Hey everybody. Welcome back to the Elon Musk
Podcast. This is a show where we discuss
the critical crossroads that shape SpaceX, Tesla X, The
Boring Company, and Neurolink. I'm your host, Will Walden.
Good afternoon, everyone, and welcome to Tesla's third quarter
2024 Q&A webcast. My name is Travis Axelrod, Head
of Investor Relations, and I'm joined today by Elon Musk, Devat
Teneja and a number of other executives.
Our Q3 results were announced at about 3:00 PM Central Time in
the update deck we published at the same link as its webcast.
During this call, we will discuss our business outlook and
make forward-looking statements. These comments are based on our
predictions and expectations as of today.
Actual events or results could differ materially due to a
number of risks and uncertainties, including those
mentioned in our most recent filings with the SEC.
During the question and answer portion of today's call.
Please limit yourself to one question and one follow up.
Please use the Raise Hand button to join the question queue.
Before we jump into Q&A, Elon has some opening.
Remarks, Elon, thank you. So to recap some listening,
something that would have been history of saying year over year
declines in order volumes in Q3. Tesla at the same time has
achieved record deliveries. In fact, I think if you look at
EV companies worldwide, to the best of my knowledge no EV
companies even profitable and I'm not to the best of my
knowledge there was no EV division of any company of any
existing order company that is profitable.
So it is notable that Tesla is profitable despite a very
challenging automotive environment and and this quarter
actually is a record Q3 for us. So we produced our 7 million
vehicle actually just yesterday. So congratulations to the teams
that made it happen in Tesla. That's the staggeringly advanced
amount of work to make 7 million cars.
So the C and we also have energy storage business is growing like
wildfire with strong demand for both Mega Pack and Powerwall.
And as people know on October 10th, we laid out a vision for
an autonomous analytical future that I think is very compelling
us. The Tesla team did a phenomenal
job there with actually giving people an opportunity to
experience the future where you have humanoid robots walking
among the crowd, not, you know, with the canned video
presentation or anything, but officially walking among the
crowd serving drinks and whatnot.
And and we had 50 autonomous vehicles.
There were NO20 cyber caps, but there were an additional 30
model wise operating fully autonomously the entire night,
carrying thousands, thousands of people's thousands of people
drink with with no incidents the entire night.
So, and for those who went there that it's worth emphasizing that
these, the cyber cap had no steering wheel or brake or
accelerated pedals, meaning there was no, there's no past,
there was no way for anyone to intervene manually even if they
wanted to. And the whole night worked very
smoothly. So regarding the vehicle
business, we are still on track to deliver more affordable
models starting in the first half of 2025.
You know, this is I think probably purely wanting to go,
what should they assume for vehicle, vehicle sales growth
next year? And at the risk of to take a bit
of risk here, I do want to give some, some rough estimate, which
is I think it's 20 to 30% vehicle growth next year.
You know, notwithstanding negative external events like if
there's some Porsche Majeure events, some big wall breaks out
or interest rates go sky high or something like that, then you
know, we can't overcome massive force mature events.
But I think with our lower cost vehicles, with the Advent
autonomy, something like a 20 to 30% growth next year is is my
best guess. And and then, and then cybercap
reaching volume production in 26.
I do feel confident of cybercap reaching volume production 26.
So just starting production, reaching volume production at 26
and that you know that that should be substantial.
Both we're aiming for at least 2 million units a year of Cyber
Cab. That'll be in more than one
factory, but I think it's at least 2 million units a year,
maybe 4 million ultimately. So yeah, this is just my best
guesses, but if you ask for my best guesses that those are my
best guesses. The the 46, the the cell 4680
lines, the team is actually doing great work there.
The 4680 is rapidly approaching the point where it is the most
competitive cell. So when you consider the the
fully get the fully landed, the cost of a of a battery pack
fully landed in the US net of incentives and duties, the 4680
is tracking to be the most competitive, maybe lower costs
between what are fully considered than any other
alternative, which is not quite there yet, But we're we're close
to being there, which I think is extremely exciting and we've got
several a lot of ideas to go well beyond that.
So if I think there's if we execute well the 4680 we'll have
the the Tesla internally produced cell will be the most
cost competitive cell in in North America, a testament to a
tremendous amount of hard work there from by the team.
So that's a rule we'll continue to buy a lot of cells from our
competitors. So our intent is not to make to
provided to make cells just internally.
So I don't want to sort of any log bells here.
We're also increasing substantially our vehicle output
and our stationary storage output.
So we need a lot of cells and most of them will still come
from suppliers. But but I think it is, it is
some good news that the Tesla internal cell is likely it's
track needs to be the most competitive in the US.
So with respect to autonomy as people are experiencing in the
cars really from week to week, there are significant
improvements in the miles between interventions.
So with the new version 12.5, the release of wholesale driving
and Cybertruck, the combining the code into a single stack so
that the city driving and the engine highway driving are one
stack, which is a big improvement for the highway
driving. So it's just all neural Nets and
the release of actually Smart Summon.
We try to have a sense of humor here at death and we're also so
that's 12.5 version 13 of FSD what is going out soon.
Shark will elaborate more on that later in the call.
We expect to see some roughly a 5 or 6 fold improvement in miles
between interventions compared to 12.5.
And actually looking at the the years a hole the improvement in
miles between interventions, we think we'll bring at least three
orders of magnitude. So that's that's a very dramatic
improvement in the course of the year and we expect that plan to
continue next year. So the current, the current
internal expectation, upside internal expectation or the
Tesla FSD having longer miles between and human is the second
quarter of next year, which means it may end up being the
third quarter, but it's next it seems extremely likely to be
next year. Sure.
Do you want to? Yeah, I'm mentioning miles
between critical interventions like you mentioned we already
made 100 X improvement with 12.5 from starting of this year and
then with V13 release we expect to be 1000 X from the beginning
from January of this year on my production release software.
And this came in because of technology improvements going to
end to end having higher frame rate partly also helped by
hardware force more capabilities so on.
And we hope that, you know, we continue to scale the neural
network, the data, the training compute etcetera.
By Q2 next year, we should cross over the average human minus per
critical intervention public collision.
In that case I mean that. Is just unbondished our internal
estimate, yes, yeah. So that's not sandbagging or
anything else. Our internal estimate is Q2 next
year to be safer than human and then to continue with rapid
improvements thereafter. So vast majority of humanity has
no idea that does those drive themselves.
So especially for something like like a Model 3 or Model Y, it
looks like a normal car. So you don't expect normal car
to be able to be intelligent enough to drive itself.
The cybercap looks different, Cyber truck looks different, but
Model Y and Model 3 are look, they're good looking cars, but
look, they look fairly normal. You don't expect a fairly normal
looking car to have the intelligence.
You have enough AI to be able to drive itself, but it does.
So we do want to expose that to more people.
And so we're doing every time we have a significant improvement
in the software, we'll roll, we'll roll out another sort of
30 day trial so to encourage people to try it again.
And we're all seeing a significant improvement in
adoption. So the the take rate for FSD is
has improved substantially, especially after the 1010 event.
Yeah. So there's no need to wait for
robot taxi or server cab for to experience full autonomy.
We expect to achieve that next year with the with our existing
vehicle line. I wanted to actually spot
someone gives a small taste of what it's going to look like.
The car able to drive itself to the user within private parking
lots. Currently it's speed limited,
but then it's going to quickly be increased and we already had
more than a billion usage items of smarts and then.
Yep. So and we actually, we have for
Tesla employees in the Bay Area, we already are offering a ride
hailing capability. So, so you can actually use with
the development app, you can request a ride and it'll take
you anywhere in the Bay Area. We do have a safety driver for
now, but that's not where we're required to do that.
We've, we've developed and I mean, David, do you want to
collaborate on that? Yeah, sure.
David. We showed some screenshots of
this in the Q1 shareholder deck. And yeah, this is real.
We've been testing it for the other part of the year and the
the building blocks that we needed in order to build this
functionality and deliberate to production we've been thinking
about working on for years. It just so happens that we've
used those building blocks to deliver great features for our
customers in the meantime, such as sharing your profile,
synchronizing it across cars so that every single car that you
jump into, whether it's, you know, another car that you own
or a car that somebody's loan to you or a rental car that you
jump into, it looks exactly like yours.
Everything's synchronized, seat near positions, you know, media
navigation, everything is the same.
Just what you would expect from one of our robo taxis.
But you know, we gave that functionality to our customers
right now because we built it intending for it to be used in
the future, releasing that functionality now all the and
then cybersecurity that we knew we were going to need to deliver
that functionality, sending a navigation to destination from
your phone to the vehicle. And so you know you're doing
that now with the with the ride hailing app, but it's something
that we've made available to customers for years, seeing the
progress on a route in the mobile app.
That's something you'll need for the ride hailing app.
But again, we released it in the meantime.
So it's not like we're just starting to think about this
stuff right now while we're building out, you know, the
early stages of our ride hailing network.
We've been thinking about this for quite a long time and we're
excited to get the. Functionality out there, yeah
and and we do expect to roll out ride hailing in California,
Texas next year to the public. But no, the California is
somewhat this quite a long regulatory approval process, but
it shouldn't, I think we should get a rule next year, but but
it's contingent upon regulatory approval.
Texas is a lot faster. So it's I'd say like we're,
we'll definitely have available in Texas and probably have it
available in California subject to regulatory approval and then
and maybe some other states actually next year as well, but
at least California and Texas. So I think that'd be very
exciting. That's really a profound change.
Tesla becomes more than a sort of vehicle and battery
manufacturing company at that point.
So we published that Q3 vehicle safety report which shows one
pack for every 700 miles of autopilot that compressed the US
average of water crash roughly every 700,000 miles.
So it's currently showing a 10X safety improvement relative to
the US average. And we continue to expand our AI
training capacity to accommodate the needs of both FSD and
Optimus. We're currently not not a
training compute constraint. That's probably the big slimming
factors that the the emphasis is actually getting so good that it
takes us a while to actually find mistakes.
And when you start getting to where it could take 10,000 miles
to find a mistake, it's it takes a while to actually figure out
which it is. Is this, is this software ball
better than a soccer ball A better than software ball B?
It actually takes a while to figure it out because neither
one of them making mistakes. What takes take a long time to
make mistakes? So that's actually the single
little bit big so many factors. How long does it take us to
figure out which which which version is better sort of high
class problem. Obviously having a giant fleet
is very helpful for breaking this out.
And then with Optimist we showed, we showed a massive
improvement in Optimist dexterity movement on October
10th and our next Gen. handed forum which has 22° of freedom
double which doubled the prior handed forum.
It's extremely human like and we'll say it's much better a
tactile sentencing. It's really I feel confident
saying that we have most advanced humanoid robot by
Longshot and we're moreover the only company that really has all
of the ingredients necessary to scale humanoid robots.
Because the things that what other companies are missing is
that they're missing the AI brain.
They're missing the ability to really scale to very high volume
production. So you sort of see some
impressive video demos, but what but they're they're like the
they like the localized AI and the voyage scale volume to very
high numbers. As I've said on a few occasions
before, I think optimists will ultimately be the most part I
think has a good chance of being the most valuable product ever
made for the energy business that's doing extremely well.
And there's the opportunity ahead is gigantic.
The Lathrop Megapack factory reached 200 Megapacks a week,
which is now a 40 GW hour a year run rate.
And we have a second factory in Shanghai that will begin with 20
GW hour a year run rate in Q1 next year, so just next quarter
and that that'll also scale up. It won't be long before we're
shipping 100 GW hours a year stationary storage in Tesla.
And that I mean that'll ultimately grow I think to
multiple terawatt hours per year.
It has to actually in order to have a sustainable energy
future. If you're not at the term what
scale, you're not really moving the needle.
So if you look at our mentally very complicated last master
plan, which I think actually has too much detail, I'll maybe last
grow up to analyze it, shorten it up, give us the TLDR on the
last master plan. But we we showed in that master
plan that it is possible to take all of us to a fully sustainable
energy situation using sustainable energy, power
generation and batteries and electric transport.
And there are no fundamental material limitations.
Like there's not some very rare material that we don't have
enough of on Earth. We actually have enough of the
raw materials to, you know, take all of human civilization, make
it fully sustainable. And even if civilization
radically increased, its electricity usage would still be
fully sustainable. You know, one way to think of
the progress of a civilization. Space.
Sounds a little esoteric, but is percentage completion of
Khadoshi scale. So Khadoshi scale one would be
you're using all the power of lava planet.
We were. We're currently less than 1% on
Khadoshi level level 1. Level 2 would be using all the
power of the sun and Level 3 all the power of the Galaxy.
So we got a long way to go Long way to go.
When you think in Carter ship terms, it becomes obvious that
by that the by far the biggest sources of energy is the sun.
Everything else is in the noise. So, so in conclusion, Tesla is
focused on building the future of energy, transport, robotics
and AI. And this is a time when others
are just focused on managing around near term trends.
We think what we're doing is the right approach and if we execute
on our objectives, I think we will Tesla.
My prediction is Tesla will become the most valuable company
in the world probably by a long by a long shot.
I want to thank the Tesla team once again for strong execution
in a tough operating environment, and we're looking
forward to building an incredibly exciting future.
Thank you. Great.
Thank you very much, Elon. And that, Bob, has some big
remarks as well. Thanks.
Our Q3 results were more positive and once again
demonstrate the scale to which businesses evolved what they
use. With the generation of record
operating cash flows of 6.3 billion, our automotive revenues
grew both quarter on quarter and year on year.
While we had unit volume growth, we did experience reduction in
ASPs primarily due to the impact of financing incentives.
As a reminder, we are providing these incentives primarily using
third party banks and financial institution and recognize the
cost of these incentives as a deferral reduction to them.
We released FSD for Cybertruck and other features like actually
smart someone like Peter talked about in North America which
contributed 326 million of revenues in the quarter.
We continue to see elevated levels of regulatory credit
sales with over 2 billion of revenues so far this year.
Expand on this at an industry level, China continues to
outperform US and Europe by a factor of 3 and if there is
something to be learnt from that, this gives a signal of
what is to come in other regions as customers acceptance of EV
growth and we feel that is the right strategy to build
affordable and more compelling leads.
Our focus remains on growing unit volume while avoiding a
build up of inventory. To support this strategy, we are
continuing to offer extremely compelling vehicle financing
options in every lock. When you compare any vehicle in
a lineup with other OEMs, believe our vehicles provide
much better value, particularly when you consider the safety
features, performance and unbalanced software.
Functionalities like David also talked about include also what
Ashok had talked about about autonomy, music options,
parental controls and much more. While every vehicle in our
lineup comes up with these capabilities, there is an
awareness gap not just with buyers but at times even with
existing owners. We plan on making these more
visible in our interactions with both existing and future
customers. Automotive margins improved
quarter over quarter as a result of A50 features release
discussed before. Increase in our overall
production and delivery volume, continued benefit from the
marketing pricing and more localized deliveries in region,
which resulted in lower freight and duties.
Sustaining these margins in Q4, however, will be challenging
given the current economic environment.
Note that we are focused on the cost per vehicle and there are
numerous work streams within the company to squeeze that cost
without compromising on customer experience.
Yeah. Something that doesn't helpful,
hopefully helpful macro trend is if there's a decline in interest
rates, this has a massive effect on the on automotive demand.
The vast majority of people is the demand is driven by the
monthly payment, can they put monthly payment.
So like most likely we'll see continued decline interest rates
which helps with affordability vehicles.
Yeah. I mean, that is one trend which
we observed in the industry that you know, because of
affordability being impacted because of interest rates,
people are holding onto the cars longer, especially in the US and
that is actually having an impact on all of the industry
team. As we discussed earlier, as we
discussed impact orders, energy deployments fluctuate quarter
over quarter due to customer readiness, location of orders
being fulfilled and not necessarily an indicator of
demand or production within the quarter.
While we did see a decline in Q3, we expect to grow deployment
sequentially in Q4 to end the year, but more than doubled of
last year. Energy margins in Q3 for a
record at more than 30%. This is a function of mix of
projects being deployed in the quarter.
Note that there will be fluctuation in margins as we
manage through deployments and our inventory.
Our pipeline and backlog continue to grow quarter over
quarter as we fill our 2025 production slots and we are
doing our level best to keep up with the demand.
Just coming back on automotive margins, I talked about, sorry,
I talked about what is happening.
One other thing which I want to also share is that we're that
you know, we will continue to keep whatever we can to squeeze,
like I said before about squeezing out the cost, but this
is something which we also are very capable of.
I mean just in Q3 we reached our lowest cost per vehicle and that
is a trend which we want to keep focus off.
Then going on to service and other, we continue to show
improvements in Q3. This was a result of better
performance both in our service business which includes
collision parts sales and merchandise and continued growth
in supercharging. These field based revenues will
continue to grow as the overall field size increases.
Our operating expenses declined quarter over quarter in a year
on year basis. This is partially due to the
restructuring we undertook in Q2.
Cost saving from these initiatives were partially
offset by increase in costs related to our AI efforts.
We've started using the GPU cluster based out of a factory
in Austin ahead of schedule and on track to get 50K GPUs
deployed in Texas by the end of this month.
One thing which I'd like to elaborate is that we're being
very judicious on our AI compute spend too and saying how best we
can utilize the existing infrastructure before making
investments. On the CapEx front, we had over
3 1/2 billion in the quarter. This was a sequential increase
largely because of investments in AI Confused, we not expect
the CapEx for the year to be in excess of 11 billion.
We shared our vision for the future at the WE Robot event at
the beginning of the month. The Tesla team is hyper focused
on delivering on that version. The all efforts are underway to
make it a reality. While we've achieved significant
progress this year, it will take time to get this as we find in
new and incredibly complex technologies and navigate a
fragmented regulatory landscape. Future is incredibly bright and
I want to thank the Tesla team once again for all the help.
Great. Thank you very much for all.
Now we'll go to investor questions.
The first one is, is Tesla still on track to deliver the more
affordable model next year as mentioned by Elon earlier?
And how does it align with your AI products right now?
Sure. I mean as Elon and Bible both
said, you are in plan to meet that in the first half of next
year. Our mission has always been to
lower the cost of of the of our vehicles to increase the
adoption of sustainable energy and transport.
Part of that is is lowering the cost for current vehicles, which
is where all of the personally owned vehicles that we sell
today come in. But the next stage in that
really is it fits into AI road map is when we bring in robo
taxis, which lowers the initial cost of of getting into an EV.
And those that's really where we see the marriage of of EV road
map in the AI road map. Yeah.
It'll be like with with with incentive sub sub 30K which is
kind of a key threshold. Right.
Thank you very much. Similar question next, when can
we expect Tesla to give us the $25,000 non robot taxi regular
car model? We're not making it on.
Yeah. All our vehicles today are.
Robotaxi, I think we've made very clear that we're the future
is autonomous. I mean, it's going to be, you
know, actually said this many years ago, but that my strong
belief, and I believe that is panning out to be true.
So it'll be very obvious in retrospect, is that the future
is autonomous electric vehicles and non autonomous gasoline
vehicles in the future will be like riding a horse and using a
flip phone. It's not that there are no
horses. Yeah, there are some horses, but
they're unusual, they're niche and you know, so, so really just
everything's going to be electric, autonomous.
I think this this is blind, like should be frankly blindingly
obvious at this point. That is the future.
So a lot of automotive companies or most automotive companies
have not not internalized this, which is surprising because
we've been shouting this from the rooftops for such a long
time. And it will accrue to their
detriments in the future. But all of our vehicles in the
future we yes, sorry, older vehicles that we've really made
obviously have millions of vehicles.
The vast majority are capable of autonomy.
And you know, we're currently making on the order of 30 by
1000 autonomous vehicles a week. If you compare that to say Wayne
More's entire fleet, it's less than they have less than 1000
corners. We make 35 KA week.
Yeah, and our cars look normal. Yeah, they mostly look normal.
Cybertruck looks yes, thankfully, you know, looks
abnormal. And then the, you know, cyber
cab slash robotaxi. You know, we wanted to have
something futuristic looking. It does look futuristic.
It's worth starting with respect to the Cyber Cab, it's not, it's
actually not just a revolution in vehicle design, but
revolution in vehicle manufacturing that is also
coming with this with the Cyber Cab.
The the cycle time like the the units per per hour of of the
Cyber Cab line is like this is just really something special.
I mean, this is probably, yeah, half ordered magnitude better
than other car manufacturing lines.
Like like, like like not in the same league, is what I'm saying.
Not in the same league. So so it's it's it's you know,
and I said like several years ago that the maybe the most
hottest Tesla point coffee will be the foundry.
Yeah, just like buy a. Factory.
Yeah. You can't reverse engineer a
factory. This up to Mile, Yeah.
It's like, you know, yeah, so the and as we're so we're
rapidly evolving and manufacturing technology.
So so anyway, there's like basically I think having a
regular 25K models pointless. Yeah, it would be silly.
Like it would be completely at odds with what we believe.
In, in an autonomous world, what matters is the lowest cost per
mile of, of efficiency of that vehicle.
And that's what we've done with, yeah, with the rope taxi.
Exactly. Autonomous, it's fully
considered cost per mile is what matters.
And if you try to make a car that is, you know, essentially a
hybrid manual automatic car, it's it's not going to be as
good as a dedicated autonomous car.
So yeah, Sarah cab is just not going to have steering wheels
and paddles. Well, you design optimized for
autonomy, but now it'll it'll it'll, you know, cost on the
order of cost roughly 25K. So it is a 25K car and you can,
you won't be able to buy one on it exclusively if you want.
So just won't have steering wheel paddles.
You don't need it. Great.
Thank you very much. The next question is what is
Tesla doing to alleviate long wait times at service centers?
So we aim on solving problems at the source, so at the factory,
before they can even affect our customers.
We believe the best service is no service and.
Really is. Don't even have them.
If the car doesn't break. Yeah, exactly.
That's the best thing. Don't see anyone with the test
shirt you need to do it fix the issue upstream or you would
remotely do it through software. They can be at work or at home
and you know car can be parked and we address the fixed issue
and we've partnered the field with service to make sure we're
looking at the same issues. And additionally just in Q3 and
Q4 of this year long we we have opened and will open in total at
nearly 70 locations. And in North America, we
significantly expand the size of each location and have doubled
the size last year compared to this year.
Yeah, I think, I think it's like actually a lot of merits that
have any large service centers because you can, you can have
specialization of Labor, you can start, you can start to
approach. Yeah, it should be more factory
like, you know, where you can have dedicated lanes for
particular types of servers, OK. And it's way easier for somebody
to become expert in a few different types of repairs than
in every repair. Exactly, this has helped us with
the base of these heavy repairs like clogging up the lane.
They've dedicated lanes for different type of repairs and so
it's throughput matters and really treating it like a
factory. Yeah, this is, this is where
Tesla structure, I think Tesla has a structural advantage
relative to the rest of the auto industry because we, we make the
cars and we service the cars. Whereas I think there's a bit of
a conflict of interest with the dealer model and the sort of
traditional OEM, a dealer model where the dealerships make most
of their money on service. And so they don't, they
obviously just incented to reduce the servicing cost.
Whereas in our case, we are incented to reduce the servicing
cost because we we carry that servicing cost and we've got a
good feedback loop with our with our cars.
Yeah. With the factory, with the
service leaders together and send people from the factories
to the field and field to the factory to see it first hand.
Provide suggestions for, you know, manufacturing as well As
for engineering on design. Yeah.
So I view this as a structural, fundamental structural advantage
of Tesla versus the rest of the auto register.
Also, doing a bunch of work on the software side, not only to
automate, you know, diagnostics, so identifying, you know, what
needs to be done to a car before it comes into service, but also
automating all of the preparation work and aligning
all the resources that are necessary in order for the car
would be very efficiently worked on once it arrives.
So the parts are there like the lift is scheduled, the
technician's schedule like everything that we like.
The farm said this is what's wrong with me and tell us to
fill the service center the. Car.
Everything ready in event? Yeah.
Please fix me. And this is what's wrong, Yeah.
This is what you're going to do now, Yeah.
Instead of customer trying to translate, the car is telling us
directly and we're pulling that. Yeah, yeah.
You don't need, but most of the time you don't need to diagnose
the car exactly when it arrives. The car, Yeah, this is like,
again, a fundamental technology advantage and structural
advantage compared to the rest of the auto industry.
Yeah, it's. I think it's under appreciated
as to what all we are able to do and that's why because like you
said before, most of our cars except for cyber drug look the
same. Yeah, right.
So people don't realize that it has so much capability.
Yeah, yeah, yeah. But look, that's better than
other cars. But they're not like, obviously,
like super futuristic, yeah. Great.
Thank you very much. The next question is please
provide an update on the semi. What will the next stage of
growth look like and when will FSD be ready?
Sure. So as you, we posted in the
earnings back, we're progressing something on the build of the
semi factory in our data factory in Reno.
We've released all our major capital expenditures for that
program and we're on track to start pilot builds in the
second-half of next year with production starting in the first
half of 2026 and rampant really throughout the year to to full
production semi, you know, growth will largely depend on
our customers adoption of the product.
Well, I, I, I don't think we're going to be divided limited.
Honestly, yeah, what should I say?
Which is like, you know, trainer for foot semi because it's
really a commodity of total. Cost of ownership, Yes, exactly.
It's it's good we we have kind of ridiculous demand for the
semi. In that world where it's about
how much do I spend? Yeah, it excessinates per mile.
It's a no brainer. Yeah, fundamentally, if you've
got a semi work, the fully considered cost per mile per per
ton of transport is better than say diesel truck.
Any company that doesn't adopt an electric semi will will lose.
It's not a, it's not a subjective thing.
It's like whether do you like? It's a competitive, I mean, we.
We like, we, we want the style we want, we want to have a
beautiful semi truck. But frankly if you made an Oxy
semi truck it wouldn't matter. And, and this is proving so in
our fleets and in Pepsi's partner.
In fact, the the Pepsi actually said last week they're having
nobody want their drivers don't want to go back once.
Yeah, yeah. As soon as we give anyone the
electric semi, it's it's, it's like the that's like the choice.
It's the what they want to. Drive yeah yeah, yeah that's
like like so the like the most senior like their top drivers
will they get to drive to tell the same one and it's it's the
it's the thing they want to drive it's it's it's super fun
to drive it's also very. Easy to drive.
It's easy. It's easy to drive and it holds
ass and it's like fast. Maybe too fast.
Well, but I mean like, you know, like, like you've seen like the
videos of where like the electric semi, like, you know,
can go uphill speeding past like the diesel truck.
Yeah, in cars. So like it's responsive.
It's you know, you know, you floor it and that the truck
actually, but. And that's a benefit not only
for for the driver and for the goods, but also for safety in
terms of other drivers on the road.
You don't get stuck behind the semi.
You're not like, you know, in a slow down situation in the
homeland. I mean, how that plays into, you
know, FSD, which is the second part of the question.
All of the semis have been since the couple 100 we've deployed
already and and the ones that we'll be building next year and
throughout should you have all of the hardware in the cameras
necessary to to deploy FSD and we're currently training with
that small that we have and as soon as the fleet is trained and
the neural Nets are up, you know we'll we'll get FSD onto that
platform. Yeah, I mean, it'll be a massive
improvement in driver fatigue, you know, because and driver
safety. We've got sort of the anti Jack
knifing software. We're, you know, you don't have
to worry about your brakes overheating if you go down a
down a steep hill because because the we, we use
regenerating like that, that energy goes back in back into a
pack. Actually, when we leave ring on.
Something it's just like it's it's like radically better than
than a diesel assembly. It's what what the drivers love
it, OK. Great, guys.
Thank you very much. Our next question is when will
Tesla incorporate X and CROC in all the Tesla vehicles?
I mean, these are relatively small 5 things, you know, but
yeah, I think we'll keep expanding, you know what, what
is available in the car on the spot screen and also improving
like the browser. So like just generally you can
access anything you want in the car.
In fact, for the Tesla, you know, once you get to full
autonomy, you actually want fully a, a system that is you
can do anything like if you want to browse the Internet, if you
want to, you know, ask, ask AI questions, if you want to watch
a movie, if you want to play a video game, if you want to do
some productivity thing, you can do anything you want and an
autonomous vehicle because you don't need to drive.
And so that's why the Cybercast got a nice big screen and it's a
great sound system. So you can watch it, watch a
great movie with it's like bringing like a.
Personal movie theatre. Yeah, personal movie theatre.
Awesome. Yeah, This is why we've been
building this functionality, adding gaming to the car, adding
these and other all sorts of different media applications to
the car, because you know, the cars, that's what you're going
to. That's, yeah, the cars that we
built today, There's some. Really fun games by the way.
People haven't tried it. There's like Castle Doobad and
Paulotopia and a bunch of really fun games in the car.
Yeah, we're, we're constantly looking at, you know, what
features that annex and we're paying attention to what's most
commonly refunded by our customers.
Yeah, play Castle Bimbat, you wonder.
Great. Thank you guys very much.
The next question is, Elon mentioned unsupervised FSD in
California and Texas next year. Does that mean regulators have
agreed to it in the entire state for existing Hardware 3 and 4
vehicles? No, as as I said earlier,
California loves regulation, but they have a pathway.
Yeah, I mean, there's a pathway. Obviously Waymo operates in
California. So there's just a lot of forms
about and a lot of approvals that are required.
I mean, I'd be shocked if we don't get approved next year,
but it's, it's just not something we totally control.
But I think we will get approval next year in California and
Texas and, and and towards the end of the year it will branch
out beyond California and Texas. I mean, I think it's important
to reiterate this like you're certifying a vehicle at the
federal level in the US is done by meeting FMBSS regulations.
All our vehicles today that are produced that are autonomous
capable meet all those regulations.
The cyber cattle meet those regulations.
And so the deployment of the vehicle to the road is not a
limitation, but is a limitation is what you said.
At the state level where they control autonomous vehicle
deployment. Some states are relatively easy
as you mentioned for Texas and other ones have half place like
California that they take a little longer, other ones
haven't. Set up anything yet and so we
will work for those state by state I, I do think we should
have a federal. I agree that like autonomous
vehicles should be approved. It should be.
It should be possible to. Congress, if you're listening,
let's get a federal AB. There should, there should be a
federal approval process for autonomous vehicles.
I mean, that's that's how the FMBSS.
Is starting to work. Federal Motor Vehicle.
The FMBS is federal. Yeah.
So I mean in 2017 and 18 that we, you know, some regulators
started looking at it and it's really kind of stalled since
then. But we would appreciate and
would support helping out it. Really needs to be at like a
national approval is is important.
You know, if there's a department of government
efficiency. I'll try to help make them open.
And you took for everyone, not just Tesla, but you know, just
we, we like like some, some things in the US are state by
state regulated, like for example, insurance.
And it's like a it's incredibly painful to do it state by state
50 states. And and I think we should have,
there should be a national approval process for autonomy.
So. Great.
Thanks guys. The next question is what is the
plan for 2025I? Don't think we're just talking.
Yeah, we, I mean, basically we talked through this and there's
a lot going on. You know, ALDI mentioned that
we're working on cheaper models to come out.
I mean, they're work which the team is doing to get the
factories ready today to try and make that happen.
Yeah, by the way, the amount of work required to make a lower
cost car is insanely high. But like, it is harder to get
like 20% of the cost out of a car than it is to design the car
and build the entire factory in the 1st place.
It's like excruciating and it's and there's not a lot of movies
made about the the the heroes who got 20% of the cost out of a
car. But let me tell you, there
should be. That is incredibly heroic.
It's a little change, isn't it? It's not like.
This yeah, but it's like there should be the the heroes who got
20% the cost out of a car is like, damn, I'm going to respect
to them. It's like, you know, I think you
probably could make a compelling movie, but it's just no, no,
like if you actually saw how hard, if people actually saw how
hard it was to do that, you'd be like, whoa, that's damn hard.
Just yesterday we were talking about potty.
Yeah. I mean, honestly, like
literally, yeah. I mean, there's a lot of what I
do call it sort of like getting cost out of things.
It's kind of like, it's like Game of pennies.
So it's like Game of Thrones, but pennies.
You know, first approximation you've got if you've got 10,000
items in a car. Very rough approximation.
And each of them costs $4.00. Then you have a $40,000 car.
So if you want to make a, you know, a $35,000 car, you're
going to get $0.50 on average out of the 10,000 Landers.
Every. Every part, yeah.
And it's like, you know, and then obviously the best is you
delete some parts. In fact, we've not been able to
delete a lot of parts. I'm very, I'm not very excited
about the, the Sava cap design and, and, and the but you know,
how how, how rethinking the design of a car for the side of
a cab, designing it will offer high volume production and then
design machine that builds the machine that is that I think is
also revolutionary. And it's just that there's no
other car company that's even trying to do what we're doing.
Like I've even heard of it actually.
In fact, I'm certain there isn't one Like like like I'm, I think
this, this the new machine that builds the machine like it's so
it's, it's inherent like that. It's it's designed to be like
five times better than provisional factory like cycle
time. Cycle time and like heart
deletion, I don't think any other car company has the same
level of like integration of thought that we have when it
comes to like when you design a part from a white sheet of paper
who's going to make it where's it going to be made how's it
going to be shipped how's it going to be assembled into the
vehicle And like at any one point if something is done in a
silo, it becomes a bottleneck of either cost or time or
efficiency. But with the with the row taxi,
you know the, the development like we've done a good job on
like combining all that and then like blowing up how it's made
and saying it should be made this way and rethinking it all.
So it's the most efficient factory possible that shows in
our we will ship in our CapEx efficiency when when we deploy
it, it shows in the number of parts, it shows in the
simplicity of the vehicle, but also how it performs in, in
terms of like end user state. Yeah.
Just to close up, just on the energy front, also in 25, we
will have started manufacturing of the manufacturer.
We'll continue to increase our storage deployments with
Powerwall 3. We plan to continue expanding
our supercharging network, getting more OEMs on our network
4680 in that cell ramp as you all talked about that would keep
going. And then there's a, we're also
we'll have a little refinery starting to produce.
So there's a lot which is going on.
Great. Yeah, so many things, Yeah.
I mean, the great like crazy thing is like Tesla's winning
basically on, on almost every single thing we're doing.
If we're not winning now, we're trying to run in arenas where
there are entire large companies that that's the only thing they
do, yeah. I mean that's it's a company.
There are multiple companies within the company.
Yeah, Tilda's, like many companies they want yeah.
That's it. Thank you guys.
Just a few more. What is going on with the Tesla
Roadster? Fun things.
Well, I just thought you'd like to thank our long-suffering
deposit holders of the Tesla Roadster.
You know, the reason it hasn't come out yet is because it is
the roaster is not not just the icing on the cake, it's the
cherry on the icing on the cake. And so, you know, our larger
mission is to accelerate the progress towards a sustainable
energy future, you know, trying to do things that maximize the
probably the future is good for humanity and for Earth.
And and so that necessarily means that like the things like
that are kind of like dessert. But we'd like we'd all love to
work on the Tesla, the next Gen. Tesla rose.
We're super it is super fun and we are working on it, but it has
to come behind them. The more things, the things that
have a more serious impact on the good of the world.
So just thank you to all Lord suffering Tesla roster deposit
holders. And we are actually finally
making progress on that. And we're we're close to
finalizing the design on that. It's really going to be, I
think, spectacular. You know, a friend of mine,
Peter Thiel. Yeah.
And sometimes people like Peter Thiel and our rivals, we're
really good friends. You know, Peter, you know, was
lamenting how, you know, the future doesn't have flying cars.
Well, we'll see more to come. Yeah.
Great. Thank you very much.
The next one is quite similar to other questions we've had, so I
might combine it with the final question.
So briefly, could you just detail how Robotaxi will roll
out? Will it start with a Tesla
deployed fleet and then allow customers to add theirs on like
a subscription model and then we'll hardware 3D capable of
level 5? Because you're going hardware 3.
What we saw with 12.5 was it was easier to make progress with
starting with Hardware 4 and figuring out the solution and
then back porting into Hardware 3 instead of directly working on
hardware 3. Given that hardware 4 has more
like fundamental hardware capabilities.
I think that trend will continue into the next few quarters as
well. But we first figured the
solution rapidly with AI4 and then back ported, right, the
kernels. It just takes longer to develop
those things because it's not fundamentally supported in the
hardware and it's emulated. But yeah, it's initially working
on hardware 4, backboarding it to Hardware 3.
Yeah. So it's the answer is we're not,
we're not 100% sure, but, but as a short mention, because by some
measures Hyper 4 has really several times the capability of
hardware 3. It's easier to get things to
work with hardware 4 and then it takes a lot of effort to sort of
squeeze that functionality into hardware 3.
And there is some chance that hardware 3 is does not achieve
the safety level that allows for unsupervised FSD.
You know, there was some chance of that.
And if that turns out to be the case, we will upgrade those who
have bought hardware 3 FSD for free and we have designed the
system to be upgradable. So, and it's really, it's really
what you know, just to switch, sort of switch out the computer
type thing like the camera, the cameras are, you know, they're
capable. But anyway, we don't, we don't
actually know the answer to that.
But if it does turn out, we'll take, we'll make sure we take
care of those who have bought MSD on Hot Route 3.
Great. And in the last few minutes that
we have left, we will try to get in some analyst questions.
The first question will be coming from Pierre Ferrigan at
New St. Pierre.
Please feel free to unmute yourself.
Thanks a lot guys for taking my question.
I was wondering about like the compute you're you're ramping
up. So you gave like interesting
statistics on how much you have and you said you you don't feel
your compute constraint. And I was wondering, you know,
how you are putting to work this additional compute.
Is that a game for you of creating like larger and larger
models, like next generation of models that are larger the way
open AI go from GPT 3 to GPT 4? Or is that more like you're set
on your model and you need to throw more and more compute to
accelerate the pace of learning to to improve reliability?
And then I had a quick photo pretty quick on you roll out in
Texas and in in California next year.
The plan as you see today is it to roll out like a fleet of two
with cars that we start with like a supervisory like like
some on board supervision, someone sitting at the wheel
just in case and removing the supervisors progressively or are
you aiming for going fully fledged without even a human
super supervisor when you get? Started, OK, well, I guess we're
going to, I'll answer. Yeah.
The first part of the question, Dean, the nature of real world
AI is different from say an LLM in that you have a massive
amount of context. So that like the, the you've got
a case of Tesla 7 or 8 cameras that you know, 9 up to 9 if you
include the internal camera that, that, that so you've got
gigabytes of context and, and that that is then distilled down
into a small number of control outputs.
You know, whereas it's like you don't really, it's very rare to
have, in fact, I'm not sure any ALM out there can do gigabytes
of context. And then you've got to, you've
got to then process that in the car with a very small amount of
compute power. So, you know, it's, it's a, it's
all doable and it's happening, but it is a different problem
than than what's say a Gemini or an open AI is doing.
And now part of the way you can make up for the fact that the
first computer is, is quite small is by spending a lot of
effort on training. And just like, just like a human
like you, the more you train on something, the less, the less
mental workload it takes when you try to when you when you do
it like when the first time, like a human starts driving, it
absorbs your whole mind. But then as you train more and
more on driving get very good then you, the driving camera
becomes a background task. It doesn't it only absorbs a
small amount of your mental capacity because you have a lot
of training. So we can make up for the fact
that the inference computers, it's tiny compared to, you know,
A10 kilowatt Bank of GPUs because you've got a few 100
watts of difference compute. We can make up that with heavy
training. So yeah, that's and then there's
also vast amounts. The actual petabytes of data
coming in are tremendous. And then sorting out what
training is important with, you know, all of the vast amounts of
video training, video data coming in fleet, what is
actually most important for training that's also quite
difficult. But as I said, we're we're not
currently training compute constraints.
I'm sure you want to leverage. Yeah, like you mentioned the
training. Has more trained larger models
also to train quicker. But in the end, we've still got
to pick which models are performing better.
So the validation effort to picking the models because the
miles per intervention is pretty large.
We're driving a lot of miles and going close to, we do have
simulation and other ways to get those metrics.
Those two help. But in the end, that's the big
bottleneck. Yeah, that's why we're not
training computer constraint alone.
And there's other axis of scaling as well, which is the
data. Figuring out which data is more
useful. That that is an important task.
We're focusing on that. Yeah, so here.
So as it relates to the second part of your question, Pierre
about safety drivers and rolling it out, each state has different
requirements that you know in terms of how many miles and how
much time you need to have a safety driver and not have a
safety driver. We're going to follow all those.
We're not going to violate whatever regulations are out
there, but safety is a priority. But the goal is obviously that
when we're ready and safety is there, we'll we'll drive from
from the right chair. Yeah.
I mean, I guess like we, we think that we'll be able to have
driverless Teslas during paid rides next year, you know,
sometime next year. Arie, thank you.
And our next question comes from Adam Jonas at Morgan Stanley.
Adam, please feel free to unmute yourself.
OK. Thanks everybody.
Just had a question about the relationship between Tesla and
XAI. Many investors are still not
clear how the work at XAI is is truly beneficial to Tesla.
Some even take the view that the two companies may even be in
competition with each other in terms of talent and tech and
even your time. Elon, so what's your message to
investors on that relationship between Tesla and XAI and where
do you see it going over time? Thanks.
Well, I should say that, you know, XAI has been helpful to
Tesla AI, you know, quite a few times in terms of, you know,
things like scaling up a lot like training, You know, just
even like recently in the last week or so, improvements in all
toner training where if you you're doing a big training 1
and I know it fails, being able to continue training and and
easy to recover from on a train when the exam has been pretty
helpful. So, but there are different
problems. You know, XAI is working on
artificial general intelligence or artificial super intelligence
tells us trying to make autonomous cars and autonomous
robots. They're different problems, so
yeah, I mean. I think we've said this before
also like all, not all AI is equal, right?
I mean, there's AI is a broad spectrum, yeah.
And we have our old swim lengths.
Yeah. There are certain things which
we can collaborate on if needed, but for the most part we're
solving different issues. Yeah, it doesn't tell us focus
on real world and and that was saying it is quite a bit
different from because you have massive context in the form of
video and some amount of audio that's going to be still like
with extremely efficient inference compute.
I do think tells us the most efficient in the world in terms
of inference compute like because out of necessity, we
have to we have to be very good at inferred efficient inference.
We can't pretend 10 kilowatts of GPUs in a car.
We've got a couple 100 watts. And so, you know, it's pretty
well designed Tesla AI Cho, but it's still a couple 100 watts.
But there are different problems.
I mean, it's just, you know, like the stuff that XI is like
when it's running in ferns. I mean, it's it is running in
ferns like answering questions, answering testing questions on a
on A10 kilowatt rack. It's like, yeah, put that in the
car. It's a different problem.
Please. No, no, exactly.
So you know, XAI is because because I felt there wasn't
there wasn't a truth seeking digital super intelligence
company out there. Like that's what it came down to
that they needed to be a truth secret like like an AI company
that is very rigorous about being truthful.
And so I'm not saying XAI is perfect, but that's but that
that is at least the explosive aspiration.
Even if something is, you know, politically incorrect, it should
still be truthful. I think this is very important
for AI safety. So anyway, I think AI XAI will
it has been helpful to Tesla and will continue to be helpful to
Tesla, but there are very different problems.
Great. And and and I mean like like
what is like what, what are the car company has?
It has a world class trip design team.
Like 01 of the car company has a world class AI team like Tesla
does 0. Those are all startups.
They're creative from scratch. Great.
Thank you, Ilan. And I think that's unfortunately
all the time that we have for today.
And we appreciate all of your questions and we look forward to
you next quarter. Thank you very much and goodbye.
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