EV transition

There is a lack of targeted governmental and institutional support for the industry’s transformation. In fact, the situation is quite the opposite.

Matej Hornak

Analyst at Slovenská Sporiteľňa

Strategic risk

Europe’s Detroit vs. Motor City

Elon Musk announced that he is pushing Tesla to increase its electric vehicle production due to what he anticipates will soon be increased demand for autonomous driving.

Tesla’s production plans have undergone significant changes over the last five years.

The automaker started the decade growing at a roughly 50% annual rate and aimed to produce 20 million cars annually by 2030.

Now, Tesla has a production capacity of less than 3 million vehicles, and it is using roughly only 60% of this capacity due to low demand.

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This situation has led Tesla to reconsider its plans for new factories, including its previously announced gigafactory in Mexico.

Today, Tesla released its Q3 financial results, and CEO Elon Musk took the opportunity to announce that the automaker will now increase production:

I feel confident in expanding Tesla’s production. So that is our intent, to expand as quickly as we can our future production. I was reticent to do that until we had clarity on achieving unsupervised full self-driving, but at this point, I feel like we’ve got clarity and it makes sense to expand production as fast as we reasonably can.

The CEO stated that he is “100% confident” that Tesla will solve unsupervised self-driving – a claim he has made every year for the last six years.

Musk said that once people can text inside their cars, demand won’t be an issue:

Here’s the killer app: really, what it comes down to is, “Can you text while you’re in the car?” And if you tell someone, “Yes, the car is now so good you can be on your phone and text the entire time while you’re in the car,” anyone who can buy the car will buy the car. End of story.

He added that the most significant increase in production will come from Cybercab, which he expects will enter production in Q2 2026.

The vehicle lacks a steering wheel and pedals. Therefore, if Tesla doesn’t solve unsupervised self-driving by then, it will be useless.

The CEO reiterated that he expects Tesla to remove the safety monitor from its Robotaxi in Austin, Texas, by the end of the year and release unsupervised FSD in consumer vehicles on the same timeline.

Electrek’s Take

Increasing production based on presumed demand coming from a feature, unsupervised self-driving, that isn’t finished, and that you have been consistently wrong in predicting.

What could possibly go wrong?

Elon always says that “people don’t understand how impactful self-driving will be.” I think they do. He is confusing people not believing his self-driving timelines with people not believing in self-driving.

If Tesla does deliver unsupervised self-driving in HW4 vehicles, I do believe that it will result in a significant increase in demand.

However, I don’t think Tesla is as close as Elon is leading shareholders to believe.

Tesla may or may not remove the safety drivers from its Robotaxis in Austin, but that’s a geo-fenced areas with a bunch of limitations.

Turning on unsupervised self-driving in consumer vehicles and Tesla taking responsibility for the system is an entirely different thing, and the automaker is not ready for it.

But there’s some good that could come out of this. If Tesla increases Model 3 and Model Y production in anticipation of full self-driving, it could result in lower prices.

Tesla claimed in today’s Tesla’s Q3 shareholder letter that it started a ride-hailing service in the San Francisco Bay Area “with Robotaxi technology,” but this is impossible given that the company has no license to operate an autonomous taxi in California.

After years of promises, Tesla finally started offering its “Robotaxi” service in Austin, Texas this June. The Robotaxi service is not really a robotaxi, by what we would expect the colloquial definition to be, as each car currently has a “safety monitor” in it at all times, with access to a kill switch should things go south.

It’s been a bit of a bumpy ride so far, but this is one step towards the autonomy promises Tesla has been making for around a decade now.

Tesla also recently did its first autonomous local car delivery, though we’ve only seen one example of that, making it seem to be more of a publicity stunt than an actual sustainable piece of the business.

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Along with the introduction of Robotaxis in Austin, Musk made big claims about what’s to come. In July, just a month after the Austin rollout, Musk said that Tesla would cover half of the US population by the end of the year. We are now three months later and two months from the end of this year, and Tesla has made zero progress on that goal – it covers approximately the same area as it previously did, in only one relatively small city.

Or, well, is it two cities? If you ask Tesla, it has also rolled out a Robotaxi-like product in San Francisco, the metro area where the company was founded, and where other autonomous ride-hailing companies have been operating for years now.

In Tesla’s Q3 shareholder letter, released today, the company included a line stating that it “launched ride-hailing service in the Bay Area using Robotaxi technology” in Q3. Later, on the conference call, CFO Vaibhav Taneja said “in the Bay Area, where we still have someone in the driver’s seat due to regulations, we crossed more than a million miles” during a portion of the call talking about Tesla’s Robotaxi program.

However, note that while both of these statements are very clearly Robotaxi-adjacent, they ever-so-slightly skirt around the direct statement that Tesla has rolled out Robotaxis in San Francisco… because, well, it hasn’t.

Despite the company’s statements today, its ride-hailing service is just that – ride-hailing, similar to Uber or Lyft, with nothing special about it other than the fact that the cars involved are Teslas and that those cars have access to Tesla’s level 2 driver-assist system.

There is functionally no difference between hailing a ride on this service versus hailing a ride from a Tesla driver who drives for Uber or Lyft, except that you use a different app to do so. Well, and that the app is limited only to an exclusive group of Tesla Early Access customers, rather than open to the general public like other ride-hailing apps are.

One of the reasons for this, and the reason we know that Tesla isn’t operating real robotaxis in California, is because it can’t. Tesla did obtain a ride-hailing permit earlier this year, but has not obtained a permit to operate an actual driverless taxi service. Those permits do exist in California, and have been obtained by other companies – but they come along with reporting requirements, which Tesla has heretofore been hesitant to comply with.

But that hasn’t stopped Tesla from claiming, as the very first line item in the “highlights” of its “operations” for the quarter, that it made some sort of breakthrough with Robotaxi by launching it in the Bay Area.

This seems like a relatively minor introduction, especially given that it has been alluded to in previous quarterly conference calls. But, despite the lack of forward movement on Tesla’s autonomy project (and, in fact, some regression), Tesla wanted to suggest to investors that something big had happened this quarter. But it hasn’t.

Tesla went on to talk about the future of Robotaxi on the call, stating that it would come to 8-10 metro areas by the end of the year. This is a far shout from the at least 47 metro areas that were promised just three months ago, and yet, still seems like it may not be achieved with only two months left in the year.

Musk did state on the call that the public can see where Tesla has applied for permits, naming Arizona, Nevada and Florida specifically. Notably, California was not on that list. He also stated that Tesla would likely drop the “safety monitor” from its Austin Robotaxis by the end of this year, and that future metro areas would start off with safety monitors and then drop them after a few months.

We’ll have to wait and see whether any of those things happen. But the fact that Tesla is using deceptive language in front of its investors, especially as its also begging them to give Musk $1 trillion dollars (so he can control a robot army), doesn’t make us feel like there’s a lot of honesty going around here. If the company can deceive shareholders in one way as it has today (and as it has done before), it’s likely to lie to shareholders in other ways too.

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