In the first of a three part interview series with Automotive News, Elon Musk shared some of his thoughts on Tesla's competitive advantages, autonomy, manufacturing efficiency, TSLA's stock price, and more.
Shedding some additional light on comments made on Tesla's second quarter earnings call, Musk described why he believes, over the long term, that Tesla's most sustainable competitive advantage will be their manufacturing ability. Though Musk views Tesla's prowess in autonomous driving as a current advantage, he expects the technology to be widely available and included in most new cars in ten years.
Assuming competition has access to autonomous technology, Musk said "we will just need to be better at manufacturing than them.”
Musk sees a lot of opportunity to improve there. He described how he thinks about factories, and why he believes automotive throughput rates can continue to improve dramatically from the levels of today's most efficient factories.
"You can think of a factory like a CPU, or a like a microchip, or something like that. You know, you bring the circuits closer together, you increase the clock speed, and then you can calculate some theoretical limits for the output of a given silicon fabrication technology. I think the same is true of factories.
"So if you actually look at the volumetric efficiency and the velocity of automotive factories, volumetric efficiency is extremely low, I would say in the low single digit percentage. You know, a couple percent maybe for volumetric efficiency. The speed is much slower than walking speed. Like a very fast automotive factory would be exiting a car roughly every 25 seconds. If the car length is 5 meters, that’s only a speed of 0.2 meters per second. That is 1/5th of walking speed. So the fastest car factories in the world are only producing a car at 1/5th walking speed. This is not very fast."
How much room is left for improvement? 10x to 100x, says Musk.
"I think it is possible to improve automotive manufacturing efficiency by at least 1,000%, and possibly 10,000%."
Musk also noted that Tesla saw strong demand for their vehicles over the last few months in the midst of the pandemic, and that he doesn't spend much time worrying about the stock or managing investor expectations.
"At the end of the day if you make great cars and the company is healthy and making great products, investors will be happy."
For more details from the interview, please see the included video.
Disclosure: Rob Maurer is long TSLA stock and derivatives.