On February 13th, we sat down with Elon Musk in Fremont, California for an episode of our FYI – For Your Innovation podcast. We discussed Elon’s estimates for the global electric vehicle (EV) market, Tesla’s autonomous strategy, misperceptions about Tesla’s strategy, and Tesla’s willingness to open its platform to other automakers. Here are some of our key takeaways.
Musk on Electric Vehicles Sales
ARK estimates that EV sales could reach 26 million by 2023, up from 1.3 million in 2018, if battery production scales accordingly.1 Focused on the exponential growth potential, Elon agreed and projected that Tesla alone should be able to boost its production from roughly 240,000 cars last year to 1.5 million in 2021 and 3 million in 2023. As the largest producer of EV batteries in the world, Tesla is an important barometer of the potential for EV production.
Musk on the Future of Autopilot
Elon told us that he is certain that Autopilot will be “feature-complete” for self-driving by the end of this year and he believes that, by year-end 2020, people will be able to relinquish all responsibility to Autopilot and fall asleep while being transported from point to point, pending regulatory approval. To attain regulatory approval, Tesla should be able to show that Autopilot travel is safer than human-driven travel, given the billions of miles of driving data collected from its customer fleet. Musk said that the regulators are data driven.
Increasing at an exponential rate given the increasing number of its cars on the road, Tesla’s data should allow Autopilot’s performance to improve at an exponential rate, given the long tail of corner cases – including “hurricanes, fires, smoke, dust” – in its massive database. We believe no competitor’s data collection can compare. Tesla vehicles equipped with first- and second-generation Autopilot hardware, for example, have collected a cumulative 8 billion miles to date, while Waymo’s vehicles had collected roughly 10 million miles as of October of 2018.2 Every time a driver takes the wheel when using Autopilot, he or she is teaching the system, giving Tesla information to improve the system and minimize the number of human takeovers in future use cases. According to Elon, this process also is reducing Tesla’s reliance on human labeling, the most time-consuming factor in harnessing the power of artificial intelligence (AI).
While Tesla has a history of missing calendar targets, ARK notes that predicting precisely the pace of improvement in autonomous driving algorithms is impossible. Even if autonomous driving were to take twice as long to adopt than ARK anticipates, commercializing in 2021 instead of our original 2019 estimate, equity markets should be valuing the opportunity at $1 trillion globally today, compared to our baseline estimate of $2 trillion, instead of next to nothing.3
Musk on Misperceptions about Tesla
Elon thinks that the Tesla Autopilot artificial intelligence (AI) supercomputer has not received the public attention it deserves. ARK has estimated that Tesla is 3 years ahead of peers like Nvidia in autonomous hardware, given the specs of the custom chip it released late last year. Confirming this cadence, Musk said that Tesla started building the chip 3 years ago, and that it will enable a 2000% improvement over the Nvidia system it will replace. With the Nvidia system, Tesla currently has to crop frames, “bend pixels”, and reduce the resolution of content to process incoming camera feeds. Tesla’s hardware will be able to process full resolution and full frame camera feeds.
Musk on Other Automakers Building Upon Tesla’s Platform
We also asked Elon about other automakers potentially building upon Tesla’s platform. Tesla’s open patents have been available for several years and already are in use. More recently, Daimler said it was in talks with Tesla and GM was rumored to be considering its powertrain. Tesla has denied the likelihood of any partnership. Elon did say, however, that Tesla would open its vehicle platform, Autopilot, and the supercharger network to other automakers as long as it did not have to make the changes most auto manufacturers demand to ease the integration process. Tesla does not want to add engineering overhead.
To hear the full interview with Elon Musk on ARK’s FYI: The For Your Innovation Podcast, please click here.
- ARK Invest’s Big Ideas 2019, Page 44 (Available for download here: https://research.ark-invest.com/big-ideas-2019) ↩
- Sources: ARK Investment Management LLC, 2018, Data sourced from: https://waymo.com/ontheroad/, https://hcai.mit.edu/tesla-autopilot-miles/, https://hcai.mit.edu/tesla-vehicle-numbers/ ↩
- ARK Invest’s Big Ideas 2019, Page 56 (Available for download here: https://research.ark-invest.com/big-ideas-2019) ↩
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