Tesla profit soars. And also craters

And we have the winner.

Has everyone forgotten that Honda developed a bipedal robot over 2 decades ago? ASIMO, in case you never heard of it.

Interestingly, Honda stopped updating ASIMO in 2018. Their stated reason is:

On 8 July 2018, Honda posted the last update of Asimo on their official page stating that it would be ceasing all development and production of Asimo robots in order to focus on more practical applications using the technology developed through Asimo’s lifespan.

(Bolding mine)

ASIMO - Wikipedia.


Well, that certainly quieted the cheerleaders, eh?

I used to own a Honda vehicle and a Honda lawn mower. Great products. Replaced both with electrics and would never go back. So I have fond memories of Honda products but it seems unlikely I will ever buy one again. Honda is sadly about the past.

A better guide to the near future appear to be the Chinese. From rare earths to EVs to batteries to solar, they seem to have gotten good at predicting the industries to focus over the next 5-10 years. This Chinese general purpose robot is being marketed at a cool price of $30,000 and is expected to start shipping in Q3 2024.

> " The Kepler humanoid robot from the Forerunner series is a versatile general-purpose robot. Standing at 178cm (5’10") and weighing 85kg (187 lbs), this advanced humanoid features a smart and nimble hand with 12 degrees of freedom. With a total of 40 degrees of freedom throughout its body, the robot excels in navigating challenging terrains, skillful obstacle avoidance, agile hand manipulation, robust lifting and carrying of heavy objects, precise hand-eye coordination, and intelligent interactive communication, claims the firm. The Kepler Humanoid Robot’s impressive abilities are powered by a high-tech system inspired by Tesla’s Optimus,"

If Kepler’s PR is anywhere near accurate, the future has almost arrived:

The Kepler Humanoid Robot, designed for multifunctional use, is adept at operating in various settings, including education and research, automated production lines, intelligent material handling, complex environment inspections, emergency rescue services, outdoor safety operations, and detection of concealed safety hazards. CES 2024 Spotlight: Kepler's Humanoid Robot Launch Gains International Recognition

Once again, it appears that one of the few western companies standing in the way of Chinese domination of an industry is Tesla.

At the moment, there appear to be three major humanoid robot models that are close to being deployed for useful work, Tesla’s Optimus, Kepler’s Forerunner, and Agility Robotic’s Digit. As with EVs, the ultimate winners will be the one’s with the best software and the most efficient mass production.

These robots represent diverse approaches to automation: Optimus aims for versatility in both domestic and industrial applications, the Forerunner emphasizes precision and power for specific industrial roles, and Digit targets practicality in logistics environments. The future of robotics lies in seamlessly integrating these machines into various aspects of our lives and industries, alleviating humans from repetitive and hazardous tasks while enhancing efficiency and productivity. Optimus, Forerunner, and Digit: The Future of Robotics

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That leaves only the cultists.


And the old fogies wedded to the past…

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Also known as the people who have been around the block a time or two (or 10) with a bit of experience in a great many things.



Honda is not known for AI dreams.

* *American Honda sales top 1.3 million units, up 33% in 2023*
  • Honda brand finishes 31.9% up on sales of 1,162,531 units; Acura closes up 42% in 2023 on sales of 145,655

  • Honda electrified models set an all-time sales record with CR-V and Accord hybrids combining for 293,640 units - representing over one-quarter of total Honda brand sales

  • CR-V sales (361,457) strengthens its position as America’s best-selling crossover of the past 25 years

OK. Thanks for your studied analysis.


When companies go obsolete, the impact on revenue often happens very abruptly:

I sincerely hope this doesn’t happen to Honda as I’ve had good experiences with their products. But if China is a harbinger of the future direction of the global auto market and if Chinese car companies are going to start aggressively competing globally, then the danger signals for Honda are pretty obvious. At this point in time, they cannot compete in China and still do not have a viable BEV that can compete with Chinese models.

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Sure but there can be another factor. Japanese cars are more expensive. The Chinese economy can not afford them right now. Chinese cars are less expensive including the EVs. Still Chinese EVs can go towards the better off folks in China. It is not an all or nothing. All of these issues are marginal.

China is hurting economically. Buying Japanese might not be popular. Or might at least by reconsidered by many.

I do agree the Japanese manufacturers are late to the party. Many companies are.

China herself is getting booted from the party.

Looks like the 90% revenue decline took about 10 years in this case. Is that abrupt? I suppose for a 100 year old company it might be.

That might not be so bad for them. The operating assumption at many (most) manufacturers is that we’re moving quickly to BEV’s, but Toyota and Honda have generally been skeptical of that idea, and stuck to their knitting and promoted their very popular hybrid cars. So…what if they’re right? Maybe China isn’t the harbinger of what’s going to happen in global markets?

As mentioned earlier, consumer demand for BEV’s in Europe isn’t skyrocketing any more. In fact, in 2023 the fastest growing segment was no longer BEV’s, but conventional hybrids - a trend that was far more pronounced in the second half of the year. Turns out that California - the leading EV market in the U.S. - is showing the same thing:

After years of rapid expansion, California’s booming EV market may be showing signs of fatigue as high vehicle prices, unreliable charging networks and other consumer headaches appear to dampen enthusiasm for zero-emission vehicles.

For the first time in more than a decade, electric vehicle sales dropped significantly in the last half of 2023.

If we actually are following an S-curve for BEV’s, then obviously Honda’s falling way behind. But if we’re not - if BEV’s have had rapid uptake among the customers that really want them, but if that’s going to max out soon (with consumers cutting fuel costs/emissions through conventional hybrids), then Honda’s well-positioned. While China subsidizes an onslaught of BEV’s, it will be hard for any western OEM to compete in China (Tesla’s going to be protected by its enormous headstart) - but while it’s not ideal, Honda can thrive in the rest of the world without China.

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I suppose that is possible, but not surprisingly I think it unlikely. The flattening of BEV uptake this year I believe is simply that quality BEVs are still priced too high for much of the mass market. Last I checked the average US sale price for a hybrid was $20K less than for BEVs, which suggests that most hybrids being bought are cheaper than the current available Teslas.

In two years that won’t be the case with the next generation Tesla coming and BYD most likely ramping up production in Mexico and Europe to enter the US and European markets in force. And batteries just keeps getting cheaper. Watch the return of the BEV s-curve when the Model 2 is at sticker price parity with the Accord ICE and BYD is selling a bunch of their BEVs at the low end.

IMO Honda has perhaps two years before its Kodak moment unless it can pull some unexpected technological rabbit out of its hat.

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Consider that a.large part, perhaps a majority of the “mass market” doesn’t want a pure EV. It’s not just cost, it’s availability of charging, including “at home.” Lots of people don’t have garages. Lots of people with garages have them full of other stuff. Apartment buildings, if they have chargers at all, have only a couple. Condo owners can face tens of thousands of dollars in costs trying to get a charger to their space in a parking lot. And unlike Norway, the government is not significantly helping with those costs.

A hybrid is a much easier to swallow “mileage” pill for all of those, and even for people living in geographically spread areas of the Midwest and near West like Montana and Colorado, etc. where range anxiety is not just a fear but a deal-breaker.

I have said before that I believe the market for EVs in the US is below 50%, perhaps well below, at least for a time - but the hybrid market could easily be north of 80% (in the passenger car segment.) Few would complain to Hertz that they got a hybrid, whereas there was significant pushback to people being shoehorned into an EV.

It appears that the former President of Toyota, recently kicked upstairs, may have been right all along: EVs are the niche, and fossil cars have a long road ahead of them. Heck, even Warren Buffett is increasing his stake in fossils. (I know, I know, he’s a fossil himself, a clueless old fuddy daddy who, uh, keeps making fistfuls of dollars.)


Always possible, but extremely unlikely. We are still very early in the EV adoption cycle. Tesla has yet to enter the mass car market. Low priced, high quality Chinese competition is only beginning to enter Europe and has yet to come to America. The charging network is only just becoming established.

Yet California is already approaching 25% EV adoption as is Germany.

The main competition with BEVs is still about two years away. These are just the preliminary rounds. Battery costs are declining faster than most expected. Sticker price parity between BEVs and equivalent ICE/hybrids will happen by 2025. After that, BEVs will be cheaper to build than ICEs and certainly cheaper to build than the far more complicated hybrids.

It will soon be strictly economics driving BEV adoption, one gets more car for the buck.

Game. Set. Match.

It’s not old in age, it is fossilized thinking. Warren Buffett has made a lot of money investing in BYD.


Will it? Tesla hasn’t even revealed their next-gen cars yet, much less actually confirmed their prices. We don’t know what that $25K car is going to look like, or even whether Tesla will actually come in at $25K or in time for sales to begin in 2025 (their record on hitting price and timing targets is spotty, and they haven’t even broken ground on the Mexico facility).

If the Model 2 (or whatever they call it) is cheaper in part because it is smaller, then it might still not represent sticker price parity. Average MSRP for a compact car in the U.S. is about $22K - a $25K compact Tesla would be more than 10% more expensive. Subsidies would completely erase that, of course - but we’ll see how long subsidies last into the ‘mature’ period of EV production and sales.

It’s certainly possible, but by no means assured, that sticker price parity comes in late 2025 - but until we actually see what the new model that Tesla’s coming out with, we won’t know. Again, a ~$25K compact sedan is still going to be several thousand dollars more expensive than the segment average.

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Yup, it is inevitable because it is simply engineering. BEVs are much simpler from an engineering perspective than ICEs and substantially simpler than hybrids. The only reason BEVs cost more is the price of batteries. Current advances in battery technology has eliminated that pricing issue, it is now mostly just a matter of mass production.

New chemistries will very likely make batteries even cheaper in the near future.


Battery prices have fallen from their peak, when they were constrained by Covid supply chain issues (and very high material costs). Yet EV’s are still significantly more expensive than ICE’s - despite the fact that EV’s are very much mass produced.

It is possible that there will be new battery technologies that significantly reduce the cost of batteries, but that’s by no means assured. Tesla’s difficulties in bringing their new cells online in a timely manner is an illustration of how there are sometimes hiccups - or major hurdles - in moving from the lab to the production line. It is by no means assured that battery costs will continue to fall at a significant rate, much less that they will do so fast enough for sticker price parity to come by 2025.


That’s because the newest batteries are made by Chinese companies (CATL, BYD) and are being put first in Chinese cars. You may have heard there is cutthroat price war going on in China and EV prices there are much lower than anywhere else.

There are all sorts of rumors that CATL has made an LFP battery at $56/kWh that it is making available to Tesla (its biggest customer). EV LFP Battery Price War at Less Than $56 per kWh Within Six Months | NextBigFuture.com

That appears to be the battery that Tesla will be producing in a new facility in Nevada using CATL equipment. Tesla To Start LFP Battery Production in Nevada Using Equipment From China's CATL - autoevolution

Nothing in the future is assured. The best one can do is assess on the available information what seems most likely to happen. Given the rapid development of battery technology, the demonstrated declines in battery prices, the continuing reductions in the dependencies on expensive rare earths, and the enormous amount of resources by multiple countries being spent on battery development, I’m betting that batteries are going to get a lot cheaper.

But I admit to being optimistic. What I suggest might happen in two years the analysts are predicting for 2028-2030.

Yet Tesla for the most part is successful at putting out the product they promise. LG announced it will be mass producing 4680 cells for Tesla starting in August. Despite delays, Panasonic announced improved versions of 2170 and 4680 cells that it will produce for Tesla over the next year. Samsung announced something similar. So Tesla is working with the world’s biggest battery makers to substantially increase battery production over the next year. It appears to all be coming together in 2025.


Toyota and Honda made a lot noise about hydrogen. GM and VW boasted about how they were going to dominate electrics. They all failed. So now they are promoting hybrids. Who can blame them, they don’t have a lot of other options.


They were all chasing the 11% GP that Tesla was showing, a couple years ago. Now that Tesla’s GP has receded to normal, GM, and Ford, aren’t so hot on dropping so much green to move to EVs.


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