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Zoe Thomas: This is your Tech News Briefing for Friday, March 3rd. I'm Zoe Thomas for the Wall Street Journal. Tesla wants to become the world's biggest car maker by volume, but it's not exactly detailing its near-term plans for how to do that. The electric vehicle company run by Elon Musk is known for breaking the mold, but how do shareholders feel about an Investor Day lacking in details about forthcoming vehicles? Our Tesla reporter Rebecca Elliott joins us to discuss what Tesla did say about its future this week and how investors and analysts are reacting to its plans. That's after these headlines.Two US senators have called on Facebook parent Meta to halt its plans to make its Metaverse app available to teens. In a letter to Meta's CEO, Mark Zuckerberg, on Thursday, Democratic Senators Ed Markey of Massachusetts and Richard Blumenthal of Connecticut criticized Meta for past failures to protect children on its platforms. They also said there was a growing body of evidence of potential threats to teenagers in the metaverse. A spokesman for Meta didn't respond to the letter, but said the company released supervision tools for its Quest headsets in June that allow parents to approve, block, and view the apps their teens use. We reported last month that Meta planned to open Horizon Worlds to teenagers as part of the company's new strategy to expand the app's user base.The Biden administration has released its first-ever national cybersecurity strategy. It lays out in broad terms how the US government should approach cybercrime, its own defenses, and the private sector's responsibility for security over the next several years. The White House said the plan is necessary as malicious cyber activity has evolved from a criminal nuisance to a national security threat. Our reporter, Caitlin Ostroff, has more.
Caitlin Ostroff: Mostly, this is focusing at critical infrastructures: the utilities, banks, hospitals, financial services. Anything that, if it all of a sudden shut down and went offline would be very critical to day-to-day life. In the past, a lot of the standards for cybersecurity protection were voluntary. There weren't really hard guidelines of the minimum standards that a company had to ensure to make sure that users of its software were safe from malicious activity. And so what this lays out is a shift from that. It calls for laws on software companies that sell tech that they can't lack cybersecurity protections.
Zoe Thomas: And finally, we exclusively report Apple has delayed the approval of an update to the email app BlueMail that would include AI language tool ChatGPT. Apple voiced concerns that the update could generate inappropriate content for children, but the app's developer disagrees. Apple's app review team said BlueMail needs to either raise the age restriction for the app to 17 and older or include content filtering to assure that the content produced is appropriate for all ages. BlueMail's developer, Blix, claims that these restrictions are unfair, considering that they do have content filtering and that there are many other apps that use ChatGPT functions that are not required to adopt an age limit. Apple reporter Aaron Tilley spoke with a former director of the app review team at Apple who shared that Blix's claims may have some validity.
Aaron Tilley: What he said oftentimes is that policy is applied very inconsistently. There's a couple hundred person team, and there's a lot of app updates that they're supposed to review each one and to apply a policy perfectly to each one is quite a tall order for that size of a team and that kind of larger an ecosystem.
Zoe Thomas: All right. A master plan with a massive price tag. This week, we learned about Tesla's plans for the future. We'll discuss what they are after the break.At Investor Day, Tesla executives kept bringing up one particular goal.
Speaker 4: 20 million electric vehicles a year.
Speaker 5: Let's talk about how we get to 20 million.
Speaker 6: 20 million vehicles.
Zoe Thomas: The electric car maker has a long-term ambition to sell 20 million vehicles a year. To do that, it has plans that include building new manufacturing facilities, getting involved in the production of battery cells, and, of course, selling more cars worldwide. But Elon Musk and his electric vehicle company are facing growing competition from other automakers. And speaking to investors this week at its Austin-area based factory, the company offered few near-term details on how it plans to achieve this lofty long-term ambition. Joining us from Texas to discuss what Tesla did say about its future and how investors are reacting is our Tesla reporter, Rebecca Elliott. Hi, Rebecca. Thanks for joining us.
Rebecca Elliott: Hi, Zoe. Thanks for having me.
Zoe Thomas: Tesla has this long-term goal of becoming the world's biggest car maker by volume. Rebecca, how does it plan on doing that?
Rebecca Elliott: You're right. So Tesla, for a while now, has been aiming to sell 20 million vehicles a year by 2030. And for context, the company delivered around 1.3 million vehicles to customers last year. And if it were to reach this target, that really would be twice the volume that today's biggest car company does each year, so a really ambitious target. And Tesla this week spelled out for investors some of the ways it intends to cut costs, improve productivity, things like that on its path to achieving that and other goals.
Zoe Thomas: I can imagine a goal like that is going to cost the company a lot. Did they say how much it might cost and how they're going to pay for it?
Rebecca Elliott: Yes, actually. The Chief Financial Officer, Zach Kirkhorn, laid out his expectations for how much reaching these longer-term goals will cost, and he estimated that it would run from around 150 to $175 billion, and that includes what he estimated to be around $28 billion that the company has already spent.
Zach Kirkhorn: Maybe this total investment looks large. I actually think it's quite small, relative to our ambitions. And if you look at our 2022 operating cash flows and you just say, well, let's assume some modest growth to that, maybe not all that much, but the ability to pay for this level of investment from the forecast that we have is very achievable for us.
Zoe Thomas: Tesla has had problems in the past meeting their delivery goals. So is this a reasonable expectation for them, or did they talk about getting over hurdles they might have faced in the past?
Rebecca Elliott: Elon Musk, the company's CEO, spoke to the challenges, certainly, of scaling up this much this quickly. Certainly, it is an extremely ambitious target. Executives were clear in saying they think it's achievable, but it does require the company to maintain a very fast pace of growth over the next several years.
Zoe Thomas: Price point seems to be an issue here. Teslas are not cheap cars, and the impact of price on demand was something Elon Musk acknowledged at the event. Let's take a listen.
Elon Musk: And we found that even small changes in the price have a big effect on demand. Very big. So that was a good thing to learn.
Zoe Thomas: Musk says Tesla has learned that. Did he talk about any plans to bring down costs or introduce a lower-priced vehicle?
Rebecca Elliott: Tesla did not go into detail there. They hinted at its next-generation vehicle at various points during the presentation, but I think that was a big disappointment for Wall Street. Coming out of the event, shares traded down on Thursday morning after. And Musk, at the event, said, essentially, when asked about the next-generation vehicle, now's not the time. Tesla would have a separate product event about that.
Zoe Thomas: Because Tesla only has, what, four vehicle models at the moment?
Rebecca Elliott: It has four passenger vehicles. It also has a semi-trailer truck that it started delivering last year, and the long-awaited cyber truck pickup is expected to hit the market later this year. But all of those models are priced above $40,000 in the US. And so investors have been looking for the company to enter a lower price point, which would expand the number of people who could potentially buy a Tesla, right? Not everybody can afford a new vehicle that costs more than 40,000.
Zoe Thomas: Right. It can be a tall order for a lot of people. One of the other frontiers that they're entering is in the production of materials for battery sales for the batteries that power electric cars. Can you tell us a bit about their plans to get into that?
Rebecca Elliott: Tesla is obviously not the only company really investing in making electric vehicles right now. There is a lot of competition in the US, in China, in Europe, and that has created a whole lot of demand, particularly for the materials that go into the battery cells that power electric vehicles. Tesla, for a long time, has vertically integrated, meaning done more in-house, than many auto manufacturers, and the battery supply chain is no exception. The company has been working to make its own battery cells and also, this week, spoke to investments that it's making further up the supply chain. It broke ground on a lithium refinery in Texas and also is working to build a battery materials facility near its factory here.
Zoe Thomas: Do the analysts that you spoke to think that some of these goals are feasible or that there's any reason to doubt that Tesla can do this?
Rebecca Elliott: Look, selling 20 million vehicles a year is extremely ambitious. There is no precedent for that, and so there is a healthy amount of skepticism about the company's ability to achieve that goal. That being said, I think it's important to keep in mind that Tesla over the years has achieved a lot of things that many people thought were impossible.
Zoe Thomas: All right. That's our Tesla reporter, Rebecca Elliott. Rebecca, thanks for joining us.
Rebecca Elliott: Thanks for having me.
Zoe Thomas: And that's it for Tech News Briefing this week. TNB's producer is Julie Chang. We had production assistance from Zoe Kuhlkin. Our supervising producer is Melony Roy. Our executive producer is Chris Zinsli. And I'm your host, Zoe Thomas. Thanks for listening, and have a great weekend.
