help. And then fourth and finally, the fact that Elon said
that Master Plan Part 3 will include sections about SpaceX, Tesla, and The Boring company. With the context and scope of Master Plan Part 3 out of the way, let’s go a level deeper in terms of detail. The biggest focus of Master Plan Part 3 seems to be the tonnage of materials required to transition the world to sustainable energy. Elon mentioned tonnage 4 times in the past year, and he even mentioned specific battery material materials like lithium, separators, electrolyte, cathode, and anode. So, it should come as no surprise if he actually lays out a shopping list of all the materials and specifically how many millions of tonnes of each that we need. As we know, it’ll require 20 TWhs of steady state production at a global level to transition the world to sustainable energy, which would be about 14 million tonnes of lithium carbonate equivalent per year. And those factories will need to be running for about 15 years to complete the
transition, for a total of about 300 TWhs or 200 million tonnes of lithium carbonate equivalent. And bear in mind, that’s just lithium, which makes up less than 5% of the weight of a battery pack. These numbers aren’t just extreme, they’re super colossal. But, if as a civilization we can secure all those materials rapidly, the future is indeed bright. Cheap, clean, and abundant energy on a global scale can solve a lot of what ills most
societies. This isn’t just a money making venture for Elon, he’s obsessed with actualizing a utopian sci-fi future. Failing that, I think he’s hoping humanity at least survives, even if it’s a Blade Runner type dystopia. Not as inspiring, but at least you can have a missile launcher for an arm.
Moving along from raw tonnage, the next big question mark for me on Master Plan Part 3 is: How will it incorporate the Boring Company and SpaceX? Are the sections on the Boring Company and SpaceX going to be a subset of the plan for materials or are they going to have their own standalone goals separate from materials? For example, is the Boring Company going to be involved in the mining raw materials or will it be included in Master Plan Part 3 because it will eliminate soul sucking traffic jams? I’m not sure how SpaceX would fit as a subset of the materials ambitions other than reducing the wiring required for global internet through Starlink. But as for standalone goals it’s pretty clear Starlink will bring internet access to the people in the world that need it most, while Starship will provide an inspiring multi-planetary future, and make global point to point travel possible to anywhere in the world in half an hour. Either way, I don’t specialize in either SpaceX or the Boring company. My interest is more in Tesla. With that in mind, the next big question mark for me is what level of detail the plan will provide for Tesla. I see three broad areas where Tesla can contribute: First, AI and robotics. Second, manufacturing expertise. Third, finance and
project support. Let’s go through each. Tesla’s obviously setting itself up to be a robotics behemoth. The point of that is to increase the total amount of work humanity can do which, like energy, has the potential to massively improve peoples’ lives. But,
beyond that, those robots can continue to extend Tesla’s lead in manufacturing and do difficult, dangerous, and dirty jobs in factories and mines. So, Master Plan 3 may simply state something like the following for AI and Robotics: Tesla will develop a robot for industrial use cases and then expand the portfolio to general commercial and domestic robots. This will free people from doing monotonous and dangerous jobs and make cheaper labour available to everyone. The second and biggest part Tesla can play in Master Plan Part 3 is manufacturing. Every part of the supply chain has to be maximally optimised to grow rapidly at extreme scale.
That’s because scaling unoptimized processes sucks up valuable engineering resources that could otherwise leveraged to build additional capacity, and that effect compounds over time. As I’ve said in past videos, Tesla’s slowly working their way up the supply chain and at each step they’re ripping out inefficient processes and replacing them with processes that are cheaper and easier to scale. First it happened with vehicles, then batteries, now it’s cathode production and lithium refining. After refining is of course mining. Tesla will only get into mining if they need to, but that’s looking more likely by the day. Mining doesn’t pose the technical challenge that chemical refining and vehicle manufacturing do, but it faces other challenges. No one wants a mine in their backyard, so mining regulations and public pushback are a challenge to opening new mines. The question is, can Tesla find a way
to innovate around that? I think so. They can make the process of mining a range of materials cleaner, simpler, and lower impact by using lower toxicity processes with lower energy requirements. For lithium specifically, Tesla can develop technologies to directly extract lithium from brines. If they make comments about this at Investor Day, I’ll do a deep dive. Not only is extracting lithium from brines a clean process, it could be done in ways and locations where there’s less political resistance. For example, in areas that are already environmental write-offs like the Salton Sea in California or tapping oil field brines left over from mining operations like E3 Metals is doing.
The politics and environmental concerns around those locations would be far easier to navigate. With that said, Elon may not get into that much detail in Master Plan Part 3. Although the key points of Elon’s Master Plans tend to mention products and technologies, he doesn’t get lost in the weeds with specifics. Another challenge with the Master Plans is that it’s
often difficult to know what will be included because Tesla is always quietly developing technologies behind closed doors. For example, Tesla’s grid control software that allows them to become a grid operator. That’s a significant piece of technology to Tesla’s mission, but it was never mentioned in a Master Plan. With that in mind, I’m going to lay out what
I’d like to see from Tesla in the next 5-10 years that relates to scaling sustainable energy technology at a global scale. I’d be surprised if more than one or two of these are actually listed in Master Plan Part 3, but whether they’re in it or not, they’re the types of things that would fit and that Tesla could be working on. First, Tesla will begin manufacturing factory equipment for use by third parties that’s critical for the transition to sustainable energy. Second, Tesla will develop clean and rapidly deployable lithium extraction and refining technology. This might include other metals as well; I’m just targeting
lithium because it’s the most important. Third, Tesla will implement a fully closed loop in-house recycling system for all the materials in their vehicles that can be recycled. This one may be redundant because we know that Tesla already has a certain amount of in house recycling capability. Fourth, develop in house versions of non-toxic earth abundant alternative chemistries such as LFP, LMFP, and Sodium Ion. Fifth, Elon has been teasing a Tesla Home HVAC system for years now. Although this doesn’t so much relate to scaling, it would fall into the bucket of creating a brighter future.
Finally, some people are thinking that Tesla should get into water and air transport options, but I think that’s something that’s best left for Master Plan Part 4. Tesla still needs to create buses, vans, more than one pickup truck size, and more. As a side note, I’ve of course made an entire video on Tesla’s raw materials strategy. I haven’t
included the key points from that video here for two reasons. First, going through all of them again would be redundant. Second, many of them are too tactical or specific for a Master Plan. That is, I don’t think Master Plan Part 3 will reveal too much about the actions Tesla will take or the specific technologies they have in their toolkit. Technology announcements are better suited to standalone events and large scale corporate actions are better suited to press releases. The last way Tesla might be able to help with Master Plan Part 4 is through finance and project support. That is, funding new mines, partnerships, and clearing red tape. In the last 7 years, underinvestment in the mining space has
been an issue and it’s been happening at a time when it needed to be increasing. Besides that, it never hurts to have a big wallet to back a project and it certainly doesn’t hurt to have Tesla’s clout around to grease the wheels. That covers all my thoughts on Master Plan Part 3, but what about Investor Day itself? What can we expect? As the invite says, “investors will be able to see our most advanced production line as well as discuss long term expansion plans, Generation 3 Platform, Capital Allocation, and other Subjects.” Let’s go through those one by one: The tour of the most advanced production line most likely refers to the Model Y line in Texas because the Cybertruck line is still under construction.
Long term expansion plans hopefully includes the number Cybertrucks they’ll produce each year in Austin, what other vehicles might be produced there, and battery production plans. Beyond that, Tesla’s overdue for one or more new factory and factory expansion plan announcements so I wouldn’t be surprised if they made announcements to that effect, such as the highly rumoured Mexico factory. As for Capital Allocation, I expect Tesla talk about what they plan on doing with their pile of cash. I know some people want stock buybacks, but I think that’s a poor use of capital if they could buy out mining companies or expand instead. I think there’s actually a good possibility of this in the next year or two. But, I’d be surprised if Tesla made an announcement like that on Investor Day. If they do, as investor, nothing would make me happier. As for the other subjects the invite refers to,
my view is that’s the bucket that Master Plan Part 3 falls into. That just leaves the Generation 3, or Gen 3 Platform highlighted in the invite. Although I’d love to see Tesla unveil a new vehicle at investor day, that seems better suited to a standalone event. Platform typically refers to a technology suite rather than a specific vehicle. For example, the battery and powertrain skateboard introduced in the Model S and the
gigacasting technology introduced in the Model Y. Besides, in my view, it still seems too early to unveil a new vehicle with so many vehicles yet to be ramped like the Semi, Cybertruck and Roadster, as well as vehicles that aren’t yet fully ramped, like the Model Y. As usual, I’d love to be wrong here. With that said, although I don’t think it’s likely we’ll see a full unveiling of a new vehicle, we could see the following: a) They could tease the upcoming Robotaxi or Mini vehicle like they did with the Cybertruck b) They could announce they’re upgrading the Model 3 lines for higher production efficiency along with new full self driving hardware c) They could announce that they’re starting production of the Tesla Roadster along with its final specs. d) Or, they could reveal the final cost and specs of the Cybertruck along with the finalized design. Overall, although new vehicles are exciting,
I’m actually more excited about the way that Tesla will be simplifying and accelerating vehicle manufacturing. So, I’m hoping that’s the focus of the Generation 3 discussion. I’ve already mentioned in the Q4 earnings call video what could be meant by Gen 3, from electric brakes that remove the need for hydraulic lines, to increasing the voltage of the high and low voltage systems, to dramatically reducing the amount of wiring in Tesla’s vehicles through either wireless or power over ethernet technologies. On that note, on January 22nd Elon said that no change in copper production is necessary for the transition to sustainable energy. If that’s true a big part of achieving that would be to remove most of the non-battery copper from the vehicle in the wiring loom, but even then, it’s a stretch. To hazard a guess, I think reasoning here is that robotaxis will each do the work of 5 vehicles, so each unit of copper will do more in each vehicle.
Beyond that, for the Gen 3 platform, in my gigacasting finale video I already talked about the ways that Tesla can expand Gigacasting beyond front and rear underbodies. So, I won’t cover all those again today. Basically, Tesla can expand their gigacastings into the roof rails, rockers, and pillars. Or, they can do the front and rear castings in one machine. It is possible they could cast the body panels, but it would seem to be as much or more effort than stamping them.
Regardless, I hope that the Cybertruck is the first vehicle that uses the Generation 3 technology suite. Why? Because the earlier Tesla can introduce the new technology platform, the better. And of course the sooner we get to see a tear down by Sandy Munro to see how it works. On that note, a lot of people are speculating on the invite itself. As Cory from Munro and associates points out, the background image is thousands stampings for vehicle side bodies. In
my view there isn’t any numerology, hidden meanings, or new technology shown here. It just illustrates extreme scale, which is the theme of Master Plan Part 3 and Investor Day. Finally, what other things could we hear about or see at Investor Day that fall under the broad banner of “other subjects”? In my view, there are two, and although I don’t expect these to be major themes, even a sentence or two would be helpful for investors. First, we’ve seen a lot of leaks in the past few weeks on Full Self Driving Hardware Version 4. In my view, it’s unlikely that they get into that at Investor Day in detail. But if they do discuss Hardware 4, it would be good if they address whether it’s a requirement for Robotaxis.
Second, as I touched on earlier, Tesla is rumoured to be buying a lithium project. Even if that’s not discussed, it would be great to get some details about Tesla’s raw material strategy. We’ve seen wave after wave of announcements from other companies and as an investor, I’d love to see Tesla do the same. In summary, my view is that Master Plan Part 3 will be the first Master Plan that doesn’t focus solely on Tesla. It’s going to be a planetary scale plan to the secure the raw materials we need for a bright sustainable future; the sci-fi utopia that Elon has in mind. To achieve that end, I expect the plan to call out the millions tonnes of
each material that are required to get us there. If we zoom out for some context, it’s a crescendo Elon’s been working towards for the last 15 years with the introduction of the Tesla Roadster in 2008. Even at an exponential growth rate, this is how long it takes to hit the scale required begin to create global impact. Master Plan 1 was released in 2006 and lasted till 2016. Master Plan
Part 2 was released 2016 and lasted to 2023. And now Master Plan Part 3 will for the most part complete Tesla’s mission of accelerating the world to sustainable energy over the next decade. But, Master Plan Part 3 has to be more than just about digging up materials and avoiding the worst effects of climate change. And that’s why Elon’s wrapping it in hope and optimism. A sustainable future isn’t just about avoiding being lobstered, it’ about creating greater abundance in the world, improving the quality of our lives, and freeing us from monotony.
As a side note: If Elon is including other companies now in the Master Plans, is he working on a unifying theme and vision for those companies? There’ve been teases in the past that Elon will combine all of his companies into a super conglomerate called X Holdings. I doubt an announcement like that will happen on March 1st at Investor Day, but I do think that Master Plan Part 3 will carry the spirit of X holdings and serve the purpose of providing some unity between the different arms of Elon’s empire. At some point, Elon will no longer be around and he’ll want all of his companies to share a vision of achieving the highest possible good for humanity. Regardless, besides the fact that Master Plan Part 3 will include sections on SpaceX and the Boring Company, I expect Tesla to remain the star. Tesla is the best positioned in terms of AI and Robotics, Manufacturing, and Financing to increase the global output of raw materials.
The manufacturing expertise will be the heavy lifter here. Moving, refining, and building raw materials into products takes engineering expertise from chemical to electrical to mechanical, and Tesla’s an engineering juggernaut. Although the master plan will have a global focus, Tesla is still a company that needs to make a profit. So, Tesla will also be playing out strategies in the background to secure battery supply for their own needs, whether that means buying battery cells from other suppliers or going as far as buying or partnering with mining companies. And of course, besides revealing Master Plan
part 3, Investor Day will contain some tactical information about what Tesla is doing in the next few years in terms of products and factory expansions. Outside of the expected gen 3 platform update, there’s quite a few possibilities for bonus topics. Regardless, even if don’t get any bonus updates, Tesla’s working on all these things and we’ll find out more in due time. It’s exciting times for Tesla and I’m sure investor day won’t disappoint.
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2023-03-03 01:41
