what JUST happened at the Tesla shareholder meeting.

hey everyone me kevin here the tesla

annual shareholder meeting just took

place in austin in this video i'm going

to break down everything that was

discussed but first we heard the model 3

became the best-selling premium vehicle

sold globally beating the bmw 3 series

mercedes c and e-class tesla now also

believes that the model y will become

the best selling vehicle of any kind not

just premium vehicle of any kind

globally

potentially by 2023

if not by next year 2022 in terms of a

free cash flow generation cash flow

generation has been

substantially higher and better than

what we've seen in 2017 and 18 and 2017

we obviously had free cash flow losses

and uh 2018 barely break even

2019 2020 and in the last four quarters

we've definitely seen that bump up you

can in fact take a look on screen now

and you see this sort of little chart

here that was put up strong free cash

flow generation of just over 4 billion

dollars in the last four quarters which

is great of course you get a lot of

tesla critics that say oh but what about

all those vehicle credits and energy

credits hey you know that helps a newer

company get off the ground but uh

tesla's not gonna need those going

forward uh even though they'll still get

them uh elon musk even mentioned that in

2017-18 things look quoted dicey but

this is now part of tesla's past and uh

he he says quote especially if you

multiply unit volume by autonomy and

increased efficiency in the factory the

free cash flow is essentially going to

explode and remember the elon musk has

this projection that we should be able

to get to with 30 gross margin which

would be absolutely unheard of in the

vehicle manufacturing industry

right now

gross margin is somewhere without tax

credits around 22 percent

and elon musk's goal is to get this to

30 percent elon musk can tend to have

very ambitious goals but even if without

credits we get to 25 26

profitability at tesla just goes

absolutely through the roof by 2025 i

expect we should easily be able to uh

hit some number like 28 percent in fact

in my projections where i think a

reasonable curve to get to an eighteen

hundred dollar sales price uh per share

target for tesla i use a 28 gross margin

by 2025 and i think that's very very

reasonable then we also heard that tesla

is open to licensing autonomy he expects

that eventually all automotive

automotive manufacturers will make

battery electric vehicles and eventually

they'll all be autonomous vehicles and

he says that he's open to licensing this

because quote it will be such a

significant lifesaver and preventer of

injuries that would be morally right to

license it out to other manufacturers if

they'd like to use it which is wonderful

because

it's not going to cost tesla i mean

it'll cost a tesla a little bit but i

would expect the the marginal cost of

providing

autonomy to other vehicle manufacturers

will be virtually zero they'll probably

be some customer service uh some

adjustments that may need to be made for

individual vehicle models so even if you

put in a 10 expense ratio or even 15 20

percent expense ratio

for uh autonomy licensing or autonomous

vehicle licensing you're still going to

be

netting somewhere around 80 to 90 cents

on every dollar of autonomy licensing

and if this is something that could be a

recurring revenue package

or even a one-time upfront payment i

would expect profitability at tesla to

just explode

because really now we're not just

focused on becoming the largest vehicle

manufacturer in the world we're taking

the place of someone like toyota but

we're actually exponentially increasing

our revenue by selling to all the other

manufacturers

autonomy software an absolutely

incredible opportunity uh and especially

if we can do this without lidar which so

far so far been working without lidar

i'm very impressed i really think the

neos you know

the neos including forward-facing lidar

is very smart especially since it

actually doesn't look that bad if you

look up we looked this up this morning

in the live stream it was the neo

neo et7

it it has forward-facing lidar and two

cameras on the sides and when you look

at the forward-facing lidar it's not

horrible you know the forward-facing

light or just surround lidar which they

used to be so interested in surround

light are was pretty ugly with those

domes on the roof that spin around take

a look at this picture of forward-facing

lidar here on the et7 it's not bad it's

just sort of like a little hump there

cameras on the side tesla has those

cameras on on more the sides rather than

the top there which it looks like you

might actually have these on the side

here as well but anyway

hey i mean i get it the car is certainly

sleeker without those humps there uh and

uh hey if you could do without great

keep it up elon so uh elon is focused on

ongoing cost reduction oh look at that

he's actually talking about uh margin

here average selling price versus a

gross margin expectation

and so uh they gave a forecast here

actually it's not a forecast this is

going this is sort of looking backwards

this is uh showing gross margin slowly

moving up

moving and now this is with oh i'm sorry

they wrote gross margin excluding

credits uh that's good excluding credits

they're actually showing that in the

first half of 2021 uh they're they're

coming in up just above 24

very very good i said 22 earlier in the

video uh it looks like the most

up-to-date would be just above 24

and uh the average selling price for

vehicles uh coming down but actually not

coming down as fast as i personally

thought they would i thought we'd be

much closer to 45 50 45 to 40 000

sooner and at this pace

we're not falling too quickly and keep

in mind that the second half of 2020 in

the first half of 2021 included a

significant reduction in the amount of

model s's and model x's that were

actually delivered so it's worth noting

that

average selling price per vehicle

especially since prices are going up due

to supply shortages the model 3 in the

model

y just had a price increase

and we now have the model s

and x revamps selling again at higher

prices we can actually see this bar go

up the gray bar here rather than go down

again which is great uh obviously the

higher the average selling price for per

vehicle and the higher the margin the

higher profitability

so let's see here uh okay tesla's goal

is to make cars as affordable as

possible but they're seeing cost

pressures in the supply chain chains so

they had to temporarily increase prices

on cars the model 3 now starts at 42 000

as opposed to that 39 000 for the

psychological threshold

on batteries tesla is still desperate

for batteries and wants to buy as many

as possible they said as long as they're

fairly priced musk says quote there is

no limit to how much they are willing to

buy as much as you can make we will take

and this is because a lot of folks worry

that oh if tesla's trying to make their

own batteries they're going to stop uh

buying batteries from panasonic and elon

musk has repeatedly claimed that no no

no we need all the batteries like we're

not going to stop working with panasonic

because we're making our own tesla

prioritizes batteries for vehicles and

then the excess go into power walls and

mega packs over time they do expect

demand for stationary storage is going

to be at least as high as demand for

vehicles that right there is also

bullish for end phase shout out to end

phase also another battery storage

provider

this is because sustainable energy is

intermittent wind doesn't blow all the

time it's true you get a lot of solid

wind in the early morning hours like two

to six a.m and oftentimes solar pretty

uh pretty rigidly between this 11 to 3

p.m time frame you're usually looking at

about a four hour effective time for

solar that's at least when you calculate

solar sort of an average of solar

efficacy you're usually using a four

hour per day uh a solar calendar

and i know the sun is out more than that

but that's like full-time efficacy you

usually use to calculate solar

generation

and so obviously you have you have

significant uh black holes with within

that time frame the pillars of

sustainable uh a sustainable future are

number one solar and wind number two

stationary batteries and number three

electric transportation he mentions that

batteries need to be recyclable and they

are he says they're basically high-grade

ore which is kind of cool that batteries

uh have your minerals in it that it's

kind of like ah yes this battery has has

a lot of high quality material and

mineral in it rather than a lot of dirt

and stuff that we need to filter out

it's actually a really good analogy and

it kind of gets me excited about like

what redwood materials is doing uh

co-founder of tesla running that over

running that company and uh really

ramping up battery production and

battery recycling it's very good

reference high grade ore uh you can't

understate how important that reference

is very very uh important to think of it

like that uh really uh why go digging

for the material when it's in an old

battery now in my opinion we don't have

anywhere near the amount of old

batteries that we need so battery

recycling is still going to take a while

to catch up but

you know if we're creating a whole new

use case for batteries there are only so

many old batteries we can really use but

preparing for good battery recycling

great idea five step because nobody's

gonna really want to buy a used battery

like you buy a new model x or a model y

are you going to want uh you know a

battery from a car that got totaled but

the battery was mostly okay right no

that battery needs to be recycled and

then and then rebuilt essentially of

course elon musk then also talked about

how they are planning to as quickly as

possible ramp up the cost reductions

curve for uh battery materials including

how they design battery cells how they

manufacture them the materials they use

for the anodes and the cathodes and of

course how they integrate them into

vehicles remember tesla is now going in

the direction of using structural

battery packs which means battery

swapping doesn't work and you can't you

can't really

take the battery out and throw it into

another car

you will have to go through battery

recycling so especially with uh with

with tesla we're going to see a lot more

of a requirement to have uh battery

recycling something to think about

especially as tesla manufactures more

cars giga shanghai now exceeds the

fremont factory in terms of production

which is not a surprise a substantial uh

expansion in giga shanghai with a

capacity of producing 1 million vehicles

a year which is incredible of course

we're not at full capacity yet although

capacity is growing substantially

increasing fremont operations and hoping

to increase fremont output by 50

and remember all of the s's and x's are

made in fremont all tesla factories will

be doing battery production soon as well

and tesla has made great improvements on

safety in factories now 18 safer than

other factories

tesla big news moving its headquarters

to austin texas not leaving the

california fremont facility but are

definitely moving the executives to uh

to austin texas remember housing is less

expensive there you've got longer

commute times in california less so in

texas

and uh and there's a limit to really how

much you could scale in the bay area so

austin texas has much more of an

opportunity to grow and scale and you

don't have to pay state income taxes so

you know why pay the state of california

when you've got a failed government in

california that increases homelessness

and worsens our schools the more money

they get sad

ai day sort of an update on ai day musk

says that this was important to changing

the overall perception of tesla which

people before considered it a car

company but elon musk really wants to

mention that tesla is as much of a

software company as it is a hardware

company

questions in the q a section when will

the cyber production ramp up happen musk

has as many times struggle to answer

this question generally he blows it off

it's not going to be this year uh the

expectation is that maybe sometime next

year we can actually start seeing cyber

truck production and ramping up the semi

truck but right now he mentions that

struggles with shortages uh this year

the biggest obstacle if we had five

extra products we would not change our

vehicle output at all that's how

impacted we are by the supply shortages

it's not just chips it's everything is

tesla thinking about a stock split uh

basically not yet remember last time

they kind of get motivated when the

price was around fifteen hundred dollars

maybe that'll be another trigger point

4680 battery production in texas not

this year but they're making the 4680s

in the pilot plant in california this is

just a

few miles away from fremont this is

known as the cato facility and they

expect to start model y production in

texas this year using structural battery

packs in the 4680s so that gives you a

thorough update on what happened with

tesla if you like this kind of content

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