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Hello and welcome to SAE Tomorrow Today Unplugged. I'm your host, Grayson Brulte. Today's topic is SAE Level 3. The controversial level, the often-forgotten level. Frankly, today, the most important level I'll ask you this question. Will SAE Level 3 introduce personally own autonomous vehicles?
I think so. Do you think so? The consumer thinks so. The consumer's spoken and they wanna own their own autonomous vehicle. While this vehicle on day one will not be fully autonomous. Otherwise known as SAE Level 4, the vehicle will have autonomous capabilities and the vehicle will be able to drive itself under certain conditions on certain roads.
Perhaps it cannot drive in a dense, urban environment, but it could drive on a rural road, it's gonna get there. We're seeing this today with Tesla's full self-driving, also known as FSD. Could FSD drive everywhere and everywhere? No, but Elon Musk last night, an interview with David Faber on CNBC said he's getting close.
He is getting close. If you look at every update that they push out for FSD, it keeps getting better and better. Is FSD perfect today? No, Elon admitted so in the interview with David Faber, but it's a step in the right direction. Despite what a loud group of minority commentators have to say about Tesla known as Tesla Q, they're loud, they're a minority, and if they short of the stock, they lost billions of dollars because at some point in the future, Tesla will create and ship a fully autonomous vehicle to the enjoyment of millions of individuals around the world. Consumers clearly want to own a personally owned autonomous vehicle.
Individuals said you ask them. Do you? What do you have? I have a self-driving car. I have a Tesla. Is it a true self-driving car today? No, but the consumer believes it and that's what they believe and that's what they want and believe when Teslas will be able with FSD drive themselves everywhere, I don't know, but what I do know, it will happen at some point in the future.
You look at this, you tell Elon Musk. Can't make renewable reusable rockets. Look at SpaceX. Look what they've done. They have renewable rockets, reusable rockets. It's working. And oh, by the way, those rockets land autonomously. That's right autonomously in the middle of the ocean. The technology's happening there.
You don't bet against the guy, that's the bottom line. You might not like his personality or his antics or his politics, but you clearly. You don't bet against them. And consumers are not betting against 'em for the most part because they're opening their walls and they're buying what they perceive to be a personally owned autonomous vehicle.
A Tesla, I said it and I'll say it again. Consumers perceive that a Tesla is a personally owned autonomous vehicle. They're paying up upwards up to $15,000. I repeat 15,000 US dollars. That's Uncle Sam bucks big bucks to upgrade their Tesla to FSD and Tesla. They're raking in the cash shareholders are loving this in Q4 2022.
Tesla's FSD plus hardware software option generated $300 million in revenue for the company. Repeat $300 million in revenue in Q4 2022. That's a three-month period. Let's do some math. Let's multiply that over four quarters, which is 12 months. AK known as one year. You have $1.2 billion in highly profitable revenue.
I repeat $1.2 billion in highly profitable revenue. Who doesn't wanna be in that business? That's a highly profitable business. That's a growing business. Software has astronomically large margins. How do we get to the point where Tesla could generate $300 million in Q4 2022 revenue from FSD? Simple.
It's very simple. Let's just look back at the introduction. ADAS was first introduced commercially in the 1970s with the introduction and the adoption of the anti-lock breaking system. Millions of individuals around the world, they depend on anti locking break system. I don't know the data, I'm sure NITSA does, but look at how many of the lives it saved.
And then in the two thousands, ADAS systems began to gain popularity. That's right. They became a lot more popular with the introduction in 2000, the Cadillac DeVille Night Vision system, and the 2000 Toyota Dynamic Laser cruise control system, followed in 2004 with the introduction of lane departure warning in the 2004 Infiniti FX.
You've got the basis right there between 2000-2004 for the modern ADAS stack. Those are consumer vehicles. You could buy the Infiniti FX, you could buy the Cadillac DeVille. You could buy a Toyota vehicle. That's right. All of those vehicles paved the way to where we are today and how we got here.
Those were the stepping stones. The technology for autonomy, especially in person vehicles, didn't just start overnight. It wasn't bibbidi bobbidi boo made some magic dust and away we went. No, these models paved the way to where we are today and how we got here. Let's add some more data to this.
In fact, at least one ADAS feature is available in 92.7% of all new vehicles in the United States as of May, 2018. Now, repeat at least one ADAS feature is available on 92.7% of all new vehicles available in the US as of May of 2018. That date is according to SBD Automotive.
That's a pretty big percentage. Okay, so we've got 7.3% of vehicles as of 2018 that do not have ADAS, let's fast forward. We're in 2023. I'm willing to go on the record and tell you there's probably less than 5% of vehicles on the road today don't have ADAS. Okay, so 95% of the vehicles on the road today that my friends, my family, your friends, your family drive. They've got ADAS. Guess what those consumers are getting used to ADAS talk to an individual that drives with a s and then they rent a car and have the advanced ADAS. They have I don't like this car. Oh, I know I can't use this car. They are used to it. They're used to it. They're demanding it.
They want it. In fact we might look back 20 years from now and every vehicle could have the capability to drive itself. That's right. Every vehicle 20 years from now, could I repeat, could have the ability to drive itself, could that be the early days of what I described in the two thousands with the a s moment, 20 years from now.
Maybe I don't know, but it could. But why bet against the technology and why a lot of individuals are betting the technology? It's silly. We're going there as a society. Consumers are demanding it. Consumers are demanding full autonomy and newsflash, consumers drive markets. Okay? Consumer drive markets.
What drives the stock market? Consumer spending and services. No spending. No stock market, no spending, no economy. It's driven by consumer spending. Dick Morris family said this for Bill President Clinton, it's the economy, stupid. And that is a great line. It is the economy, stupid. The revolution. That's right.
Warren Revolution. That's, and it's going to be driven by autonomy. Okay. When you turn on the news today, you hear, AI. Oh, AI. A day doesn't go by when you don't open your favorite news app or turn on the news without hearing the term AI. Chat GPTs the cool kid today who's getting all the attention and frankly, all the love from the media and investors.
It won't be like this forever. There's a lot of smart money out there, but there's also a lot of dumb money that's tracing, chasing fads and tracing trends. Could ChatGPT be one of those fads or one of those trends? Don't know. I really don't know. But what I do know, there's two major AI data sets lurking in the shadows that don't get enough credit.
They're about to take the world by storm. One starting to Google Deep Mind. Play with Bard. It's better than ChatGPT. Oh and what runs the Waymo vehicle that runs on AI? Google Deep Mind. Now that they combine Google Brain with Google Deep Mind, you're gonna see a lot of big AI breakthroughs with Google Deep Mind and keep your mind on that.
The other one, the Tesla Dojo, Elon said it, the interview with David Faber, maybe a year from now. They'll finally get the credit that they deserve. Tesla Dojo is the super computers, one of the most powerful computers in the world, and it's the computer that's about to transform the way that we move around the world.
The Tesla Dojo computer it's teaching the Tesla cars to drive themselves. It's the computer that is, it is the computer that is the future of Tesla. It's not about the cars at Tesla, it's not about whether to do with FSD. The big story, the big picture. It's Dojo. It's this computer that will enable Tesla to achieve full autonomy.
Tesla has the Dojo in my opinion, the not-so-secret weapon. Other major car companies are exploring personnel, autonomous vehicles as well, but do they have their own supercomputer? Do they have their own AI? Do they have the ability to get the GP be used to build their own AI? Nope.
What the major automotive manufacturer's doing, they're playing catchup on the supply chain. So Elon comes in very smartly and ushers in the electric revolution. And I'll say this on the record, if it wasn't for Elon Musk and Tesla, we wouldn't be having the conversation we are today around electric vehicles.
So meanwhile, Tesla has a vertically integrated supply chain. All the other large OEMs are trying to figure it out. Tesla's already passed that. Yes. They announced that they're gonna track Cobalt now, but they're way down on the track and trace policy. Okay. They're already there. Other companies are trying to figure out their EV strategy.
Tesla's moving along. They've got the supercomputer advantage. Tesla has a supercomputer. They have the supply chain figured out. They have the Gigafactories. There's another brand that's lurking out there. It's a purist brand Porsche. It is pursuing astronomy through a strategy with mobile I, Porsche Mobile, I, they announced the partnership and they're gonna to the purest hearts.
I'm sorry, Porsche's gonna eventually do a fully autonomous vehicle at some point. For the record, Ferrari is two, one that is, I don't know, but the, they're both gonna do it. Frankly, Porsche's no longer the company of the nine 11. Yeah. Their ticker might be P nine 11 trading on the Euro necks.
It's the company of the Cayenne and the Macon. Today. The Cayenne financially saved the company. The Macon supercharged the finances on the company, and you combine the vehicle sales for the Cayan and the Macon. They can, they account for about more than 50% of Porsche's 2022 vehicle sales.
All right, Pete, more than 50% of Porsche's vehicle sales with a Cayan and the Macan. You factor in the 911, so you got 64% of sales, three vehicles, okay, doesn't matter. 50 percent's the Cay and the Macon most popup vehicles they have today. And that, in my opinion, is where the autonomy is going to go in first, the Cayan and the Macon, they're gonna usher in Porsche's autonomous future by leveraging mobilized supervision technology platform, which will allow the vehicle to drive itself under certain conditions when the driver's paying attention to the road.
That's the key with s SAE level three, certain conditions, not all conditions, certain conditions, whether do you need driver monitoring? I'm not getting into that debate. I'm not commenting on it, but the system will drive under certain conditions. This is SAE Level 3. This is the future. Certain conditions of autonomy and personally owned.
Vehicles. This is a future that consumers want. And so we've seen this from Tesla's financial data. It's a function, it's a future. And oh, by the way, it makes a lot of money for car companies. It's a feature that will drive sales and recurring revenue. As S SAE level three features, in my opinion, are most likely to be rolled out in a subscription-based service.
It's this type of revenue that appeals to Wall Street and sends car company executives clapping and applauding. Why It's both profitable and predictable. You can project that type of revenue. Would you want to own a profitable, predictable business with recurring revenues? If you're running a business, the answer's simple.
Yes. Heck yes. Let's sympathize it. Let's bold it. Heck yes you would. This is exactly what car companies are going to do because at the end of the day, they are businesses and they have very small historical margins. But in the future, when they introduce. Personally owned s SAE level three autonomous vehicle subscriptions.
They will have larger margins, maybe 30, 40% depending on how they structure it and what the uptake is from the consumer. And if we look at Tesla financial data, they could be very profitable for these businesses. While they're a business, car companies are a business. As I said earlier it's not the businesses that are driving it this trend.
It's you. It's you as the consumer that are driving this trend towards SAE Level 3. You want it, you crave it, you're buying it, you're asking for it, and the car companies are listening because they see the potential to generate large amounts of highly. Profitable revenue. You got 'em here. Because for years, car companies were solely focused in removing the human from the loop and ushering in S SAE level four, which I think is absolutely fantastic, and I can't wait for level four to scale.
Way more scaling it. Cruise is scaling it, emotional scaling it. They're all doing well. They're focused on the robotaxi business, but car companies can compete on. The person they owned a autonomous vehicle business and Mary Barr's, CEO of GM is public cause the GM's gonna go in that route as well.
In addition to the cruise business. GM's strategy is frankly fantastic. You put this all together and then along came Tesla. This all changed. They forced the hand because Tesla gave the consumers what they didn't know, what they didn't want. The old Steve Jobs analogy, if I asked you 30 years ago, 20 years ago, do you want an iPhone?
You look at me cockeyed, or you're a crazy person. I didn't know I want an iPhone now. I live on my iPhone. So do millions of Americans live on their iPhones? That's what Tesla did. They had their Steve Jobs moment. Tesla's had its trials and tribulations that have been well documented. The company has caught the imagination of the public, and it's this imagination that's leading us to the forgotten level.
SAE Level 3. It was the forgotten level. It was the level that. EN engineers and individuals wanting to skip over. But no, you as a consumer, you spoke up and said, give me that level. At some point in the future, you as a consumer will be able to buy a personally owned autonomous vehicle that will drive you from your home, down city streets on the highway.
And when you get to your super dense urban environment, location that you're gonna end at, perhaps you'll take over the wheel for the last few miles. It'll be a relaxing journey and the one that's coming sooner than you think. And when this major milestone of S SAE level three is achieved in scale, S SAE level four will not be far behind.
Fully autonomous. Personally owned vehicles are closer than you think to get here. We have to learn from s a E level three and how the public interacts and uses these vehicles similar to the way that we've learned from the 1970s to the two thousands to today. For S AE level two, in Advanced A systems, we've learned a lot.
We've started to perfect the systems. As a society, we're always learning and moving the ball forward. As a society, we will not settle for mediocracy. As a society, we will only settle for greatness, and we are well on our way to an autonomous future. With the introduction and adoption of personally owned S SAE level three autonomous vehicles, consumers will embrace S SAE level three autonomous vehicles and they will pave the way for fully.
Personally owned autonomous vehicles. Will you buy an S SAE level three autonomous vehicle? When you have the opportunity, you might hesitate, but I bet you will. Once you hear your neighbors and friends talk about how great it is. This is the Tesla effect. This is the Tesla effect, and it will usher in the future of autonomy what Tesla did for electric vehicles.
Tesla will do for autonomous vehicles. That's right. The Tesla effect is real. The Tesla effect is real.
If you enjoyed this SAE Unplugged, follow me on Twitter @gbrulte or send a note to podcast (at) sae.org, We look forward to hearing from you.
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