Autonomous Vehicles

At the end of the month, the U.S. EV tax credit will sunset, which may explain why in August Ford and GM reset their EV plans and in September VW cut its U.S. 2030 EV target to 20%, down from 50% three years ago. This tempered EV outlook contrasts with increasing investments into autonomy, pushing these companies into a Catch-22: saving money by slowing the path to electrification dampens the autonomy reward.

For years, EV buyers fixated on range as the key buying metric in response to range anxiety. As Tesla enters the autonomous era, a new metric is taking center stage: the strength of the car’s self driving hardware. A Tesla’s processor and sensor suite (HW3 vs HW4 vs upcoming HW5) now determine how well it can run FSD software and whether it can access future autonomy upgrades. I believe HW5 will be needed for the fleet to go mainstream, and upgrading existing hardware will be cost prohibitive. The bottom line: Tesla is best positioned to be one of the biggest winners in autonomy, despite the reality that rolling out new hardware will be a near term governor on growth.

Deepwater’s second annual Frontier Tech Survey measures the American public’s viewpoint on emerging technologies, including AI, Electrification & Automation, the Creator Economy, and Relationship with Tech. Key Takeaways: AI – General usage is increasing but we are still early in the…

The odds of Tesla successfully capitalizing on autonomy increased with the news that Trump's transition team is planning to make regulating self-driving vehicles a top priority. Tesla holds a unique position, as it can pursue autonomy through a combination of two business models: asset-light, focusing on vehicle hardware sales, or asset-heavy. I believe these strategies could significantly boost Tesla's operating profit by the end of the decade, with a wide range of potential outcomes—anywhere from a 10% to a 155% increase, depending on which model they pursue. My prediction: by 2030, autonomy will account for 40% of Tesla's operating income.

On the surface, the waiting game will continue for TSLA investors as the Cybercab and Optimus are still years away. Beneath the surface, the "We, Robot" event posed a challenge for traditional automakers as Tesla showcased an innovation edge that puts an end to the "Is Tesla a tech or car company?" debate.

I’ve had a week to process the “We, Robot” event, including conversations with several industry players and am left with 4 takeaways. 1) The world needs autonomy. 2) It’s going to take longer than I thought to get there. 3) Once the Robotaxi fleet is nationwide, it could add +20% to Tesla’s operating income. 4) Tesla's biggest opportunity lies in unsupervised FSD driving more consumer sales.

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.

This note provides Deepwater’s updated timeline of EV adoption in the United States. Previously, we had estimated that by 2030 50% of new car sales in the US would be fully electric. We now believe by 2030 only 25% of new car sales will be EVs. We expect the industry to cross the 50% threshold between 2035 and 2036. As for Tesla, we're expecting total 2030 deliveries of 4.5m, compared to the Street at 3.6m (FactSet).

While it's still more than two months away, I'm sharing my early predictions for the "Robotaxi Event". I expect three vehicles to be revealed, including Robotaxi, Model 2 and Cybervan (tailored to the ride-hailing vision). I expect initial production ramps could start as soon as summer of 2025, with FSD approval playing a large factor in the timing. These vehicles fit into Elon's vision that they need to solve autonomy to unlock shareholder value.

Deepwater’s first annual Frontier Tech Survey measures the American public’s viewpoint on emerging technologies, including AI, Electrification & Automation, the Creator Economy, and Health-Tech. Key Takeaways: AI – General usage and awareness remains low; opinions are mixed when it comes…

Tesla’s second annual AI Day is coming up on September 30th. While the event is primarily geared toward recruiting talent for AI, software and chip development (confirmed by Elon on Twitter), it serves a second purpose of outlining the company’s…

Gene and Doug have different perspectives on how the Tesla story will play out over the next decade.