Is Tesla Making A Compact Car? (or something else)

Is Tesla Making A Compact Car? (or something else)

Hey, I’m Steven and this is Solving The
Money Problem. If you’re new to the channel, welcome. If you’re not, cool. While in China recently to show off his dance
moves [3, 2, 1, go] [music] Elon Musk casually dropped this: [Something that would be, I think, super cool
would be to–and so we’re gonna do it. I mean, we’re gonna try to do it. Is to create a China design and engineering
center to actually design an original car in China for worldwide consumption.] [I think this will be very exciting.] [I think China has some of the best art in
the world. And–and I think it’s something that would
be appreciated on a worldwide basis and I think it should be done. And we’re gonna do it.] [You know, try something, just like kinda
radical. Like cybertruck. You know? Nobody was expecting that. You know?] [And that’s–and so–I think we should try
and do something just like, you know, cool and different and something the world hasn’t
seen before.] [That really moves the heart and gets you
right there.] [That’s the kind of product you want.] [We wish there were more of those things in
the world.] [Anyway, that’s what we’re gonna do so..] [applause] Thanks everyone. It’s an honor being here and it’s one
of the coolest places on earth so thank you. [applause] Tesla China has since started advertising
for positions in its design studio, indicating Musk intends to move forward with this immediately. This has me wondering. What type of vehicle would Tesla design? What makes the most sense given all the available
information? I won’t speculate on aesthetics but I will
speculate more broadly about features and function. Tesla is systematically tackling most major
segments of the auto market. The S, 3, X, Y, Cybertruck, Roadster and Semi
mean Tesla has entrants in the large sedan, mid-size sedan, large SUV, crossover, pickup
truck, sports car and freight transport categories. Missing, is a compact car, ideal for densely
populated cities, singles, and budget buyers. Given that compacts and subcompacts make up
a combined 29% of the new vehicle market, this is a MASSIVE piece of the pie for Tesla
to miss out on. Tesla has always made safety their #1 priority. The S, 3 and X are the 3 safest vehicles ever
tested. Small cars are inherently less safe than large
cars. This is a fact of physics. All other things being equal, less mass in
a collision means you’re coming off second best. This is why boxing has weight classes. As it stands today, making a compact car would
force Tesla into a situation where they’d be producing a less-safe vehicles than they’re
known for. Why would they do this? Well, they wouldn’t. Wait, what? Then why am I speculating they will? I’m glad you asked. See, Tesla is working on fully autonomous
vehicles. Tesla KNOWS they are close to solving full
self driving. Their baseline goal is to be at least 10x
safer than a human driver. If collisions occur far less often–and those
that do are far less significant because the full self-driving computer braked sooner,
or took evasive action–then a small car is far less of a safety issue. You can’t be injured in an accident that
doesn’t happen. So let’s look at the reasons why I think
Tesla will make a compact car and, while doing so, will simultaneously reinvent what a vehicle
is. Before we dive in, this is PURE speculation
so don’t get your panties in a twist. Tesla has told us approximately “f**k all”
about this new vehicle, so our imaginations are all we’ve got. City Living A few hundreds years ago, almost everyone
farmed for a living, believed in god and resolved disputes with merciless violence. As technology has progressed, the world’s
knowledge has advanced, its population has exploded, productivity has skyrocketed and
people have moved to cities in droves. This trend of living in densely populated
urban areas continues. Ask anyone who rents or owns an apartment
in New York, Sydney, London or Hong Kong and they will tell you space comes at an enormous
premium. Should I spend the extra half a million dollars
for a bigger garage, or a bigger bedroom? Do I want a kitchen or will I eat out for
every meal? A tiny car is perfect for city living. Maneuvering through busy crammed streets,
squeezing into car spaces too big for others, having enough room in your garage to park
your car AND store your bike AND keep your blow up doll collection is invaluable. Still unconvinced how important and valuable
space is in a city? Visit one of these cities and try–just TRY–to
find a pickup truck. If you do manage to find one, ask the driver
where they came from. Less Is More The heavier an object is, the more energy
is needed to move it. You probably know this. It’s basic physics. So the less massive an electric vehicle is,
the less energy is needed, which means a smaller battery is needed, which not only brings the
cost down dramatically (the battery is the most expensive component in a Tesla) but physically
removing some of the battery means EVEN less mass which means EVEN more efficiency which
means EVEN more battery can be removed which means EVEN more weight is saved…bla bla. This compounding effect is huge. Even incremental improvements in efficiency
can make an enormous difference to price and performance. My suspicion is that Tesla will be looking
to create an ultralight, hyper efficient car. We already know Tesla’s battery AND powertrain
technology is years ahead of everyone else. This means Tesla will be able to undercut
competitors or price, and outdo them on range. Tesla’s battery costs are lower AND their
battery performance is better. I mean, how do you even compete with that? A Tesla compact car would be far cheaper to
run than anything comparable. Unless someone has a major battery breakthrough
and it’s not Tesla themselves. Small Car, Huge Market As I mentioned, compact and subcompact vehicles
make up 29% of the new car market. Nearly ONE THIRD of the 90 million vehicles
sold annually are compact. This is a stupidly large market and with safety
concerns addressed by full self driving, Tesla would be insane not to go after a big slice
of it. What’s interesting here is that, not only
does entering the compact car market expand Tesla’s potential pool of buyers by tens
of millions but such a car would be dramatically cheaper to produce (and therefore buy) than
any other Tesla on the market. My guess would be in the $20,000. Just for fun, let’s imagine what could happen
if Tesla sold a $25,000 car in the compact market. Capturing just 1% of this market, which is
300,000 units a year, would bring in $7,500,000,000 in revenue. Or maybe they take 5% of the market which
is 1,500,000 units a year or $37,500,000,000 in revenue, far more than the entire Tesla
business did in 2018. The potential is enormous. From an investor’s point of view, this gets
me very excited. Robo Taxi Fleet Now here’s the kicker, and it ties into
the last point. When Tesla solves full self driving and owners
can add their vehicles to the fleet of robo taxis to make them money any time of day or
night, the dynamic of car ownership is flipped on its head. Now, instead of a car being a depreciating
asset that costs you money, it could be an appreciating asset that makes you money. Imagine a $25,000 car that earns you $10,000/yr
in robo taxi fares. In 3 years, it’s paid for itself entirely. This is enormous and will make car ownership
possible for millions of people who previously couldn’t afford to own. The second reason I bring up the robo taxi
fleet is regarding the design of the vehicle itself. What a car is changes entirely when it can
drive itself safely from point A to B. Everything can be reimagined. I believe Tesla wants to create a new type
of vehicle, completely re-thought. There is no driver so there’s no need to
have eyes on the road. Infotainment becomes the primary feature and
we know how great Tesla is at software. The possibilities are endless. Perhaps seating configurations that allow
for sleep in transit will be implemented. This could be a boon for escorts and put love
hotels out of business. When what was once unproductive “driving
time” is newly liberated as productive time, everything changes. Imagine starting your work day the moment
you begin your commute. Or now having the time to meditate, work on
your novel, catch up on Netflix, get frisky in the back seat, own noobs, or watch your
favourite YouTube channel, all while your car drives itself. Maybe Tesla will find ways to seat 6+ people
for high density compact transit, or go even smaller. Who knows. The only thing I’m confident of, is that
Tesla will be designing this new vehicle with the robo taxi fleet in mind. Tesla knows they’re on the cusp of solving
full self-driving. It would be unquestionably moronic NOT to
be designing this new vehicle with autonomy in mind. Will it definitely be a compact car? No. Does it make sense? Yes. Otherwise Tesla is missing out on a third
of the new vehicle market. This goes against their mission of accelerating
the world’s transition to sustainable transport. Will it look like other Tesla’s? Unlikely. Musk has hinted that this will be a novel
design. Plus, I mean, Cybertruck. What does a ‘Tesla’ even look like? At the end of the day, I’m happy to be wrong
but based on the information at hand, I’m confident in speculating that the vehicle
Tesla designs in China for worldwide consumption will: * Be cheap
* Compact * Hyper efficient
* And feature a revolutionary design — a complete re-imagining of what a vehicle is. The first mass-market car designed with fully
autonomous driving as a given I don’t know what it will look like. I don’t know what it will cost. But I do know, if Tesla makes a compact vehicle,
they’re going to turn on a multi-billion-dollar revenue stream that could eat the lunch of
automakers the world over and reinvent what a car is. Dominating a single vehicle category would
be awesome. But Tesla appears to be systematically going
after them every single one of them. My only question is, how many vehicle categories
will Tesla dominate and how many will they merely participate in? I’m Steven Mark Ryan, this is Solving The
Money Problem and I love you all. Thanks so much for watching. Let me know your thoughts in the comments
below. Do you think Tesla will make a compact car
or something else? What features do you imagine it will or won’t
have? How much would it sell for? Would you buy one? How would you design a compact car? And of course, if you have any ideas for future
videos, let me know. I read ALL your comments. p.s. If you’re still watching, you’re AWESOME. This channel has kind of blown up since it launched and I’m working on making the best possible content for you guys, but it takes time. Consider supporting the channel at so I can continue creating content for you guys. There’s a link in the description. Either way, the best kind of support is you being here and watching, so thanks again.

100 thoughts on “Is Tesla Making A Compact Car? (or something else)

  1. I absolutely LOVE your content! It's hard to find a realistic analyst of a company who genuinely spends time researching. You had me as a subscriber at your first video, keep up the amazing work. P.S. God's not dead 🙂

  2. The Billionaires want cashflow fast how else are they going to setup their Planet B on Mars? 
    If a small car is designed for safety and a big SUV isn't the car certainly gets damaged more but the occupants have a greater chance to live. During the 70/80's we had a notorious small highway where Volvo's collided with Landcruisers and everytime in a head on as someone is making a bad overtaking move the people in the Volvo survived Landcruiser rarely.

  3. 25,000, high end, a few years later, the 19k model, maybe a sleak looking Mini?
    You may know the answer to this, if a wholly owned US company in China imports to the US, will it cost them any tariffs? This has never happened, the wholly owned part, let me know what you think!!!!

  4. Im from South Africa. No Teslas here. Very few EVs – Jaguar I pace and Nissan Leaf but its mere symbolic. Question: will Chinas presence and expansion in Africa be the key to Teslas expansion into Africa?

  5. Chevrolet has the Chevy spark a entry level four door hatchback compact car that can be had for about $10,000. Tesla should make a subcompact Vehicle for a sub $20,000 price tag.

  6. Your compact car FSD safety analysis seems spot on. I was thinking a 6 seat+cargo minivan layout but your idea is 💡 EUREKA!

  7. Delivery vans for sure needed immediately. Small, medium and large.
    Small would replace all USPS carts, medium like Ford Transit and a larger like Sprinter, actually that one could be a living/camping van too. Winnebago or Westfalia can work out the details…

  8. I think full self-driving is still years away. The sheer amount of data they will need to collect to account for human error on the road will be astronomical. Full self-driving may be 99% complete, but each percentage of a degree further will take an exponentially longer time in my opinion. I think a 100% safe self-driving vehicle is only possible if all cars on the road are computer controlled.

  9. The robotaxis will be great for Tesla itself but may create issues.
    When Uber and similar came to the cities, entrepreneurial folk bought cars and found students to drive them.
    When Turo came into popularity, some people including someone I know bought a second car just to rent it out.
    Its less likely going to be the car owners themselves profiting from their cars, but the speculators who saw an opportunity and jumped on it.
    Then you'll have more cars that needed, which is likely going to be a nightmare to supercharge and people who bought their all tricked out Teslas might be disappointed unless they charge at home (which they will).

  10. Not gonna be a Rickshaw or a Tuk Tuk, but a few clues from The Cybertruck definitely! Maybe a few clues from a Tata Magic Iris & also a Tata Nano, but it would be 2 seperate small cars combined with Cybertruck & Model Y tech! After 15 minutes of research on the Auto Taxi market in India & China this makes perfect sense to me. Tesla would need 2 small "cars", a Compact & a Sub-Compact.

  11. Musk wants to bring tesla to India.. In India average price of a car is approx 10k$ – 12k$.. I'm sure budget cars are in tesla cards.. About 5.5m new cars coming on roads in India every year HUGE MARKET … I think YOU'RE RIGHT…

  12. The exterior will be more rectangular, tall and container-like to maximize space. Interior configuration is customizable to allow for sleeping, desk, fitting room, or seats during ride. No steering wheel or pedals, no dashboard, no center console. Will still have a monitor for operation. Windows at waist level to look out but can be shaded for privacy. Doors are removed, only a door at the front and a door at the back. No front trunk or back trunk. 4 wheels. Short in length. Most similar car model exterior today is a Smart car. Light. 7 seconds 0-60, top speed 80mph. Shoot for $18k base

  13. Tesla did the electric smart car but it wasn't great. Hopefully they will create a compact that is truly incredible.

  14. I invested in Tesla stock, sold, and used part of that money to buy a Tesla.
    Best decision I've ever made.
    I'm so excited to see where this company will be in the future.
    But first… I need to re-invest. 🙂

  15. I would love nothing more than a subcompact, hyper efficient Tesla, as long as it can be optioned up to more than 300 miles of range.

  16. @3:35 this is an imported slang term from South Africa. It is derived from the Afrikaans phrase "fokol" which translates to "fuck, empty/nothing". Here is a good example of it being used:

  17. Personally, i think it will be a car for the molasses. it will have a weird design slightly more range than a porsche (maybe 211 miles). In exchange, it will have a 0-60 acceleration in 2.2 seconds, full infotainment system, full autopilot hardware, 5-seaters, somehow still get 5-star rating in all categories, and the base model will cost $18k

  18. Would future superchargers be automated in view of the auto taxi benefiting able to self-charge?
    How might this China compact/sub-compact construction help with; self-cleaning (interior, those body fluids!), self-charging, and transition from ‘my Tesla’ to robotaxi and back again?
    What might the Berlin Gigafactory contribution be to these requirements?

  19. Loving your delivery, I am currently driving a Audi A5 convertible diesel in the UK, and my wife doesn't want convert to EV until there is a convertible. When are we going to see an affordable 4 seat convertible or at least large sun roof?

  20. Any wild prediction on what is going to do to the stock price in the short term ( a few hours when market opens ) the "unintentional acceleration" investigation situation? I think it is very likely that Tesla could address anything. as a software update, but if that does not cut it, could a possibly mass recall be a massive set back? Keen to hear your thoughts on that.

  21. I've been to China and considering most of the vehicles on the road are compact 1 / 2.5 seater ev's that cost less than 10k usd, I wouldn't be surprised if Tesla would build something similar. Even a 20k usd car. Looking forward to it!

  22. I think the same teh next tesla wil surely be a hatchback to fill the last gap in the market. Model 3 + Model Y + new hatchback will turn tesla into Huge global player…

  23. Safety concerns ? Millions of small cars sold every year … Smart cars are one of the safest and smallest … Why would Tesla be concerned about this

  24. The Cybertruck is cyber because flat stainless steel is a good cheap strong way of making a body. So a Cybercar could be a way to the budget car market. A small Cybercar would look like a Johny Cab and the have self driving so Total Recall is NOW!

  25. so when a tesla estate car no one seems to be doing anything in that market
    they all seem to just want to do a small car

  26. Question for you not related to this video: I was reading about Elon's performance based compensation plan that allows him to purchase stock at a discounted rate upon meeting specified market cap and operational milestones, but I cannot seem to find where they come from. Are they shares that the company currently still holds? Will they be created at that time and the stock price adjusted accordingly? Forgive my naivety regarding corporate finance. I think that this compensation plan is a super interesting metric on which to gauge the Tesla's potential from their POV. Thanks, I absolutely love the channel.

  27. The FSD problems, e.g. drunk or inattentive drivers, become increasingly simpler and more reliable as all of the other vehicles on the road become FSD. As soon as the controls are removed, e.g. steering wheel, accelerator, etc. no human can intervene.

  28. A. It was part of Musk's strategy from day 1. Phase 3. I don't think anyone thought it might come from China, though.

  29. Great production! I predict that the KIA / HYUNDAI Korean Auto Group will topple TSLA. They have an existing dealer network and already produce the NIRO by Kia which has been tested against the Model 3 and has very close to the same range. Also, they have a trusted brand to an educated demographic that has money. Of course, nobody may win this if the IMF is right and we go into a deep depression this decade. Interesting times.

  30. 1 > if they do one, it be still too pricey to buy by the low wage worker since Tesla stands for fancy pricey cars for the well off or rich! 2 > if they manage to have the Chinese design it, and the design as said be non normal car design maybe like the Cyber Truck then it won't be popular as the Cyber Truck is as most people who follow Tesla releases stated it is Bloody Ugly Horrible right angled crap design! 3 > Tesla are a car maker who as Elon states a way for the people to own a good EV, trouble is Tesla stands for pricey cars even the horrible model 3 is £42.000p to buy in the UK. ( I say horrible because no drivers binnacle speed display on the top of the dash instead you got to look off to the left side onto a flat screen taking your eyes off the road for 2 to 3 times longer than if you had a binnacle were it should be just below your line of driving sight that you glance down for 1 second to see it and back to the road ) . Why should every single car design ever made ICE or EV have to always have that placement of the binnacle no matter the design inside or out is over decades.. Because Safety laws state it must be there no matter the cars safety devices or driver help systems so the driver can see the speed without taking their eyes off the road as you can crash even in a Tesla with all it's fancy sensors if you don't watch the road ? Why should this model of car be exempt from the law? And the damn model Y which is not a model X cheaper version as it was said it be, instead it is a clone of that damn model 3 with a bigger body shell. So with the ugly Cyber Truck that's 3 cars without a binnacle. so 3 that should be banned as unsafe and breaking the long stuck to by every maker rule about speed display placement.

  31. Please @Tesla, make a compact happen sooner rather than later. Most of Europe, me included, are waiting. Take my money.

    Model 3 range, charging speed and interior in a compact hatchback for 40k € or less and I'll order one immediately.

  32. or you can live in tesla. your poo could be desintegrated so you don’t need to have WC in the car.
    but sarcasm aside videos are great. Keep up the good work

  33. Will be called "model 2" for "2 S3XY CARS" a 35KwH battery with a 100Kw/136HP motor could have a cost Of 20K+ USD and a 200+ Miles with a weight arround 3000 pounds (1350kg) or less. but also possibilities for a performance model with the same motors than the M3P and a 45KwH battery for +250miles… Or so.

  34. Either VW ID3 will grab the quality affordable small car EV market, or a future Tesla Model 2. We'll see. But whoever does it will show ICE the door.

  35. How many Teslas are driven around narrow country roads where passing places are used? Would a self-driving car know to reverse back up to one when facing an oncoming vehicle?

  36. While I can only afford a small car I would love a Tesla, so I hope this is true. I need the mileage as we live remotely way out of town, but need a small car in town. 20,000 or preferably less to catch more buyers, Please Elon. He did say “something to touch your heart”……another sector that this made me think of was revolutionizing handicapped mobility, a high range mobility vehicle or wheelchair with all the computer gizmos and more would be amazing. Fingers crossed for both. xxx Thanks for creating this original channel.

  37. Could you imagine the demand if they sold at 10-15,000, no wonder they have set up in China to match the demand.

  38. what happens with TESLA when every can company release every model that they produce in electric version with 300+ miles range. Average JOE will still rather buy an electric Ford than TESLA. And average JOE is probably 80% of the market.

  39. Hi there! I wanted to know your thoughts on a near future market collapse and its effect on Tesla stock. A lot of people are foreseeing it and some are not willing to see the big fall after the steep clime. I am a great Tesla believer and I am sure Tesla will get to 6000$/share in a few years but I don't think that during this very probable crisis Tesla stock is going to go up all the time. With all the hype coming this year on Tesla I'm sure it will counter some the loss in the stock price but how much? Perhaps you could make a video on it. Great videos by the way.

  40. I know you already have a bunch of ideas for your next videos but is there a chance you could talk about hydrogen cars and their competition to Tesla? This might be a stupid question, but is there a chance of ever running out of energy to charge electric cars if there are millions of people using them in the future (after the adoption of EV)? Anyone else feel free to answer my question, I'll be more than happy!

  41. Steven – love your videos. I’m a serious TSLA investor. Have an honest question though – How do you think the first cell formed from a pool of proteins and amino acids? Personally – I feel like this is like saying that a library with HVAC and thousands of books could form by putting paper and plastic and metal and ink in a pile and blowing it up.. Do Elon’s thoughts intrigue you at all about this all being a simulation? Again – just personally – I think the difference between a programmer and a god is semantics. Religion has been one of the worst evils in human history, but I don’t think this should discount belief in intelligent design, or an intelligent designer. Religion has mostly been just greedy people taking advantage of power, same as in any other organization at any point in time anywhere on earth. Sorry to go too deep. Curious on your thoughts.

  42. 4:12 "squeezing into car spaces to big for others" yes that is a challenge. big spaces are far harder to park in.

  43. This makes me think of a recent Autoline episode on deconstructing the tooling cost of the Cybertruck (long, but worth watching). If they did a small compact (for cities, 3rd world, etc) and did it along those lines, saving need for very costly painting, etc … an interesting idea. It'll be fun to see what they do. Regardless, I do see them working up something small & inexpensive. Something that could be geared for most of the rest of the world, which tends to have different vehicle demands than does the U.S.

  44. Yet another well-formatted programme Steve. Great insights, based on intelligent and logical extrapolation of known facts. My guess is that a small Tesla will be (feature-wise) just as you describe.

  45. With lol .teslas being purely electric. T’d be handy if Tesla could a hybrid electric for all of us Country’s of Cavemen who’ve no roadside chargers yet. But ho cares if Tesla picks us up, or we catchup.. the change’ll happen 1 day👍

  46. Bullshit about a small car being less safe… The Smart car is extremely small and it was one of the safer cars among the small cars segment at the time when it was released back in the days.

  47. You know I was having similar contemplation's since Elon made that statement in China. In my imagination, I came up with a 3 wheel version similar to Archimoto's FUV (see: Except this version would have room for 2 people wide in the front, and 1 in the back. It would be extremely light and maneuverable, and could fit almost 2 cars in a normal parking spot. A 100 mile range would be about triple what would be needed in the big city environment, but would be enough to make a trip to the country, should one desire.

    As always, Steven, keep up the good work. I love your videos! Excellent research on facts to back up your ideas.

  48. They are nowhere near solving the self driving problem. Having done work in machine learning I can tell you they are a decade away for FSD. Sample sizes need to be large enough in the edge cases and identification needs to be virtually perfect. They are not, this is coming from a Tesla owner and supporter.

  49. As cool as the Cybertruck is, and I'm supportive of the creativity, I really just want a regular-looking compact Tesla. I want a much better version of my Leaf, basically.

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  51. I do fancy a smaller Tesla. However in Europe there are already 30 000eur small hatcbacks. Peugeot e208 and Renault Zoe.
    I do think Tesla can make those cars in a cheaper way to have similar performance. But there already are some real oportunities for buyers in this class.
    Also M3 is outselling all those cars at the moment.
    Bye-bye dinojuice.

  52. Looks like the stock is skyrocketing once the market opens today… it’s 5:12AM in LA,…,and I think it’s about to PoP oFF ToDay 🥳🤩🤓

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