China's refining lead exposes a US manufacturing bottleneck

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 1:31:46

   One thing I was wondering is, it seems like for the policy goal of creating a lease for the US versus China, it seems like the export bans have actually been... quite impactful, where China's not producing leading edge chips, and the export bands really bite there. China's not producing leading edge turbine engines. And similarly, there's a bunch of export bands that are relevant there on some of the metallurgy. Should there be more export bands? Like, if you think about things like, I mean, there are now the drone industry and things like that, but is that something that should be considered? Well, I think it's important to appreciate that in most areas, China is very advanced in manufacturing. There's only a few areas where it is not. China is a manufacturing powerhouse next level.

2. 1:32:40

   It's very impressive. Yeah. If you take refining of ore, I'd say roughly China does twice as much ore refining on average as the rest of the world combined. And I think there's some areas like, say, refining gallium, which goes into solar cells. I think they're at like 98% of gallium refining. So China is actually very advanced in manufacturing in, I'd say, most areas. It seems like there is discomfort with this supply chain dependence, and yes, nothing's really happening on it.

3. 1:33:20

   Supply chain dependence? It depends on, say, like the gallium refining that you're saying. Yeah, yeah. There's a... All the rare earth stuff. Yeah. Rare earths, which are, as you know, not rare. We actually do rare earth ore mining in the US. Send the rock, put it on a train, and then put it on a boat to China. There's another train that goes to the rare earth refiners in China, who then refine it, put it into a magnet, put it into a motor self assembly, and then send it back to America.

4. 1:33:54

   So the thing, we're really missing a lot of ore refining in America. Isn't this worth a policy intervention? Yes. Well, I think there are some things being done on that front. But we kind of need optimists, frankly, to build ore refineries. um so you think the main advantage china has is the abundance of skilled labor and that that's like that's the thing optimus fixes but also we need the time it's got like four times our population so but we need so i mean there's this concern if you think like human rights are the future that like okay right now if it's the skilled laborers for manufacturing that's determining who's who can build more humanoids you know china has more of those it manufactures we're humanoids therefore it gets the optimi future first um well it just like keeps that going it seems that you're sort of pointing out that sort of getting to a million optimi yeah

5. 1:34:52

   requires the manufacturing that the optimi is supposed to help us get to right you can you can close that recursive loop pretty quickly with a small number of optimi yeah so you close the recursive loop um to help the robots build the robots um and then we can you know try to get to tens of millions of units a year, maybe, if you start getting to hundreds of millions of units a year, I think you're going to be the most competitive country by far.

6. 1:35:18

   We definitely can't win with just humans because China has four times our population. Right. And frankly, America's been running for so long that, you know, just like a pro sports team that's been running for a very long time, tend to get complacent and entitled. And that's why they stopped winning because it's, you know, don't work as hard anymore. So I think, frankly, just my observation is the average work ethic in China is higher than in the U.S.

7. 1:35:43

   So it's not just that there's four times the population, but the amount of work that people put in is higher. So you can try to rearrange the humans, but you're still one quarter of the, you know, assuming that productivity is health. which I think actually it might not be. I think China might have an advantage on productivity per person. We will do one quarter of the amount of things as China. So we can't win on the human front. And our birth rate has been low for a long time. So the US birth rate has been below replacement uh since uh roughly 1971 um so so we've got a lot of people retiring or you know more people dying than than than we're close to sort of more people domestically dying than than being born um so we definitely can't win on the human front but we we might have a shot at the

8. 1:36:40

   robot front are there other things that you have wanted to manufacture in the past but they've been too labor-intensive or too expensive that now you can come back to and say, oh, we can finally do the whatever, because we have Optimus. Yeah, I think we'd like to do more, build more ore refineries at Tesla. So we just completed construction and have begun lithium refining it without lithium refinery in Corpus Christi, Texas.

9. 1:37:09

   We have a nickel refinery, which is called a cathode, that's here in Austin. This is the largest cathode refinery, largest lithium refinery, largest nickel and lithium refinery outside of China. The cathode team would say, we have the largest and the only actually, a catheter refinery in America. Many supermanage. Not just the largest, but it's also the only. So it was pretty big, even though it's the only one.

10. 1:37:47

    But, I mean, there are other things that, you know, you could do a lot more refineries and help America be more competitive on refining capacity. So there's basically a lot of work for the Optimalite to do. that most Americans, very few Americans, frankly, want to do. I mean, I've actually... Is the refining work too dirty or what's the...? It's not... Actually, no. We don't have toxic emissions from the refinery or anything.

11. 1:38:22

    The chemical refinery is sort of in Travis County, like five minutes from... Why can't you do it with humans? No, you can. You run out of humans. Ah, I see. Okay, yeah. Like, no matter what you do, you have one quarter of the number of humans in America than China. So if you have them do this thing, they can't do the other thing. So then, well, how do you build this refining capacity? Well, you can do it with Optimize.

12. 1:38:46

    And not very many Americans are pining to do refining. I mean, how many of you are running to? Very few. Very few are pining to refine. You know, BYD is reaching Tesla production or sales.