We gotta talk a Tesla because I just interviewed well an amazingly brilliant mind over at Arkinvas Brett Whitton Phenomenal researcher and the full interview? uh will be on my channel Saturday February 18th. But we're gonna talk about Tesla and this potential Next Generation vehicle Brett is convinced that Tesla is going to announce the Next Generation vehicle now I'm going to talk a little bit about my thoughts about what he said, but I also want to First talk about what Wall Street says about this specifically Goldman Sachs So here is Goldman Sachs take on Tesla and then we'll get into Ark Invest Stake and then we'll get into some of my commentary: take a look at this. Goldman Sachs says that for investor day, you should expect Tesla to talk about the Generation 3 platform a lower cost structure potentially a Generation 3 vehicle platform where costs could be reduced by about 50 percent. March 1st is uh, going to be the investor day and they believe that everything about Investor Day will be about.

how is Tesla going to get their costs for vehicles down 50 percent? Which actually increases their pricing power Because if they let's say reduce prices 25 but reduce costs 50 percent. you actually have massive PP massively huge pricing power. It's really incredible. in fact.

Uh, rumor has it that Tesla might be close to announcing officially their uh Giga Mexico Either this weekend or or as early as late as next week, we'll see that rumor ends up being true. But I mean just think about the cost of goods sold for manufacturing in Texas or sorry, uh in Mexico relative to Texas cost of goods sold for labor, your average wage in Mexico is somewhere around three bucks 325 350 whereas out In in Texas you're probably 15 to 25 bucks. So you're already looking at reducing your cost of Labor by an order of magnitude of 4X just by near Shoring uh in in Mexico Really incredible. Uh, labor cost reductions and and what you'll have.

You know some people will hear about that as oh, you know, exploitation. You know, here comes the capitalist exploit. But what you're actually doing is you're just moving to an area where you have a lot of auto manufacturers already I guess Mercedes and GM already exploiting Mexicans uh at that lower pay. But what The reality is, the more you have companies move to Mexico like uh Tesla opening a gigafactory.

Mexico What you're actually doing is you're creating more demand for housing and labor and you actually increase average labor costs. Uh, and so maybe you'll see that average labor cost actually rise and you're actually increasing the standard of living in those regions of uh Northeast Mexico So so we'll see what ends up happening. but I'm actually relatively bullish on on the Giga Mexico but uh, Goldman Sachs here believes that Tesla's going to talk about achieving this cost reduction and then being able to, uh, ship a lower cost consumer-based vehicle based off of that third generation platform. Now Goldman Sachs Believes that people are investors think that Tesla would start shipping a lower cost consumer vehicle starting in 2025..

Now Goldman Sachs says they do not model for a lower cost vehicle. They're not projecting in their price forecasts that Tesla will have a lower cost vehicle out by 2025 and they do not expect that Tesla is going to announce a specific product on investor day. However, there are a lot of investor rumors about maybe a model Two, a model Q, a model Q is sort of like another slap in the face to the short sellers because Tesla Q is considered a you know your your uh Tesla short position. Uh.

But anyway, what's fascinating about this is most Financial models right now. Most people who who essentially project prices for Tesla they they look at okay, you know how much money can Tesla make just ramping the three maybe get the cyber truck in there, throw a little bit of semi truck in a little bit of mega pack expansion. That's it. Those are most models.

most models aren't touching Robo taxing most model Um models are not touching a lower cost generation vehicle. However, if it is possible that a Generation 3 vehicle could uh, be built at a 50 lower cost. Again, remember you could take something like a Model Three uh, which you know, selling in that 40K range right now and you could lower the cost of these substantially. Let's see what we could get a Model 3 for right now.

So let's go to order Now on the Tesla page and let's see what the current price is for Model Three. Keep in mind that Tesla has been, uh, reducing the cost of three. But actually, after reducing cost, we ended up raising the cost of the Model Y because they ended up selling out for Q1, which is through. Basically, you have to wait until April now to get a model.

Um, uh, Model Y. But anyway, you've got a Model 3 over here at about 43 000 bucks. If you could lower the cost of a Model three by fifty percent, you could potentially lower the cost of this by as much as 40. You don't even necessarily have to announce a new car.

You could just sell the model 3 cheaper, right? So I mean think about that. If if it's 43 000 bucks, let me make sure we don't have incentives on. Yeah, get rid of the potential savings over here. You could maybe lower the cost of this sucker by 40.

That would bring you down to twenty five point Eight thousand dollars. There's your 25 000 car you don't actually need a new car. You could just take the Model three and sell it for forty percent less. If you get your cost down fifty percent, you're actually gaining operating leverage.

You're gaining gross margin while lowering prices potentially as much as 40. And that gets you basically right to twenty Five Thousand dollars. 25.9 Call it so you don't really need a new vehicle to be announced to get to a 25 000 car. If Goldman Sachs is right and Tesla can pull off a uh a margin uh uh, reduction or cost reduction of 50, that's pretty incredible.

Maybe they can do that via Gigafactory in Mexico for example, right and deliver the United States version Uh, via the Inflation Reduction Act which wants uh Vehicles produced in North America which includes Mexico and uh. and you could potentially create that 25 000 vehicle without even announcing a new car Now Arc uh and uh Well, I should speak specifically of Brett Whitten which you'll see in the interview again it's being posted uh Saturday February 18th. You can see the full interview that I have with Uh Arkin Vast Brett Whitton Brett believes that Tesla is going to announce a new vehicle on investor day. He believed and he said it extremely convincingly.

and he believes it's going to be a vehicle. Uh, that will be the essentially epitome of the robo taxi vehicle. It will be Tesla's Robo taxi vehicle that in the future, you could actually have an optional steering wheel for that. Initially, it might ship with a steering wheel, but in the future it won't have a steering wheel and it will be the foundation for uh, the Uh, the the Robo Taxi.

Network That's pretty incredible. Now, in order to create that uh, you would expect that full self-driving and the road map for full self-driving and some of the Cutting Edge full self-driving needs to be substantially better than it is Now right now, you still need a driver, right? that lasts 10 on AI is so hard. The first 90 is exponentially easier than that Last 10 percent to actually get to real full self-driving And now we'll see I've purposefully actually just to see how close we are on the wide release. Let my car get into funky situations and then let it do stupid things in a safe way obviously.

I like I'll go to Yields and it'll treat it like a stop sign and there's traffic around and it's in this unknown area where it just hasn't trained for yet. and I'm just like. All right. Go ahead.

the people behind me are just gonna have to wait 30 seconds while the car figures it out now. I Feel bad for those people I'm sorry I I monopolize their time their 30 seconds for the sake of uh, you know, beta testing I Feel bad about that because if everybody did that, there'd be a lot more traffic on the road. In Fairness, there was not a lot of traffic on the road. There just happened to be cars behind me at that point and I did get a honk or two, but anyway, they're definitely still.

There's still some work to be done. Uh, and who knows, maybe The Cutting Edge Tech already has that. So I would expect we'll see a lot of information about the future of full self-driving on investor day, as well as potentially that Robo taxi platform. But while Arc believes that will be the announcement of a completely new vehicle, I actually lean a little bit more towards Goldman Sachs opinion that you could just cut costs by 50 for the model 3.

and uh, and and uh, you know Goldman doesn't even talk about uh, this particularly. but if you then reduce prices of the model three by forty percent, you have a twenty five thousand dollar model three. It's crazy. So and you still have a growth in in gross margin which is wild.

That sounds like a big PP to me. a lot of pricing power. but uh yeah. Arc Invest is convinced at least brettis that there will be a new vehicle announced.

so uh, they they have. uh and they said that very very confidently. So good for them. And if they're right then I'm gonna start scratching my head going.

What did you know? Uh, but uh. but anyway, they're convinced it'll be a robo taxi style vehicle. What? I Also thought was interesting in my conversation with him is he thought that in their models, they've started realizing that Robo taxis are going to become so cheap that people are going to use so many more Robo taxis that you might actually substantially increase congestion on the roads, that you might actually have to create a capsuled based robotaxi. Network We're kind of like uberpool.

You don't want to sit next to other people, but you end up having a car that has like four different capsules where people can get into different capsules and like optionally open partitions. Uh, if they're traveling with family or whatever. So that way you, uh, uh, you don't have to interact with strangers, but you could actually have a robo taxi Network that drops people off along the same path without you know driving past those potential drop-off points by having a sort of capsuled style Robo taxi that sounds a lot like a bus, but one that has sort of private compartments I Thought that was quite a fascinating idea and and that is one that I Personally do not think we are going to hear about on investor day, but I may be pleasantly surprised again. I Think investor day will probably be by the rumor sell the news event for the stock I Think that just reducing costs by opening gigafactories in lower cost areas whether that's you know, Indonesia or Mexico or potentially both to deliver a cheaper model 3 could be all you really need.

So you don't actually need a new car, you just need a more efficient platform. So that's my take on Tesla And and what's coming for? Tesla.