Tesla's Pricing Strategy - A Modern-day Take on Henry Ford's Assembly Line Legacy?

By Kevin Armstrong
Ford introduced the assembly line in 1913
Ford introduced the assembly line in 1913
Ford (edited by NATA)

In 1913, Henry Ford introduced the assembly line in Highland Park, Michigan, revolutionizing the automotive industry and drastically reducing the price of the Model T. This groundbreaking innovation led to the collapse of hundreds of rival car companies, unable to compete with Ford's cost-effective production methods. Fast forward to 2023, and we witness a similar dynamic unfolding in the electric vehicle (EV) market, with Tesla leading the charge.

Tesla's continuous advancements in technology and manufacturing and strategic price reductions have raised questions about whether history is repeating itself. Are Tesla's actions, reminiscent of Henry Ford's assembly line legacy, catalyzing Darwinian forces in the EV market and forcing competitors out of the game?

Adam Jonas from Morgan Stanley raised this question during Tesla's Q1 2023 earnings call. Elon Musk, Tesla's CEO, clarified that the company's pricing actions are not aimed at deliberately undermining competitors. "We really don't think about competitors that much," he stated. Instead, Tesla focuses on improving its products, making them more accessible, and enhancing customer service.

Tesla's Unique Strategic Advantage

Musk acknowledged that Tesla does have a unique strategic advantage. The company is developing cars with potential autonomy, which may be worth significantly more in the future. This factor allows Tesla to sell its cars at zero profit while benefiting from the net present value of future cash flows associated with the asset. Tesla also enjoys ongoing revenue streams from service, charging, insurance, and other areas, which competitors may not have.

Tesla's Supportive Approach to the EV Market

Elon Musk emphasized that Tesla's actions are not malicious or intended to destroy competitors. The company has made its patents available for free and opened up its supercharger network to other manufacturers. Tesla's approach is to support the growth of the entire EV market, not to monopolize it.

As the electric vehicle market continues to expand, it is essential to recognize Tesla's role in driving innovation and adoption. While the company's pricing strategy and technological advancements may draw comparisons to Henry Ford's assembly line, Tesla's commitment to supporting the growth of the entire EV market sets it apart.

Despite similarities to historical precedents, Tesla's current approach fosters a collaborative environment and encourages competition. This strategy ultimately benefits the global transition to sustainable transportation and pushes the entire industry toward a greener future.

Tesla Robotaxi Improvements: Reduce Wait Time By Predicting Demand and Scale Operators

By Karan Singh
Not a Tesla App

Just over a week into the Robotaxi launch, Tesla began laying the groundwork for a more scalable remote supervision model, which will be key to achieving success with the Robotaxi Network.

About a week ago, Elon Musk posted on X that Tesla will likely reach the crucial safety threshold to enable this shift within a month or two. While that means at least another month of in-vehicle Safety Monitors, it does provide us with a timeline of what to expect.

This timeline came in response to a question about Tesla’s plans for the ratio of autonomous vehicles to remote supervisors. The more vehicles that a single human can supervise, the better, especially if that number can be reduced to something drastic, like a 100:1 ratio. A single human operator would be able to manage an entire city of Robotaxis, which will be critical to make the Robotaxi Network turn a profit.

While Tesla works towards that ambitious future, it is also taking immediate steps to improve the current user experience during the Austin pilot program, where 15-minute wait times have become the norm.

Solving for Wait Times

According to Eric E, one of Tesla’s principal engineers on Robotaxi, the current 15-minute wait times are a classic logistics challenge. The supply of vehicles is lower than the current demand for rides. To solve this, there’s a two-pronged solution for Tesla.

First, Tesla is directly increasing supply by hiring more Safety Monitors/Vehicle Operators in Austin, even hosting an on-site hiring event.

Second, Tesla is working to make FSD and the Robotaxi fleet management software faster and smarter. This means they are utilizing the data from the pilot to better orchestrate the fleet by predicting demand and pre-positioning vehicles in prime locations to reduce wait times. After dropping someone off, the vehicle can start traveling to areas of higher demand, even if someone hasn’t booked a ride yet.

Next Up: Remote Supervision

These immediate fixes are all in service of that much larger goal. Scaling the Robotaxi Network isn’t just about having more cars; it’s about increasing the number of vehicles a single human can safely supervise remotely, which is a requirement for Robotaxi to turn a profit.

Elon’s comments give us this timeline. A more flexible and favorable ratio of 3:1 (although still far from the ideal 100:1) is likely to be achieved within a few months.

Tesla is committed to safety, as evidenced by the safety monitors in the vehicle. A single incident could not only tarnish the public’s view of the Robotaxi Network but could also halt Tesla’s operations altogether.

The data gathered from more Robotaxis on the road is crucial to the whole project. Tesla is gathering more data and issuing newer FSD builds specific to the Robotaxi.

As FSD requires less remote oversight per mile driven autonomously, Tesla can safely increase the number of vehicles per remote supervisor, moving the service closer to its ultimate goal.

Tesla has laid out an aggressive roadmap for the Robotaxi Network and its next few phases. We’ll have to wait and see just how this goes over the next few months, and whether they feel comfortable enough to increase the geo-fence and remove safety monitors.

Tesla to Integrate xAI's Grok Into Optimus, Helping Bring the Robot to Life

By Karan Singh
Not a Tesla App

Following the recent news of Grok being almost ready for Tesla vehicles, Elon Musk confirmed on X that the next major step is with Optimus, Tesla’s humanoid Robot. xAI’s advanced Grok models will eventually serve as the voice and brain for Optimus. This will be a convergence of Musk’s two biggest AI ventures — Tesla and xAI.

This will combine a physically humanoid robot - the brawn - with the new brains, Grok. This integration is more than just giving Optimus a voice - it suggests that Tesla is thinking ahead and possibly intends to use Grok to understand the environment around Optimus, while FSD will handle the robot’s movements.

A Symbiotic Relationship

The combination of Optimus and Grok creates a relationship where each component plays to its strengths.

For years, Tesla’s robotics team has been focused on the immense challenge of physical autonomy. Optimus learns complex tasks by observing humans, basically training itself through video by watching humans. This helps Optimus develop the physical dexterity needed to work in the real world. This is the brawn - the ability to navigate, manipulate objects, and perform useful work.

Grok provides the conversational brain. It adds a layer of natural language understanding, reasoning, and interaction. Instead of needing a computer, a specialized app, or pre-programming commands to give Optimus instructions, a user will be able to simply talk to it in a natural way. This makes Optimus infinitely more approachable and useful, especially for tasks in a dynamic environment, such as work or at home.

xAI and Tesla

Viewed from a different perspective, this move isn’t just about upgrading one product. It is the clearest evidence that xAI and Tesla are collaborating together to build a single, unified AI platform. Musk’s biographer, Walter Isaacson, believes Tesla and xAI will merge. Seeing Tesla and xAI both play critical roles in creating Optimus makes us believe that it may very well be the case.

Transformation to a Humanoid Robot

The confirmation of Grok in Optimus is one of the most significant milestones for the project to date. While Optimus’s ability to walk and work (and dance) is already an incredible engineering feat, it has all been physical abilities so far. Adding the ability to interact with Optimus in a human-like way will transform Grok from a machine to a true, general-purpose humanoid robot.

The ability to understand nuanced requests, ask clarifying questions, and respond intelligently is what will ultimately make Optimus a daily fixture in our lives.

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