“We, Robot” Event Preview
Tesla's "We, Robot" event is Thursday, October 10 at 10p ET. The two key topics orbiting the event include the number of vehicles they'll announce and timing of production. I'm looking for 3 vehicles (most are expecting two) and I believe we'll only hear production timing on the Model 2, which I expect to begin late in 2025. This timing is a few months later than what Elon's comments suggested on the June earnings call.
Source: Deepwater Asset Management
Tesla's "We, Robot" event is Thursday, October 10 at 10p ET. The two key topics orbiting the event include the number of vehicles they'll announce and timing of production. I'm looking for 3 vehicles (most are expecting two) and I believe we'll only hear production timing on the Model 2, which I expect to begin late in 2025. This timing is a few months later than what Elon's comments suggested on the June earnings call. The one wild card could be the more affordable Model 2 is actually a stripped down Model 3, which would be viewed as a negative by investors.
Key Takeaways
1
The name "We, Robot" is mostly likely in reference to the Robotaxi and its rideshare network. While we may get other Optimus updates, those products are too far off to matter to investors today.
2
Timing of new vehicle production is the most important topic around the event, which I expect will begin with the cheaper model late in 2025.
3
My expectation is Robotaxi, Model 2, and the Cybervan will be unveiled on October 10th.
4
At best, I anticipate Model 2 will begin ramping production in the fall of 2025. The Robotaxi and Cybervan timing will be heavily dependent on regulation.
1
"We, Robot"
The name “We, Robot” is a nod to Isaac Asimov’s short story collection “I, Robot”. That connection has led many to believe the October 10th event will include new announcements around Optimus, and potentially an expanded family of robots. While I believe there will be updates to Optimus, and potential talk of an expanded family, those announcements are related to products that likely won’t see availability for at least five years, more likely a decade. In other words, while it’s important to hear what the company is thinking about beyond cars, the substance of the event for investors is around what will come out over the next two years, notably the Model 2 and Robotaxi.
2
Production Timing
The pressure point for Tesla’s stock going into the event is the timing of these new vehicles, especially the more affordable model. To level set the timing topic going into the event, we went back and looked at comments the company has made on the June earnings call to get a better sense on timing. Below are Elon’s relevant comments:
“We postponed the Robotaxi product unveil by a couple of months where it’s shifted to 10/10, to the 10th of October. And this is because I wanted to make some important changes that I think would improve the vehicle, the Robotaxi, the main thing that we’re going to show. And we’re also going to show up a couple of other things. So moving it back a few months allowed us to improve the Robotaxi as well as adding a couple of other things for the product unveil.”
Takeaway: If Elon’s still making “important changes” then the product is still along ways off.
“We won’t get too much into the product road map here because that is reserved for product announcement events. But we are on track to deliver a more affordable model in the first half of next year.”
Takeaway: This is where I get concerned that the “more affordable” model is a stripped down Model 3 because it’s hard to believe they can ramp production of an entirely new model in less than a year.
“With respect to Roadster, we’ve completed most of the engineering. And I think there’s still some upgrades we want to make to it, but we expect to be in production with Roadster next year. It will be something special. Like the whole thing might be.”
Takeaway: Investors don’t care about the Roadster. The Roadster was not previously on my radar for this event, but the bear case to this event being delayed in the first place is announcing the release of the Roadster to fill the void.
“Unsupervised FSD is possibly by the end of this year. I would be shocked if we cannot do it next year. So next year seems highly probable to me based on quite simply plus the points of the curve of miles between intervention.”
Takeaway: I am a believer in the potential for FSD to create value for Tesla investors and see Elon’s timing comments on the tech to be overly optimistic. Regulatory approved is the biggest hurdle, and it’s outside of Tesla’s control. My best guess is we are 3-5 years out.
3
What to expect on October 10th
Before I jump into my predictions, I want to give some context to my product announcement framework. My view factored in several sources including public comments from Elon on the March earnings call and other Tesla management over the past 17 months and added perspective from Tesla followers.
I believe we will see 3 different vehicles during the October 10th Robotaxi unveiling event.
1. Robotaxi: I expect we will see a physical prototype of the Robotaxi. We also believe the model will have a futuristic feel, like that of the Cybertruck, without a steering wheel, pedals, or mirrors. Additionally, the reveal will include a “demo” of the Robotaxi in action, summoned by the Tesla ride-hailing app and showing off its autonomous capabilities by maneuvering some sort of track or route.
2. Model 2: The $25k Model 2 (aka Model A) will be previewed, with no working prototype. I expect this vehicle that will share similarities with the Robotaxi. While Model 2 will have a steering wheel, pedals, and mirrors, it won’t require FSD to operate. The body will be distinguishable from the Robotaxi, but overall will be on the same production as Robotaxi.
3. Cybervan: In a similar surprise to the updated Roadster driving out of the back of the Semi at the Semi launch, I expect Elon will unveil plans for a fully autonomous passenger van (Robotaxi XL for 8-10 people). While the passenger van will be light on Tesla’s sleek signature design, it will be heavy on leveraging autonomy for the ride-hailing vision of affordable transportation. This vehicle will be focused on dense urban areas and could play a role in the future of public transportation, which we estimate expands the ride-hailing addressable market by 20%.
Adding to my belief that the Cybervan is nearing announcement was the slide below from March of 2023 Tesla Investor Presentation that hinted to a van.
4
The gap between announcement and production ramp
Comments earlier in the year from the Tesla Semi lead engineer, Dan Priestley, indicated the Semi’s production ramp will start by 2026. His comments are an important reminder to TSLA investors regarding the gap between unveiling a product and ramping production. We looked at the timeline between Tesla vehicle unveilings and the start of production and measured the minimum gap at 10 months. This suggests the start of production for any of the vehicles announced in August would begin in June of 2025 at the earliest.
Looking at the more recent history (8 years) of product announcements and measuring the time it took to ramp production should remind investors that patience is a virtue.
