Investor's Corner
Tesla’s ‘Alien Dreadnought’ factory takes a step forward with structural cable patent
When Elon Musk envisioned the Model 3 production line, he saw a factory that was so automated; it looked like it was literally out of this world. In later statements, Musk shared Tesla’s internal name for the automated factory – Alien Dreadnought – a reference to the fascinating, intricate extraterrestrial motherships that are a trope of classic sci-fi franchises. Musk also noted that the Alien Dreadnought should be operational sometime in 2018.
The Model 3 production ramp would eventually teach Elon Musk that his timeline for the Alien Dreadnought was far too optimistic. Since starting the production of the electric car, Tesla has been met with bottleneck after bottleneck in both the Fremont factory and Gigafactory 1. While Tesla was eventually able to find a system that balances robot and human work to effectively ramp the Model 3, Musk would later admit that Tesla overreached when it came to the automation of its production lines. In a post on Twitter, Musk candidly noted that human workers are still underrated.
Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.
— Elon Musk (@elonmusk) April 13, 2018
While Elon Musk’s Alien Dreadnought factory might be coming later than expected, the company appears to be paving the way for even more automation in its factories. A recently published patent on Thursday, for one, outlines a structural cable design that is fully optimized for automated manufacturing. In the discussions of the patent, Tesla described the rationale of a structural cable that is rigid by design.
“The structural cable according to the present disclosure is a cable with structural integrity that may be manipulated into place by a robotic arm as part of an automated process while providing reliable data connections to its desired location. As part of the form manipulation, the structural cable preferentially allows manipulation into different geometries allowing for placement that avoids obstacles, and that can be performed in a reproducible manner so as to be implemented as part of an automated process.”
Tesla notes in its patent that traditional cables, due to their non-rigid nature, are best installed by human hands, which connect the appropriate connectors to their respective ports during the production process. The electric car maker notes that this is due to the cables lacking “sufficient structural integrity and rigidity to be easily picked up, moved, and placed by a robotic arm,” as well as their inability to be formed into pre-determined shapes.
“Because traditional cables are not rigid, they may not be easily formed into different shapes and routed to a pre-determined location amidst tight spatial constraints. Routing traditional, flexible cables during manufacturing, for example to connect different components during automobile manufacturing, typically cannot be automated and therefore require humans to place by hand. Such manual placement is time-consuming, tedious, and costly. Hence, there is a need for a structural cable that overcomes the aforementioned drawbacks.”
Tesla’s designs for its structural cable design as outlined in the newly-published patent. [Source: Patentscope]
Tesla intends to work around these compromises by using a rigid structural cable, which could be easily picked up and installed automatically by a robotic arm. By using such components, Tesla would be able to optimize the level of automation in its facilities even further.
“An advantage of this flat cable configuration with known geometries and wires/conductors spaced at known dimensions (and preferably collinear) is that the process of connecting the flat wires/conductors to connectors may be automated through, for example crimping, traditional soldering, or laser soldering. In a specific implementation, encased wires are held on a flat conveyer or with a robotic arm, and the wires are stripped using a stripping attachment so as to preserve the wire spacing. The robotic arm (or another robotic arm) may then pick up a connector and crimp the connector to the wires by pressing down (or utilizing an appropriate tool).”
It should be noted that while Elon Musk’s Alien Dreadnought factory is delayed, the company’s production lines are already heavily automated. Back in the Q1 2018 earnings call, for one, Elon Musk noted that Tesla was able to reduce the time it takes to produce Model 3 battery packs by 94%, from seven hours per unit to under 17 minutes per pack. Tesla has since improved its production lines in the Fremont factory and Gigafactory 1, and this Q4 2018, the company intends to optimize its operations even further. Gigafactory 1, for example, is expected to receive new battery cell assembly lines from Panasonic this quarter. New Grohmann machines, which are expected to improve production, are also expected to go online in the Nevada facility this Q4 as well.
The full text of Tesla’s patent for its structural cables could be accessed here.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla analyst Andrew Percoco of Morgan Stanley teased the company’s dominance in its self-driving initiative, stating that its lead over competitors is “not even close.”
Percoco recently overtook coverage of Tesla stock from Adam Jonas, who had covered the company at Morgan Stanley for years. Percoco is handling Tesla now that Jonas is covering embodied AI stocks and no longer automotive.
His first move after grabbing coverage was to adjust the price target from $410 to $425, as well as the rating from ‘Overweight’ to ‘Equal Weight.’
Percoco’s new note regarding Tesla highlights the company’s extensive lead in self-driving and autonomy projects, something that it has plenty of competition in, but has established its prowess over the past few years.
He writes:
“It’s not even close. Tesla continues to lead in autonomous driving, even as Nvidia rolls out new technology aimed at helping other automakers build driverless systems.”
Percoco’s main point regarding Tesla’s advantage is the company’s ability to collect large amounts of training data through its massive fleet, as millions of cars are driving throughout the world and gathering millions of miles of vehicle behavior on the road.
This is the main point that Percoco makes regarding Tesla’s lead in the entire autonomy sector: data is King, and Tesla has the most of it.
One big story that has hit the news over the past week is that of NVIDIA and its own self-driving suite, called Alpamayo. NVIDIA launched this open-source AI program last week, but it differs from Tesla’s in a significant fashion, especially from a hardware perspective, as it plans to use a combination of LiDAR, Radar, and Vision (Cameras) to operate.
Percoco said that NVIDIA’s announcement does not impact Morgan Stanley’s long-term opinions on Tesla and its strength or prowess in self-driving.
NVIDIA CEO Jensen Huang commends Tesla’s Elon Musk for early belief
And, for what it’s worth, NVIDIA CEO Jensen Huang even said some remarkable things about Tesla following the launch of Alpamayo:
“I think the Tesla stack is the most advanced autonomous vehicle stack in the world. I’m fairly certain they were already using end-to-end AI. Whether their AI did reasoning or not is somewhat secondary to that first part.”
Percoco reiterated both the $425 price target and the ‘Equal Weight’ rating on Tesla shares.
Tesla stock (NASDAQ: TSLA) just got a price target boost from its biggest bear, Gordon Johnson of GLJ Research, who raised his expected trading level to one that is 95 percent lower than its current trading level.
Johnson pushed his Tesla price target from $19.05 to $25.28 on Wednesday, while maintaining the ‘Sell’ rating that has been present on the stock for a long time. GLJ has largely been recognized as the biggest skeptic of Elon Musk’s company, being particularly critical of the automotive side of things.
Tesla has routinely been called out by Johnson for negative delivery growth, what he calls “weakening demand,” and price cuts that have occurred in past years, all pointing to them as desperate measures to sell its cars.
Johnson has also said that Tesla is extremely overvalued and is too reliant on regulatory credits for profitability. Other analysts on the bullish side recognize Tesla as a company that is bigger than just its automotive side.
Many believe it is a leader in autonomous driving, like Dan Ives of Wedbush, who believes Tesla will have a widely successful 2026, especially if it can come through on its targets and schedules for Robotaxi and Cybercab.
Justifying the price target this week, Johnson said that the revised valuation is based on “reality rather than narrative.” Tesla has been noted by other analysts and financial experts as a stock that trades on narrative, something Johnson obviously disagrees with.
Dan Nathan, a notorious skeptic of the stock, turned bullish late last year, recognizing the company’s shares trade on “technicals and sentiment.” He said, “From a trading perspective, it looks very interesting.”
Tesla bear turns bullish for two reasons as stock continues boost
Johnson has remained very consistent with this sentiment regarding Tesla and his beliefs regarding its true valuation, and has never shied away from putting his true thoughts out there.
Tesla shares closed at $431.40 today, about 95 percent above where Johnson’s new price target lies.
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