Elon Musk’s Big Announcement

Written by Jason Simpkins
Posted October 21, 2016 at 6:46PM

It’s being hailed as a road trip but it’s really a race.

And Elon Musk knows it.

The enigmatic entrepreneur announced this week that by next year every new Tesla vehicle will be self-driving. He plans to demonstrate the technology by sending a fully autonomous car from Los Angeles to New York.

“It will do this without the need for a single touch, including the charger,” says Musk.

It’s the modern-day equivalent of Charles Lindbergh’s flight from New York to Paris — except this time, there’s no pilot.

It really is that groundbreaking.

Self-driving cars are going to change the way people live the same way television changed media and cell phones changed communication.

Imagine climbing into a luxury sedan or SUV and reading a book, doing a crossword puzzle, surfing the Internet, or even having a glass of wine while the car drives itself from New York to Toronto. It’d be like riding a train — except more private.

Imagine a world where car accidents are a rare occurrence, not an everyday threat.

That’s the future Musk envisions.

He rightly notes that over 1.2 million people die annually in car accidents with humans in control. That figure could be cut by 90% or more once human error is eliminated from the equation.

Though, we shouldn’t get too far ahead of ourselves — especially with the highly publicized death of a Tesla autopilot passenger in Florida earlier this year.

That’s an incident Musk is eager to move past, but it’s going to take time. Tesla’s software still needs to be validated, and the system has to be approved by regulators.

Again, Musk says that’ll all happen next year. For now, the hardware is being built into the new line of vehicles and it’ll be updated remotely throughout 2017.

Once it’s released, Tesla’s fully autonomous cars will be able to avoid pedestrians, buses pulling out, construction workers, cyclists, children running in the street… everything. It’ll also be able to find parking by itself after the driver exits, and come to you when it's summoned.

Elon Tweets

Tesla isn’t the only company working on this technology, of course.

Google started its self-driving car program in 2009. Since then, its test fleet of 58 automated vehicles has traveled more than 1.5 million miles throughout the western United States.

However, the company has yet to perfect its technology, and continues to proceed with caution, even as Tesla races ahead.

Others aren’t far behind, either.

Ford, Daimler, Audi... You name it. Just about every major car manufacturer the world over is eager to carve into this futuristic market. However, their products all have a 2020 to 2025 timeframe.

If Musk’s plan comes to fruition, Tesla will be miles ahead by then.

Its cars are clean too, running exclusively on electricity.

This is possible thanks to the recent advancement in battery technology.

Lithium batteries are cheaper and more prolific than ever before. And Tesla has further reduced the cost of its batteries through economies of scale.

You’ve no doubt heard of the Gigafactory.

Unveiled over the summer, the finished factory will occupy 1,864 acres in Nevada, taking up three times as much land as Central Park.

It will double the current level of global lithium-ion battery production, pumping out battery energy of 35 gigawatt hours per year.

"Our engineering team has worked very closely with Panasonic to make dramatic improvements to the cell manufacturing efficiency,” says Musk. “I think we’re probably approaching 3x the efficiency of the best plant in the world. I think that’s pretty good. Cells will be going through that thing like bullets from a machine gun.”

The expectation is that rail cars of raw material from mines will pull into one side of the Gigafactory and completely finished battery packs (Musk hopes one day whole cars) will pop out the other.

Once the factory is fully operational by 2020, Tesla estimates the it will be able to reduce its battery prices by about 30%. That's allowed the company to price its Model 3 at about $35,000 — half the cost of a Model S.

The Gigafactory is also being used to put together Powerwalls, which are batteries that store energy for home use. Solar panels can charge the batteries during the day so they can be used at night. Musk estimates that as demand for stationary power storage increases, about half of the Gigafactory’s business will be making Powerwalls.

The other half will satisfy demand for the rapidly growing electric vehicle market.

This is big for Tesla, but it’s also big for the lithium market as a whole.

Lithium carbonate has surged 33% in the past year from $6,000 per ton to $8,000 a ton. In some cases, it's even fetched as much as $25,000 on the spot market.

Global demand for the metal in 2016 is expected to reach about 184,500 tons, rising to more than 260,000 tons in 2020.

And it will keep increasing as electric cars come to conquer a third of the auto market over the next decade.

We’ve done extensive research on this and you can find out more about how to profit by signing up for our report. It details the least known, and best prospective lithium investments.

You can get it by clicking here.

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Jason Simpkins

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Jason Simpkins is a seven-year veteran of the financial publishing industry, where he's served as a reporter, analyst, investment strategist and prognosticator. He's written more than 1,000 articles pertaining to personal finance and macroeconomics. Simpkins also served as the chief investment analyst for a trading service that focused exclusively on high-flying energy stocks. For more on Jason, check out his editor's page. 

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