Why I’m Still All-In on TSLA: Part 3 — Tesla AI/Robotics

What is AI? ML?

I’m not a trained AI engineer, but I’ve worked on simple Machine Learning prototypes while at Google. Machine Learning is a subset of Artificial Intelligence where machines learn by itself from data. I’d like to think of ML like programming turned inside out.

Tesla’s Data Advantage

Most folks would consider Google’s Waymo as the leader in autonomous vehicles. Despite boasting orders of 62,000 Chrysler vans and 20,000 electric Jaguars, Waymo’s official fleet size in 2021 is about 600 cars. (source) Each car must be disassembled by hand and reconstructed with Waymo’s own sensors and computers, making them super complex to build, scale, and debug.

https://blog.waymo.com/2020/03/designing-5th-generation-waymo-driver.html

Edge Case Training

If you watch the Autonomy Day video, you’ll learn that once Tesla identifies an edge case, such as boats on a trailer, bicycles on cars, Tesla can ask the fleet to send back examples to train the neural network. Waymo can only do this with 600 cars driving around Phoenix or San Francisco. Tesla can ask one million cars driving all over the world for this data!

Tesla Dojo HW/SW Platform

Once you have all this data, you need to design a neural network and train it. This requires a super fast training computer. While the TeslaBot was all flash at Tesla’s AI Day, I think Dojo was the real star.

Dojo From the Bottom Up

Tesla’s engineers determined the longest distance an electron can travel per clock cycle in a modern 2GHz microprocessor, and used that to determine the maximum dimensions of their training node that contains memory, CPU, and I/O that’s optimized for machine learning. Even though the training node is the smallest unit of compute, a node is capable of 1024 GigaFLOPS, or 1 TeraFlops. By comparison, a new PS5 or XBox is up to 12 TFLOPs.

Dojo Software

The hardware part of Dojo was amazing. Tesla really showed how they thought from the electron up to build the ExaPOD. But what is equally impressive is the software stack. Dojo is scalable at the D1 Chip level, so you can create virtual training “servers” called Dojo Processing Units that is “right sized” for your training model.

The Car’s Full Self Driving Computer

Each autopilot enabled Tesla car has 8 cameras: 3 front, 4 side, 1 rear. The car uses input from the 8 cameras to figure out how to drive. Believe it or not, this is all done by a small computer board that fits behind the glove box, rather than a bulky computer that takes up half the trunk.

But, But, Lidar!

Tesla has taken an unconventional vision based approach to solving full self driving, and that has ruffled a lot of feathers in the AI/robotics establishment.

https://youtu.be/vCRrXQRvC_I

Tesla Full Self Driving Beta

As you can see, Tesla has the entire self driving eco system, from auto manufacturing to data gathering to ML training. For a few years now, Tesla has had a traffic aware cruise control system with automatic lane change, and with GPS data overlaid on top to do fully automated highway driving from on ramp to off ramp. We use these features all the time on our Model 3.

https://twitter.com/garyblack00/status/1439200819459547136

Tesla Insurance

You might wonder, how will all these self driving cars be insured in the future? Tesla has that covered as well. Currently only available in CA, Tesla is entering the insurance business. In fact, Tesla will use its insurance calculator to determine who gets to access the FSD open beta.

Tesla cars in blue

Subscription Revenue, Profits, & Market Cap

Let’s take a moment to consider the impact of FSD subscription and insurance to Tesla’s market cap. Let’s say Tesla grows at 50% from 2020 to 2030, reaching 20M of yearly production near the end. That would be about 75M cars made in total. For argument sake, due to car accidents or what not, there are 60M active cars.

Endgame: Robotaxi

Suppose one day Tesla solves autonomous driving, it will create the Tesla Network, a ridesharing network where owners can add their own vehicles and earn passive income. Tesla is full of moon shots, and this is the big one.

Closing Thoughts

The market cap numbers here are nutty, but what type of investor are you? Are you a play it safe guy who is happy with 10% yearly returns on an index fund? There’s nothing wrong with that, but you will never become wealthy (unless you already are, haha). Or are you the type that wants to invest in companies that can grow 1000x, 10000x? If you can find the right company, you only need to be right once to achieve generational wealth, like those who bought and held Microsoft, Apple, and Amazon for 20+ years.

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William Wen

William Wen

25 years in tech | 13 years @ Google | 9+ years Tesla Investor | www.linkedin.com/in/wil-wen | twitter.com/wilwen2