1 00:00:00,120 --> 00:00:02,480 Good afternoon, everyone, and welcome to Tesla second quarter 2 00:00:02,480 --> 00:00:05,920 2023 Q&A webcast. My name is Martin Vieca, BP of 3 00:00:05,920 --> 00:00:08,320 Investor Relations, and I'm joined today by Elon Musk, 4 00:00:08,720 --> 00:00:11,080 Zachary Kirkhorn and a number of other executives. 5 00:00:11,880 --> 00:00:15,000 Our Q2 results were announced at about 3:00 PM Central Time in 6 00:00:15,000 --> 00:00:17,720 the update deck we published at the same link as this webcast. 7 00:00:18,520 --> 00:00:20,680 During this call, we will discuss our business outlook and 8 00:00:20,680 --> 00:00:23,880 make forwardlooking statements. These comments are based on our 9 00:00:23,880 --> 00:00:25,880 predictions and expectations as of today. 10 00:00:26,530 --> 00:00:28,850 Actual events or results could differ materially due to a 11 00:00:28,850 --> 00:00:31,930 number of recent uncertainties including those mentioned in our 12 00:00:31,930 --> 00:00:33,770 most recent filings with the SEC. 13 00:00:34,690 --> 00:00:37,210 During the question and answer portion of today's call, please 14 00:00:37,210 --> 00:00:39,770 limit yourself to one question and one follow up. 15 00:00:40,730 --> 00:00:43,090 Please use the raise hand button to join the question queue. 16 00:00:43,810 --> 00:00:47,010 But before we jump into the Q&A, Elon has some opening remarks. 17 00:00:47,210 --> 00:00:49,090 Elon. Thank you, Juan. 18 00:00:49,530 --> 00:00:53,020 So just the Q2 recap. In Q2, we achieved record 19 00:00:53,020 --> 00:00:55,700 vehicle production and deliveries and record revenue of 20 00:00:55,700 --> 00:00:59,740 about $25 billion in a single quarter and Model Y became the 21 00:00:59,740 --> 00:01:03,500 best selling vehicle of any kind globally in Q1 support 22 00:01:03,540 --> 00:01:06,820 surpassing the likes of likes of Corolla and Gold. 23 00:01:06,940 --> 00:01:10,460 So it was the number one vehicle of any kind including vehicles 24 00:01:11,140 --> 00:01:15,220 that are at a seller farming price, which is I think an 25 00:01:15,220 --> 00:01:18,900 incredible achievement by the Tesla team and just a huge thank 26 00:01:18,900 --> 00:01:20,900 you to our customers of for their support. 27 00:01:23,080 --> 00:01:27,240 So and this came in spite of high interest rates and a lot of 28 00:01:27,240 --> 00:01:31,680 macro uncertainty and nonetheless we managed to 29 00:01:31,680 --> 00:01:33,680 achieve operating margin of about 10%. 30 00:01:35,760 --> 00:01:40,120 We continue to target 1.8 million vehicle deliveries this 31 00:01:40,120 --> 00:01:46,000 year, although we expect that Q3 production will be a little bit 32 00:01:46,000 --> 00:01:49,400 down because we've got some of shutdowns to for. 33 00:01:50,090 --> 00:01:55,050 A lot of factory upgrades, so just just probably a slight 34 00:01:55,050 --> 00:02:00,170 decrease in production in Q3 for sort of global factory upgrades 35 00:02:03,170 --> 00:02:06,370 in the long term. Autonomy we think is going to 36 00:02:06,370 --> 00:02:12,530 just drive volume through the ceiling next level and and our 37 00:02:13,210 --> 00:02:18,010 so future Robitaxi products, dedicated ROBITAXI products. 38 00:02:19,740 --> 00:02:28,060 We think have like quasi infinite demand so and it we're 39 00:02:28,700 --> 00:02:33,100 the way we're going to manufacture the robot taxi is is 40 00:02:33,100 --> 00:02:37,060 also itself a revolution. So it's revolutionary design 41 00:02:37,140 --> 00:02:42,300 made in a revolutionary way. It'll be by by far the highest 42 00:02:43,980 --> 00:02:49,260 units per hour of of any vehicle production ever so. 43 00:02:49,770 --> 00:02:53,850 Very excited about that. With respect to Autopilot and 44 00:02:53,850 --> 00:02:57,210 Dojo, in order to build autonomy, we also need to train 45 00:02:57,290 --> 00:03:01,130 our neural net with the data from millions of vehicles. 46 00:03:01,930 --> 00:03:04,530 With the more, I mean this has been proven over and over again. 47 00:03:04,530 --> 00:03:06,930 The more training data you have, the better the results. 48 00:03:08,650 --> 00:03:13,730 And I mean there's times where we see basically the inner 49 00:03:13,730 --> 00:03:17,930 neural net, basically it's sort of at a million training 50 00:03:17,930 --> 00:03:21,520 examples. It barely works at 2,000,000. 51 00:03:21,560 --> 00:03:25,600 It's it slightly works at 3,000,000 it's like wow, OK 52 00:03:25,600 --> 00:03:27,720 we're seeing something for they get like 10 million training 53 00:03:27,720 --> 00:03:29,640 examples. It's it's like it becomes 54 00:03:29,640 --> 00:03:33,840 incredible. So you just there's just there's 55 00:03:33,840 --> 00:03:37,280 just no substitute for massive amount of data and obviously 56 00:03:37,280 --> 00:03:43,480 Tesla has more vehicles on the road that are collecting this 57 00:03:43,480 --> 00:03:47,120 data than all the companies combined by I think maybe even 58 00:03:47,120 --> 00:03:50,640 an order of magnitude. So I think we might we might 59 00:03:50,640 --> 00:03:54,400 have 90% of all or a very big number. 60 00:03:55,880 --> 00:04:02,520 So you know the success in a I endeavors is function of talent 61 00:04:06,600 --> 00:04:13,880 sort of unique data and computer resources and and we have 62 00:04:13,880 --> 00:04:16,399 outstanding capabilities or all three arenas. 63 00:04:20,709 --> 00:04:22,990 And I really just don't know how anyone anyone could do what 64 00:04:22,990 --> 00:04:25,910 we're doing even if they had our software and had our computer if 65 00:04:25,910 --> 00:04:28,070 they did not have the the the training data. 66 00:04:28,070 --> 00:04:33,950 So Speaking of which our do training computer is designed to 67 00:04:33,950 --> 00:04:36,150 significantly reduce the cost of neural net training. 68 00:04:37,750 --> 00:04:41,590 It is designed to it's it's so optimized for the kind of 69 00:04:41,590 --> 00:04:43,750 training that we need which is a video training. 70 00:04:45,150 --> 00:04:49,490 So you know would. We just see that that the 71 00:04:49,490 --> 00:04:54,010 needful neural net training again to give fear quasi and the 72 00:04:54,050 --> 00:05:01,330 things is is just enormous. So I think having having we we 73 00:05:01,370 --> 00:05:07,530 we we expect to use both NVIDIA and Dojo to be clear but there's 74 00:05:07,530 --> 00:05:14,490 there's we just see a demand for really vast main resources. 75 00:05:16,830 --> 00:05:20,870 And we we think we may reach in house the old net, the old net 76 00:05:20,870 --> 00:05:24,790 training capability of 100 exoplos by the end of next year. 77 00:05:26,070 --> 00:05:32,710 So to to date over 300,000,000 miles have been driven using FSD 78 00:05:32,710 --> 00:05:35,110 beta. That 300,000,000 mile number is 79 00:05:35,110 --> 00:05:40,510 going to seem very small very quickly, right it'll it'll soon 80 00:05:40,510 --> 00:05:45,550 be billions of miles then 10s of billions of miles and. 81 00:05:46,920 --> 00:05:50,560 FSC will go from being better for being as good as a human to 82 00:05:50,560 --> 00:05:52,640 them being vastly better than a human. 83 00:05:52,960 --> 00:05:59,440 We see a clear path to full self driving being 10 times safer 84 00:05:59,440 --> 00:06:06,400 than the average human driver. So and between autopilot delta 85 00:06:06,400 --> 00:06:13,280 computer our inferred hardware in the car which we calls. 86 00:06:14,500 --> 00:06:17,780 Sort of hardware 3-4, you know but it's really dedicated, it's 87 00:06:17,780 --> 00:06:19,900 a, it's a, it's a high efficiency in first computer 88 00:06:19,900 --> 00:06:24,300 that's in the car and our optimist robot translates fairly 89 00:06:24,300 --> 00:06:29,940 at the cutting edge of a had moment to with regard to our 90 00:06:29,940 --> 00:06:33,460 side which we continue to build our release candidates of the 91 00:06:33,460 --> 00:06:36,260 cyber truck on our final production line in Austin. 92 00:06:36,700 --> 00:06:38,940 I'm actually here in Austin at the Eager Factory. 93 00:06:40,980 --> 00:06:43,500 This is the first truck that we're aware of that will have 4 94 00:06:43,500 --> 00:06:47,940 door was over a six foot bed and 1 foot into a 20 foot garage. 95 00:06:48,460 --> 00:06:51,660 So it's it's a it's for the biggest on the outside but it's 96 00:06:51,660 --> 00:06:55,380 even bigger on the inside. So it's a I think that's a one 97 00:06:55,380 --> 00:06:58,660 of the one of the elements of good design is it should feel 98 00:06:58,660 --> 00:07:00,500 bigger on the inside than it looks on the outside. 99 00:07:00,500 --> 00:07:06,020 And and this is this is no small car but we we've we really cared 100 00:07:06,020 --> 00:07:08,580 about the exterior dimensions of the side truck down to the last 101 00:07:08,580 --> 00:07:12,170 millimeter. So they said just before you try 102 00:07:12,170 --> 00:07:15,610 to get rid of the goalie block zone, not too big, not too small 103 00:07:17,850 --> 00:07:22,690 and and then really maximize the the utility of the volume and we 104 00:07:22,690 --> 00:07:25,170 can't wait to start delivering it later this year. 105 00:07:26,810 --> 00:07:30,490 Some some other highlights, our global supercharging network now 106 00:07:30,490 --> 00:07:35,370 stands at over 50,000, roughly 50,000 connectors and over 5000 107 00:07:35,370 --> 00:07:38,770 locations as I think a lot of people are aware. 108 00:07:40,600 --> 00:07:45,600 The Tesla starting the the Tesla charging standard which we made 109 00:07:45,600 --> 00:07:48,400 open source is now called the North American charging 110 00:07:48,400 --> 00:07:51,320 standard. We're we're deeply honored that 111 00:07:51,400 --> 00:07:56,720 Ford, GM, Mercedes and many other Williams have signed up to 112 00:07:56,720 --> 00:08:02,040 use our connector and gain access to our charging network 113 00:08:05,160 --> 00:08:07,920 and we we we strongly believe in helping. 114 00:08:09,950 --> 00:08:14,510 Other other car companies to accelerate the EV revolution and 115 00:08:14,510 --> 00:08:16,950 just trying to do the right thing in general. 116 00:08:16,950 --> 00:08:27,110 So that's up goal there Then it's something I think I want to 117 00:08:27,190 --> 00:08:30,510 emphasize like very, very strongly. 118 00:08:30,670 --> 00:08:37,470 This is a very important point is that Tesla just as with the. 119 00:08:38,320 --> 00:08:39,880 The North American charging standard, although we're not 120 00:08:39,880 --> 00:08:42,480 licensed and that case is not licensing, we're just making it 121 00:08:42,480 --> 00:08:46,160 available. But but we are very open to 122 00:08:46,160 --> 00:08:49,080 licensing apples of driving software and hardware to other 123 00:08:49,080 --> 00:08:52,240 car companies. And we are already in 124 00:08:52,240 --> 00:08:56,400 discussions with early, just early discussions with a major 125 00:08:56,400 --> 00:09:03,800 OEM about using the Tesla FSD. So we're not trying to keep this 126 00:09:03,800 --> 00:09:05,800 to ourselves. We're more than happy to to 127 00:09:05,800 --> 00:09:10,310 license it to others. And lastly, our new lithium 128 00:09:10,310 --> 00:09:15,870 refinery and catheter facility are progressing well that in 129 00:09:15,870 --> 00:09:19,190 conclusion, we continue to focus on making as many cause as we 130 00:09:19,190 --> 00:09:21,870 can while maintaining healthy financials. 131 00:09:22,470 --> 00:09:25,510 Our artificial intelligence development is obviously 132 00:09:25,510 --> 00:09:30,030 entering a new era and we're incredibly excited about what's 133 00:09:30,030 --> 00:09:32,630 to come. Our other businesses such as 134 00:09:32,630 --> 00:09:36,250 Megapac supercharging service. And whatnot all started to 135 00:09:36,250 --> 00:09:40,970 become a miracle contributor to overall profitability this 136 00:09:40,970 --> 00:09:43,450 quarter. And then lastly, I'd just like 137 00:09:43,450 --> 00:09:49,370 to profusely thank all of our employees for making it a lot of 138 00:09:49,370 --> 00:09:50,970 extra effort during uncertain times. 139 00:09:51,410 --> 00:09:53,610 Thank you very much for your hard work and the impact you're 140 00:09:53,610 --> 00:09:55,970 making. Thank you very much, Elon. 141 00:09:56,090 --> 00:09:58,330 And I think Zach did some opening remarks as well. 142 00:09:59,450 --> 00:10:00,370 Yeah. Thanks, Martin. 143 00:10:01,710 --> 00:10:04,110 As Elon mentioned, Q2 was another record quarter of 144 00:10:04,110 --> 00:10:07,270 production and deliveries, as well as records and profit for 145 00:10:07,270 --> 00:10:09,470 energy and services and other businesses. 146 00:10:09,990 --> 00:10:12,470 Congratulations again to the Tesla team on the continued 147 00:10:12,470 --> 00:10:16,310 progress as we navigate through a period of economic 148 00:10:16,390 --> 00:10:19,550 uncertainty, rising interest rates, volatility and consumer 149 00:10:19,550 --> 00:10:21,430 confidence and regulatory change. 150 00:10:21,790 --> 00:10:23,630 I want to comment on our financial approach. 151 00:10:24,450 --> 00:10:27,250 First, the single most important priority is to ensure we are 152 00:10:27,250 --> 00:10:30,250 continuing to invest heavily in the core technologies that will 153 00:10:30,410 --> 00:10:32,490 drive the longterm value of the business. 154 00:10:33,290 --> 00:10:36,890 This include increasing spending on AI related technologies such 155 00:10:36,890 --> 00:10:40,690 as full self driving Optimus and Dojo as well as new products 156 00:10:40,690 --> 00:10:43,810 such as Cybertruck, our next generation platform and the semi 157 00:10:44,210 --> 00:10:46,690 as evidenced by the continued growth in our R&D spend. 158 00:10:47,370 --> 00:10:50,410 This also includes continuing our investments in capacity 159 00:10:50,410 --> 00:10:52,590 expansion. Not only in our vehicle 160 00:10:52,590 --> 00:10:55,230 factories, but also our supercharging network, service 161 00:10:55,230 --> 00:10:59,030 internal applications and battery processes as we continue 162 00:10:59,030 --> 00:11:01,030 with meaningful capital expenditures to lay this 163 00:11:01,030 --> 00:11:04,910 foundation for the future. 2nd, we continue to work towards our 164 00:11:04,910 --> 00:11:08,270 goals of maximizing volumes on both our vehicle and energy 165 00:11:08,270 --> 00:11:12,070 business, but most importantly doing so in a way that generates 166 00:11:12,070 --> 00:11:15,870 the capital to continue our pace of R&D and capital investments. 167 00:11:16,510 --> 00:11:19,950 This requires a strong focus on per unit COGS reductions in each 168 00:11:19,950 --> 00:11:22,720 of our key businesses. As well as working capital 169 00:11:22,720 --> 00:11:26,040 improvements on raw materials, working process inventory and 170 00:11:26,040 --> 00:11:29,600 customer AR, all of which progressed appropriately in Q2. 171 00:11:30,760 --> 00:11:33,960 If we look specifically at our automotive business, our gross 172 00:11:33,960 --> 00:11:37,640 margin showed a modest reduction and remain healthy despite 173 00:11:37,640 --> 00:11:40,160 action taken to further improve vehicle affordability. 174 00:11:40,200 --> 00:11:44,040 Early in the quarter, we recognize we realize per unit 175 00:11:44,040 --> 00:11:47,040 cost improvements in nearly every category including 176 00:11:47,040 --> 00:11:50,160 material costs and commodities, manufacturing costs and 177 00:11:50,160 --> 00:11:52,760 logistics. While also continuing to rapidly 178 00:11:52,760 --> 00:11:55,480 increase the build rate in our Austin and Berlin factories. 179 00:11:56,480 --> 00:11:58,880 For our energy business, we improved margins and gross 180 00:11:58,880 --> 00:12:01,920 profit driven by cost reductions in deal economics, particularly 181 00:12:01,920 --> 00:12:05,040 with Megapac. As a reminder, storage volumes 182 00:12:05,040 --> 00:12:07,560 are typically volatile sequentially based on the types 183 00:12:07,560 --> 00:12:11,000 of projects and their specific revenue recognition milestones. 184 00:12:12,080 --> 00:12:14,560 As we look forward to the rest of the year, I want to reiterate 185 00:12:14,560 --> 00:12:18,200 Elon's comments on Q3 volumes driven by plan down times for 186 00:12:18,200 --> 00:12:21,470 factory upgrades. These upgrades will also carry 187 00:12:21,470 --> 00:12:23,470 some amount of factor at all cost how. 188 00:12:23,630 --> 00:12:26,190 However, we are working to minimize as much as possible. 189 00:12:26,870 --> 00:12:28,910 It's also important to keep in mind the uncertainty in the 190 00:12:28,910 --> 00:12:32,470 macro environment, which can impact our execution positively 191 00:12:32,470 --> 00:12:35,990 or negatively in the near term. Regardless, we continue to 192 00:12:35,990 --> 00:12:39,270 remain dynamic with a focus on fundamental efficiency and a 193 00:12:39,270 --> 00:12:42,230 longterm outlook. Congratulations again to 194 00:12:42,230 --> 00:12:45,470 everybody on a great quarter. Thank you very much, Zack. 195 00:12:45,710 --> 00:12:47,430 And let's go to invest your questions. 196 00:12:47,510 --> 00:12:50,510 The the first question on licensing FSD we've already 197 00:12:50,510 --> 00:12:51,990 answered. So let's go to the second one. 198 00:12:52,670 --> 00:12:56,550 The second question is what is the status of 4680 cells and how 199 00:12:56,550 --> 00:13:00,430 far are you from the specs you laid out on battery day? 200 00:13:00,750 --> 00:13:03,070 When do you expect to achieve what you laid out on battery 201 00:13:03,070 --> 00:13:05,670 day? Yeah. 202 00:13:05,670 --> 00:13:07,750 First, I'll just start with a little bit of a production 203 00:13:07,750 --> 00:13:10,390 update. So in Texas 4680, cell 204 00:13:10,390 --> 00:13:13,830 production increased 80% Q2 over Q1. 205 00:13:14,340 --> 00:13:16,260 And the team surpassed 10 million production cells 206 00:13:16,260 --> 00:13:18,660 produced here in Texas, so Congrats to the team for that. 207 00:13:19,220 --> 00:13:22,700 Their focus on yield produced our scrap bill by 40% quarter 208 00:13:22,700 --> 00:13:27,180 over quarter and that resulted in a 25% reduction in cell COGS 209 00:13:28,860 --> 00:13:30,660 here in Texas. We're preparing to launch our 210 00:13:30,660 --> 00:13:33,540 cyber truck cell, which is 10% higher energy density than 211 00:13:33,540 --> 00:13:35,900 current production. That was accomplished through 212 00:13:35,900 --> 00:13:39,300 process and mechanical design optimization as we scale cyber 213 00:13:39,300 --> 00:13:40,340 cell production through the end of. 214 00:13:41,260 --> 00:13:44,100 The year and early next we should be in a comfortable place 215 00:13:44,140 --> 00:13:49,580 on cost per cell against our battery energy density targets. 216 00:13:49,700 --> 00:13:52,700 The cyber cell is at our expectations on a like for like 217 00:13:52,700 --> 00:13:56,420 electrochemistry basis. We're yet to integrate silicon 218 00:13:56,420 --> 00:13:59,540 or in house capital production both reviewed on battery day 219 00:13:59,780 --> 00:14:02,020 which do break significant further energy density and cost 220 00:14:02,020 --> 00:14:04,140 improvements, but that is a topic for another day. 221 00:14:05,780 --> 00:14:07,860 Lastly, it is important to remember that most of what we 222 00:14:07,860 --> 00:14:10,940 focused on a battery day with the Tesla engineered. 4680 223 00:14:10,940 --> 00:14:13,140 production system and the improvements we strove to 224 00:14:13,140 --> 00:14:16,860 achieve on equipment factory density, capital cost and 225 00:14:16,860 --> 00:14:19,540 utility cost reduction, all of which we are realizing in our 226 00:14:19,540 --> 00:14:23,660 Texas scale up to date. Thank you very much. 227 00:14:24,380 --> 00:14:28,140 The next question is, can you talk more to the upcoming Tesla 228 00:14:28,140 --> 00:14:31,580 Energy products and how you your thinking has evolved on the 229 00:14:31,580 --> 00:14:35,500 revenue model given Tesla's A I capabilities, how do you see the 230 00:14:35,500 --> 00:14:38,420 longterm mix between hardware margin and recurring softer 231 00:14:38,420 --> 00:14:41,870 margins from auto bidder? As the segment accelerates. 232 00:14:44,110 --> 00:14:46,670 We can't comment on future product road map, but I can 233 00:14:46,710 --> 00:14:51,430 provide a cool energy Q2 update. Megapac continues to show strong 234 00:14:51,430 --> 00:14:54,670 demand globally with Lathrop ramping successfully to meet our 235 00:14:54,670 --> 00:14:58,510 contracted projects in 2023. As stated last quarter, Megapac 236 00:14:58,510 --> 00:15:01,030 margins are in a reasonable place in line with our target 237 00:15:01,030 --> 00:15:05,070 market vehicle target margins. The second final assembly line 238 00:15:05,070 --> 00:15:08,190 at Lathrop is progressing on schedule, eventually doubling 239 00:15:08,230 --> 00:15:11,870 Lathrop capacity ahead of our full factory ramp in 2024. 240 00:15:11,870 --> 00:15:14,630 We have several exciting large projects and construction or 241 00:15:14,630 --> 00:15:18,150 nearing completion, including the KES project in Hawaii, the 242 00:15:18,150 --> 00:15:20,630 River Rena project in Australia, several projects in California 243 00:15:20,630 --> 00:15:22,990 and one here at Gigafactory, Texas that I toured today. 244 00:15:22,990 --> 00:15:26,510 Actually, we want to thank our customers, utilities and grid 245 00:15:26,510 --> 00:15:29,790 operators for trusting us with these projects on the Automator 246 00:15:29,790 --> 00:15:32,180 question. We continue to grow auto bidder 247 00:15:32,180 --> 00:15:34,900 contracts in wholesale markets like Australia, Texas, UK and 248 00:15:34,900 --> 00:15:39,300 California with over 6 GW hours under Tesla's dispatch next year 249 00:15:39,900 --> 00:15:42,300 In the UK, our project performed best in the industry. 250 00:15:42,300 --> 00:15:44,780 In Q2. Auto bidder does have software 251 00:15:44,780 --> 00:15:47,060 margins and is an enabler for hardware sales, but it's a 252 00:15:47,060 --> 00:15:50,060 relatively small contributor to revenues given how much 253 00:15:50,060 --> 00:15:52,980 deployment growth on the magnet back hardware side is occurring. 254 00:15:52,980 --> 00:15:56,060 It's important to remember that these large projects, these 255 00:15:56,060 --> 00:15:58,580 large capital projects have lifetimes, 20 years of occurring 256 00:15:58,580 --> 00:16:01,930 revenues on an analyzed basis. Relative to upfront, CapEx are 257 00:16:01,930 --> 00:16:04,730 small. On the residential side, we have 258 00:16:04,730 --> 00:16:07,450 some fun things happening. We recently surpassed a half 259 00:16:07,450 --> 00:16:10,690 million power walls installed. Just this week we were launching 260 00:16:10,690 --> 00:16:13,490 charge on solar, which allows festival power wall and vehicle 261 00:16:13,490 --> 00:16:15,690 customers to charge their vehicles using their excess 262 00:16:15,690 --> 00:16:18,450 solar and drive only on the sunshine that hits their roof. 263 00:16:19,370 --> 00:16:21,490 Yesterday we began paying customers in Texas for 264 00:16:21,490 --> 00:16:23,850 participating in our virtual power plant to provide grid 265 00:16:23,850 --> 00:16:27,010 support to IRCOT. We expect these credits to lower 266 00:16:27,010 --> 00:16:29,170 our median customers annual bill by 1/3. 267 00:16:29,540 --> 00:16:31,940 And to increase these credits over time as ERCOT expands 268 00:16:31,940 --> 00:16:34,660 market access and today we are expanding Tesla electric 269 00:16:34,660 --> 00:16:38,060 enrollment to new Model 3 honors in Texas, followed by all Texas 270 00:16:38,060 --> 00:16:39,780 vehicle customers over the rest of the quarter. 271 00:16:40,620 --> 00:16:43,020 Unfortunately and somewhat similar to Tesla Insurance, 272 00:16:43,420 --> 00:16:46,780 bringing Tesla electric and BPP capabilities to our customers 273 00:16:46,860 --> 00:16:49,500 requires working through a fractured regulatory environment 274 00:16:49,500 --> 00:16:51,460 on a jurisdiction by jurisdiction basis. 275 00:16:52,220 --> 00:16:55,100 In the long run, the value of residential energy software and 276 00:16:55,100 --> 00:16:57,220 hardware will be driven by the level of market access that 277 00:16:57,220 --> 00:16:59,640 utilities. Market operators and regulators 278 00:16:59,640 --> 00:17:03,240 permit for power walls eligible to provide the full stack of 279 00:17:03,240 --> 00:17:06,920 energy services like peaker, peaker capacity and system 280 00:17:06,920 --> 00:17:09,200 buffering such as in Australia. We can more than double the 281 00:17:09,200 --> 00:17:11,480 value of ownership relative to a typical system today. 282 00:17:13,200 --> 00:17:15,560 Thank you very much. The next question is, could you 283 00:17:15,560 --> 00:17:20,680 quantify the benefits to COGS per unit from the IRA battery 284 00:17:20,680 --> 00:17:23,599 manufacturing incentives? And secondly, battery raw 285 00:17:23,599 --> 00:17:27,310 material declines year to date? Right. 286 00:17:27,470 --> 00:17:31,390 I can take that. On the first part of the 287 00:17:31,390 --> 00:17:36,070 question for IRA manufacturing incentives, we provided previous 288 00:17:36,070 --> 00:17:39,510 guidance that we expect these to be for the course of this year 289 00:17:39,510 --> 00:17:42,990 in the range of 150 million to 250 million per quarter. 290 00:17:44,110 --> 00:17:46,750 We are staying within that boundary as we got it 291 00:17:46,750 --> 00:17:48,670 previously. So that was the case in Q2 as 292 00:17:48,670 --> 00:17:51,550 well. I will note, I think we've 293 00:17:51,550 --> 00:17:55,890 mentioned this before that. This includes a 5050 sharing of 294 00:17:55,890 --> 00:18:00,650 credits for qualified cells from our longterm battery partner 295 00:18:00,650 --> 00:18:05,570 Panasonic. On the commodity side are we are 296 00:18:05,690 --> 00:18:07,370 continuing to see improvements there. 297 00:18:07,370 --> 00:18:10,970 As we've discussed previously, lithium is the most notable 298 00:18:10,970 --> 00:18:15,010 improvement so far. I think I commented on this on 299 00:18:15,010 --> 00:18:18,650 the last call because typically we see this coming about 1/4 300 00:18:18,650 --> 00:18:20,810 before it actually is realized in our financials. 301 00:18:22,020 --> 00:18:24,700 And also just as a reminder, we're not fully exposed to the 302 00:18:24,700 --> 00:18:27,300 price of lithium. Our supply chain team has done a 303 00:18:27,300 --> 00:18:30,900 terrific job in partnership with another bunch of other companies 304 00:18:30,900 --> 00:18:35,020 to put in place some longterm agreements here. 305 00:18:35,020 --> 00:18:37,980 But we do have some exposure that moves up and down. 306 00:18:38,780 --> 00:18:41,660 We're also seeing benefits in aluminum and steel, which I 307 00:18:41,660 --> 00:18:46,220 think is great, not as large as the lithium impacts, but they 308 00:18:46,220 --> 00:18:49,810 contribute nonetheless. So if we add up the total impact 309 00:18:49,810 --> 00:18:53,330 of this in Q2 relative to prior quarter, it's about the same 310 00:18:53,330 --> 00:18:56,570 size and magnitude as the IRA benefits that we also received. 311 00:18:58,330 --> 00:19:01,930 You know just to put this in context, you know as you look at 312 00:19:01,930 --> 00:19:05,570 COGS per unit sequentially from Q1 to Q2, I think there's 313 00:19:05,650 --> 00:19:07,290 there's two things to keep in mind there. 314 00:19:08,010 --> 00:19:12,690 The 1st is that our SX mix and IT for deliveries increased 315 00:19:12,690 --> 00:19:15,970 quite a bit from Q1 to Q2. So as you think about 316 00:19:15,970 --> 00:19:19,260 fundamental cost reductions. It's important to adjust for 317 00:19:19,260 --> 00:19:22,300 that. And then secondly, you know as 318 00:19:22,300 --> 00:19:25,260 we continue to work on reducing our Austin and Berlin costs 319 00:19:25,660 --> 00:19:30,220 which we did quite a bit of that from Q1 to Q2, You know these 320 00:19:30,220 --> 00:19:33,220 factories are still a slightly above model wide production 321 00:19:33,220 --> 00:19:36,740 costs elsewhere and in the quarter our mix of Austin and 322 00:19:36,740 --> 00:19:41,340 Berlin related builds increased And so that's something to 323 00:19:41,340 --> 00:19:45,140 consider as you model out the impact on from Q1 to Q2 in terms 324 00:19:45,140 --> 00:19:48,720 of COGS per unit. And I do want to ask Claren if 325 00:19:48,720 --> 00:19:51,640 there's anything else on the commodity side or just more 326 00:19:51,640 --> 00:19:53,480 generally you want to add here. Yeah. 327 00:19:54,120 --> 00:19:56,800 As you mentioned Zach, we we've naturally been a little bit 328 00:19:56,800 --> 00:19:59,000 hedged from the losing position because they the longterm 329 00:19:59,000 --> 00:20:01,600 contracts we have in place. But we have seen reduction in 330 00:20:01,600 --> 00:20:04,480 pricing across the board for all commodities that and 331 00:20:04,480 --> 00:20:07,560 specifically going to batteries such as nickel, cobalt and and 332 00:20:07,640 --> 00:20:10,600 and graphite. And the reductions and pricing 333 00:20:10,600 --> 00:20:13,360 translate into thousands of dollars when you look at it from 334 00:20:13,360 --> 00:20:17,860 a PURV vehicle and plant. We're taking advantage of the 335 00:20:18,180 --> 00:20:20,580 historically low commodity pricing and in certain areas to 336 00:20:20,580 --> 00:20:23,820 kind of expand some of those fit price contracts through the end 337 00:20:23,820 --> 00:20:26,740 of the decade since a playbook that will continue to kind of go 338 00:20:26,740 --> 00:20:28,620 back to as you look to the future. 339 00:20:30,220 --> 00:20:32,540 Thank you. And the next question on FSD. 340 00:20:33,540 --> 00:20:37,340 Have you considered allowing FSD transferability as a lever to 341 00:20:37,340 --> 00:20:40,340 allow existing customers to upgrade to a new Tesla instead 342 00:20:40,340 --> 00:20:43,540 of being locked into an existing car due to the price of FSD? 343 00:20:45,870 --> 00:20:47,630 Yeah, this is a question we get asked a lot. 344 00:20:48,950 --> 00:20:53,870 So we're excited to announce that before Q3 we will be 345 00:20:53,990 --> 00:20:58,750 allowing transfer of FSD. This is a one time amnesty. 346 00:21:00,710 --> 00:21:04,830 So it needs to be take, you need to take advantage of it in Q3, 347 00:21:04,830 --> 00:21:08,830 but or at least place the order in Q3 with within with within 348 00:21:08,830 --> 00:21:11,910 reasonable delivery time frames, so. 349 00:21:13,430 --> 00:21:17,350 Yeah, yeah, yeah. I hope this makes people happy 350 00:21:20,310 --> 00:21:23,910 this one time thing. Right. 351 00:21:23,910 --> 00:21:27,430 The next question, when will, when will we give more 352 00:21:27,430 --> 00:21:30,790 information about the cyber truck orders, estimated delivery 353 00:21:30,790 --> 00:21:32,870 schedules, pricing and specifications? 354 00:21:34,030 --> 00:21:38,070 The demand is so is so far off the hook you can't even see the 355 00:21:38,070 --> 00:21:41,190 hook, so that's really not an issue. 356 00:21:42,460 --> 00:21:45,820 I do want to emphasize that the cyber truck has a lot of new 357 00:21:45,820 --> 00:21:51,260 technology in it like a lie, it doesn't look like, it doesn't 358 00:21:51,260 --> 00:21:53,940 look like you know any other vehicle because it is not like 359 00:21:53,940 --> 00:21:57,700 any other vehicle. So at the and the production 360 00:21:57,700 --> 00:22:01,220 ramp will move as fast as the slowest at least like the 361 00:22:01,220 --> 00:22:08,340 element of the of the entire supply chain and an internal so. 362 00:22:11,180 --> 00:22:14,340 You know, I I wouldn't expect you know it, I I hope it's 363 00:22:14,340 --> 00:22:15,460 smooth. We're, you know, we're certainly 364 00:22:15,460 --> 00:22:19,140 better production ramps than you know we've got a lot of 365 00:22:19,140 --> 00:22:20,460 experience with production ramps. 366 00:22:20,820 --> 00:22:24,740 But you know first order approximation is there's like 367 00:22:24,740 --> 00:22:30,580 10,000 unique pots and processes in in a you know in the cyber 368 00:22:30,580 --> 00:22:35,660 truck and if any one of it'll go as fast as the least lucky, you 369 00:22:35,660 --> 00:22:39,100 know least well executed elements of the 10,000 so. 370 00:22:40,600 --> 00:22:42,920 Always pretty difficult to predict the the ramp initially, 371 00:22:42,920 --> 00:22:47,840 but I think we'll be making them in high volume next year and we 372 00:22:47,840 --> 00:22:50,800 will be delivering the car this year. 373 00:22:52,320 --> 00:22:55,080 Thank you. The next question is critics of 374 00:22:55,080 --> 00:22:58,800 Giga casting contended that process makes vehicles harder 375 00:22:58,800 --> 00:23:01,880 and more costly to repair, essentially pushing costs onto 376 00:23:01,880 --> 00:23:04,200 the customer. You share some details about the 377 00:23:04,200 --> 00:23:06,560 initial repair experience with Giga Cast vehicles. 378 00:23:06,680 --> 00:23:08,320 That must be why everyone's copying us. 379 00:23:10,190 --> 00:23:11,350 Yeah. Thank you. 380 00:23:11,350 --> 00:23:14,670 On this is Larris and Martin, that that's like simply not 381 00:23:14,670 --> 00:23:16,310 true. There's a misconception that 382 00:23:16,310 --> 00:23:19,550 traditional bodies are easy to repair, but they're made of 383 00:23:19,550 --> 00:23:21,310 multiple materials and multiple joining methods. 384 00:23:21,310 --> 00:23:23,070 Spot wells and rivets have to be drilled out. 385 00:23:23,070 --> 00:23:26,670 Panels and structural adhesive have to be chiseled out, tried 386 00:23:26,670 --> 00:23:28,950 adhesive has to be removed, stamp things cut, blah blah, 387 00:23:28,950 --> 00:23:30,590 blah. It's a crazy patch of quilt. 388 00:23:30,670 --> 00:23:33,070 Yeah, And so putting that back together means time and money, 389 00:23:33,390 --> 00:23:36,390 using an example of replacing a rear cast rail on the Model Y. 390 00:23:38,410 --> 00:23:41,130 To do that versus like what we replaced it with from the Model 391 00:23:41,130 --> 00:23:44,850 3, it's 1010 times cheaper and three times faster to do it with 392 00:23:44,850 --> 00:23:47,530 the cast rail. My design team works with our 393 00:23:47,530 --> 00:23:50,410 collision repair team Since we're closed loop on this with 394 00:23:50,410 --> 00:23:53,410 insurance and we designed specific parts that are make it 395 00:23:53,410 --> 00:23:56,130 easier and faster to repair, we have an incentive to do that 396 00:23:56,130 --> 00:23:58,770 because we have our own insurance and our own body 397 00:23:58,770 --> 00:24:02,250 shops. We expect that we'll continue to 398 00:24:02,250 --> 00:24:04,530 do this and collision repair will continue to become cheaper 399 00:24:04,530 --> 00:24:06,760 and faster over time. And we already need this 400 00:24:06,760 --> 00:24:09,520 available to all body shops or a tester include Body Shop 401 00:24:09,520 --> 00:24:12,240 training, yeah? Closing loop on collision repair 402 00:24:12,720 --> 00:24:14,720 and factoring that into design is is a big deal. 403 00:24:14,720 --> 00:24:16,800 It's crucial. I don't think anyone else can do 404 00:24:16,800 --> 00:24:19,000 it with that ecosystem that we have, so yeah. 405 00:24:19,040 --> 00:24:21,560 And and we are actually able to change the details of the 406 00:24:21,560 --> 00:24:25,640 casting with inserts, and we actually do do that all the 407 00:24:25,640 --> 00:24:28,160 time. So because the answer is 408 00:24:28,160 --> 00:24:31,080 actually we're out and it should be replaced anyway. 409 00:24:31,080 --> 00:24:33,720 So we can actually make design changes to the inserts and tweak 410 00:24:33,720 --> 00:24:36,640 the castings. But the the, the cast that you 411 00:24:36,640 --> 00:24:40,160 know, basically cast the rear, rear body or front body is 412 00:24:40,240 --> 00:24:44,600 lighter, cheaper, better for noise, vibration, harshness, 413 00:24:44,600 --> 00:24:48,200 much easier to manufacture and it's better in every way. 414 00:24:49,040 --> 00:24:52,960 And that's why so many other car companies are copying us because 415 00:24:53,040 --> 00:24:55,440 probably they don't really stick well. 416 00:24:55,440 --> 00:24:57,400 They certainly put out a lot of fresh releases about it. 417 00:24:59,240 --> 00:25:02,280 I think it's basically got to be how old old cars are made in the 418 00:25:02,280 --> 00:25:05,160 future. Thank you. 419 00:25:06,260 --> 00:25:10,060 Next question, how many optimist bots have been made and when 420 00:25:10,060 --> 00:25:12,540 will they be able to start performing useful tasks? 421 00:25:12,740 --> 00:25:23,260 10 million, yeah. I think, I think we're around 422 00:25:23,260 --> 00:25:28,220 5:00 or 6 bots like, you know, there's a look 10, I guess. 423 00:25:28,860 --> 00:25:32,820 Yeah, which, which is how many are working and what phase. 424 00:25:34,640 --> 00:25:41,000 It's a it's sort of yeah like this there's more more every 425 00:25:41,000 --> 00:25:47,960 month the they're saying it's large things, large interesting 426 00:25:47,960 --> 00:25:53,080 things about the Octopus spot. We found that there are actually 427 00:25:53,080 --> 00:25:55,960 no suppliers that can produce the actuators. 428 00:25:56,080 --> 00:25:59,960 There's no there are no off the shelf actuators that work well 429 00:25:59,960 --> 00:26:02,520 for a Humor Aid robot at any price. 430 00:26:02,720 --> 00:26:07,950 Certainly not compelling. Yes, not a not a human robot 431 00:26:07,950 --> 00:26:10,510 that can do something that you know the things that human can 432 00:26:10,510 --> 00:26:13,630 do. So we've actually had to design 433 00:26:14,070 --> 00:26:18,670 our own actuators that integrate the motor of the power 434 00:26:18,670 --> 00:26:27,950 electronics, the controller sensors and really every one of 435 00:26:27,950 --> 00:26:34,480 them is custom site so. And then of course we'll be 436 00:26:34,480 --> 00:26:38,480 using the the same infrared hardware as the car. 437 00:26:40,280 --> 00:26:46,240 So you know and but we are in designing these actuators, 438 00:26:46,520 --> 00:26:48,320 designing them for volume production. 439 00:26:48,840 --> 00:26:52,160 So they're not just lighter, tighter, more and more capable 440 00:26:52,160 --> 00:26:55,400 any any other actuators that that we're aware of that exists 441 00:26:55,400 --> 00:26:57,400 in the world. There's also actually 442 00:26:58,240 --> 00:27:01,440 manufacturable. So we should be able to make 443 00:27:01,440 --> 00:27:07,720 them in volume. The the first optimist that is 444 00:27:07,760 --> 00:27:11,240 that will have all of the test that designed actuators sort of 445 00:27:11,240 --> 00:27:16,280 production candidate actuators on it integrated and walking 446 00:27:16,280 --> 00:27:23,080 should be on to November ish. So and then we'll we'll we'll 447 00:27:23,080 --> 00:27:31,400 start wrapping up after that you know in terms of when we'll be 448 00:27:31,400 --> 00:27:34,870 able to do some useful things. Like, we'll first be trying this 449 00:27:34,870 --> 00:27:37,790 out in our own factories and just proving out its utility. 450 00:27:37,790 --> 00:27:41,670 But I I think I think we'll be able to have it do something 451 00:27:41,670 --> 00:27:44,830 useful in our factories sometime next year. 452 00:27:46,630 --> 00:27:50,030 I I would be, yeah, I'm pretty, pretty confident of that. 453 00:27:52,270 --> 00:27:58,070 So yeah. And that's going well. 454 00:27:58,070 --> 00:28:02,110 I should say another cool thing about Optimist is that you know 455 00:28:02,110 --> 00:28:03,830 there's. Just in the US alone there are 456 00:28:03,830 --> 00:28:09,950 two million amputees and I was just talking to the neural link 457 00:28:09,950 --> 00:28:17,030 team and by combining A neural link implant and a robotic 458 00:28:17,030 --> 00:28:21,470 armour leg that for someone that has has had their arms and leg, 459 00:28:21,470 --> 00:28:27,790 all arms and leg amputated, we believe we can get basically a 460 00:28:27,790 --> 00:28:35,640 sideball body that is incredibly capable. $6 million man. 461 00:28:36,400 --> 00:28:39,720 In real life before no word cost $6,000,000. 462 00:28:42,160 --> 00:28:46,640 Sixty $1000 man since I was impressive but it's it'll 463 00:28:46,640 --> 00:28:51,800 actually yeah so that that that actually could be a really I 464 00:28:51,800 --> 00:28:55,200 think would be incredible to you know potentially help most 465 00:28:55,200 --> 00:29:01,320 people around the world and and give them you know a robot or 466 00:29:01,320 --> 00:29:04,610 like that is. As good make a long time better 467 00:29:04,610 --> 00:29:08,450 than a biological 1. Thank you. 468 00:29:09,210 --> 00:29:13,130 The next question is how has the order intake trended relatively 469 00:29:13,130 --> 00:29:16,730 to production levels during Q2 and how is it trended in the 470 00:29:16,730 --> 00:29:19,570 quarter to date period? Conceptually, how does this law 471 00:29:19,570 --> 00:29:24,370 decide when is it appropriate to reduce prices or at other sales 472 00:29:24,370 --> 00:29:29,810 incentives to increase demand? I guess demand is roughly track 473 00:29:29,810 --> 00:29:35,270 production, so. Which is what we aim for is, is 474 00:29:36,510 --> 00:29:38,910 that we look at you know something that we have that 475 00:29:38,950 --> 00:29:43,030 really I think no other car maker has is that we have real 476 00:29:43,030 --> 00:29:47,750 time demand and real time production like so seven days a 477 00:29:47,750 --> 00:29:52,830 week, you know, I get an e-mail order generated e-mail that 478 00:29:52,830 --> 00:29:57,070 shows output from both factories and orders globally. 479 00:29:57,550 --> 00:30:00,790 So it's like a real time thing on the pulse of earth. 480 00:30:01,360 --> 00:30:07,520 Basically and and we would you know we just we're just course 481 00:30:07,600 --> 00:30:10,840 according to what the word of the of the public is. 482 00:30:12,160 --> 00:30:16,880 You know buying a new car is a is a big decision for vast 483 00:30:16,880 --> 00:30:19,800 majority of people. So you know at anytime there's 484 00:30:19,960 --> 00:30:23,840 economic uncertainty people generally pause on your car 485 00:30:23,920 --> 00:30:29,200 buying at least to see to see what happens and you know and 486 00:30:29,200 --> 00:30:30,640 then obviously another challenge is the. 487 00:30:31,150 --> 00:30:33,910 In the interest rate environment, as the interest 488 00:30:33,910 --> 00:30:37,950 rates rise, the affordability of anything bought with that 489 00:30:38,190 --> 00:30:42,870 decreases, so effectively increasing the price of the car. 490 00:30:43,550 --> 00:30:47,150 So when interest rates rise dramatically, we actually have 491 00:30:47,150 --> 00:30:50,790 to reduce the price of the car because the the interest 492 00:30:50,790 --> 00:30:52,470 payments increase the price of the car. 493 00:30:53,830 --> 00:30:58,470 So and and this is at least at least up until recently it was 494 00:30:58,470 --> 00:31:01,950 the, I believe the sharpest. Interest rate rise in history, 495 00:31:03,670 --> 00:31:04,790 Do we have to do something about that? 496 00:31:07,350 --> 00:31:09,950 And if somebody's going to crystal ball for the global 497 00:31:09,950 --> 00:31:12,630 economy, I really appreciate it if I got borrow that crystal 498 00:31:12,630 --> 00:31:14,550 ball. DMS. 499 00:31:14,950 --> 00:31:15,910 Yeah, exactly. Damn. 500 00:31:15,910 --> 00:31:18,630 Yeah, it should be known on Twitter. 501 00:31:19,830 --> 00:31:24,950 So I mean one, one day it seems like the world economy is 502 00:31:24,950 --> 00:31:27,270 pulling apart and the next day everything's fine. 503 00:31:27,590 --> 00:31:28,790 I don't know what that was going on. 504 00:31:30,200 --> 00:31:32,600 I'd be totally frank, I wish I did. 505 00:31:34,800 --> 00:31:38,400 So I mean that's why that's why I say like yeah, I always, you 506 00:31:38,400 --> 00:31:42,080 know you know on Twitter I posted like you know, just 507 00:31:42,080 --> 00:31:48,160 really advising because I care a lot about the the, the, the sort 508 00:31:48,760 --> 00:31:51,520 of the small shareholders especially ones that have stuck, 509 00:31:51,560 --> 00:31:53,200 stuck with us through through thick and thin. 510 00:31:53,760 --> 00:32:00,650 I love you guys and so the. We we can't control these macro 511 00:32:00,650 --> 00:32:04,330 shocks you know or the the manic depressive nature of the stock 512 00:32:04,330 --> 00:32:06,370 market. So that's why I I recommend 513 00:32:06,370 --> 00:32:10,090 against margin loans in times that are turbulent. 514 00:32:10,450 --> 00:32:12,770 You know if I if times are are not that turbulent actually a 515 00:32:12,770 --> 00:32:18,610 margin loan can be a smart move within reason but we're in I 516 00:32:18,610 --> 00:32:23,410 would call it turbulent times. I like I have very high 517 00:32:23,410 --> 00:32:26,570 confidence, confidence in the longterm value of Tesla. 518 00:32:28,630 --> 00:32:31,430 Like I, I see it. I really, you know, see a path 519 00:32:31,430 --> 00:32:33,870 to a 10X. Well, we're not telling these 520 00:32:33,870 --> 00:32:39,110 days about you. The 5X increase in the value of 521 00:32:39,110 --> 00:32:46,510 the company, maybe a 10X and the the where things go along the 522 00:32:46,510 --> 00:32:49,190 way that the trials and tribulations and the mood of the 523 00:32:49,190 --> 00:32:51,990 mood of the markets, well, I cannot predict. 524 00:32:52,070 --> 00:32:59,900 And so you know, I mean. The the old adage of buy and 525 00:32:59,900 --> 00:33:06,300 hold, this is right, you know, for investment advice I say like 526 00:33:06,420 --> 00:33:11,700 identify companies products you love see if they you know, does 527 00:33:11,700 --> 00:33:14,780 it seem like they'll continue to make good products or great 528 00:33:14,780 --> 00:33:17,940 products. Buy that stock and holds it, 529 00:33:18,820 --> 00:33:24,020 That's it. But you all went and the reason 530 00:33:24,020 --> 00:33:26,940 companies exist is to make goods and services. 531 00:33:27,490 --> 00:33:31,090 Ideally, great goods and services, they don't exist for 532 00:33:31,090 --> 00:33:34,610 any other reason they shouldn't. So that's why you should buy 533 00:33:34,610 --> 00:33:38,050 stock of a company that makes me like some has a great future 534 00:33:38,050 --> 00:33:41,010 pipeline. It's common sense actually. 535 00:33:42,850 --> 00:33:49,010 And and then and then generally if you see if if you provided 536 00:33:49,010 --> 00:33:52,570 you're confident about what that company's products or services 537 00:33:52,570 --> 00:33:59,090 are when the market panics by. And when the market is, you 538 00:33:59,090 --> 00:34:01,450 know, overly exuberant, yeah, you can sell. 539 00:34:01,450 --> 00:34:09,489 I'm not recommending yourself to as a bitch, but but yeah, buy 540 00:34:09,489 --> 00:34:16,210 low, sell high. You know, Warren Buffett 541 00:34:16,210 --> 00:34:18,130 actually I think has saying I'm paraphrasing him. 542 00:34:18,130 --> 00:34:22,370 But you know, a publicly traded company is like, it's like 543 00:34:22,370 --> 00:34:24,489 imagine you're living in your house and some. 544 00:34:25,480 --> 00:34:29,400 A crazy manic depressive guy comes to, stands at the outside 545 00:34:29,400 --> 00:34:34,280 your house and yells property prices at you, you know, so it's 546 00:34:35,080 --> 00:34:36,400 and it's a different price every day. 547 00:34:37,159 --> 00:34:42,960 The house is still the same house, so who's talking about? 548 00:34:44,080 --> 00:34:48,630 Yeah, that's warm. Thank you. 549 00:34:48,670 --> 00:34:51,790 Let's go to the next question. With the emphasis of price cuts 550 00:34:51,790 --> 00:34:54,790 to drive volume growth eating into automotive gross margin, 551 00:34:54,790 --> 00:34:57,070 can investors expect to see automotive gross margin 552 00:34:57,630 --> 00:35:01,190 stabilize or even rise to the efficiencies outpacing the cuts? 553 00:35:01,590 --> 00:35:07,310 And if so, when? Where's that cross the ball? 554 00:35:07,310 --> 00:35:16,670 Again, if I may, It's like look the short term variances in in. 555 00:35:17,330 --> 00:35:22,130 The most margin profitability really are minor relative to the 556 00:35:22,130 --> 00:35:28,490 long term picture. Autonomy will make all of these 557 00:35:28,490 --> 00:35:31,330 numbers look silly. I'd recommend looking at Arc 558 00:35:31,330 --> 00:35:34,330 Invest. I think their analysis is very 559 00:35:34,330 --> 00:35:41,530 good, the best that they you know I mean and generally fin, 560 00:35:41,530 --> 00:35:46,130 Twit or like the finance, smart finance people on Twitter. 561 00:35:46,380 --> 00:35:47,980 Follow their accounts. They're great. 562 00:35:50,700 --> 00:35:56,420 So that that's what that's that's an idea where you'll get 563 00:35:56,420 --> 00:36:02,660 the best, best info. So you know, I strongly believe 564 00:36:02,820 --> 00:36:07,460 Tesla is an epic long term investment and don't swear when 565 00:36:07,900 --> 00:36:13,340 you know things go up and down. In fact, the market panics by if 566 00:36:13,340 --> 00:36:15,500 your market's a little too exuberant sell time. 567 00:36:15,500 --> 00:36:19,750 But. But just generally like like I 568 00:36:19,750 --> 00:36:22,990 feel I confident you know we will deliver a long term but 569 00:36:22,990 --> 00:36:27,310 can't control short term. So and these the autonomy is 570 00:36:27,310 --> 00:36:31,430 really where it's at exactly. I fully agree with you. 571 00:36:32,990 --> 00:36:36,550 I mean, I think the only thing in the short term that matters 572 00:36:37,190 --> 00:36:41,270 is, is what I said in my opening remarks, which is, you know, are 573 00:36:41,270 --> 00:36:43,390 we generating enough money to continue to invest? 574 00:36:44,290 --> 00:36:47,730 In, you know, the portfolio of products and technologies that 575 00:36:48,090 --> 00:36:50,530 the technical teams are investing in right now. 576 00:36:51,690 --> 00:36:55,330 And this is intense. It's intense in terms of 577 00:36:55,330 --> 00:36:57,010 investment. It's intense in terms of 578 00:36:57,010 --> 00:36:59,330 potential. Frankly, I think it's ridiculous 579 00:36:59,330 --> 00:37:03,370 that we have positive free cash flow in a capital intensive 580 00:37:03,370 --> 00:37:07,690 business while investing massive amounts of money in new 581 00:37:07,690 --> 00:37:10,610 technology. That is super hard. 582 00:37:10,690 --> 00:37:12,930 And critical integration, it's not even just like new products, 583 00:37:12,930 --> 00:37:15,240 but also. Yeah, we actually make our shit. 584 00:37:17,120 --> 00:37:19,280 We don't. Yeah. 585 00:37:19,680 --> 00:37:20,800 And and. So others. 586 00:37:25,240 --> 00:37:27,640 And. Very cool. 587 00:37:28,840 --> 00:37:31,280 And so at least from my perspective, what matters is 588 00:37:31,400 --> 00:37:35,760 continuing to generate the cash to invest and you know that 589 00:37:35,760 --> 00:37:39,080 means continuing to be hyper focused on your term cost 590 00:37:39,080 --> 00:37:41,300 reduction. Does everything we do in your 591 00:37:41,300 --> 00:37:45,940 term cost reduction provides capital to reinvest hyper 592 00:37:45,940 --> 00:37:50,420 focused on working Capital Management which we've made 593 00:37:50,420 --> 00:37:55,500 quite a bit of progress there on the raw materials and whip as a 594 00:37:55,500 --> 00:37:59,460 side of that and very focused on accounts receivables as well to 595 00:37:59,460 --> 00:38:02,460 ensure that we can continue to reinvest, reinvest the cash. 596 00:38:04,540 --> 00:38:08,460 You know that this is what we're focused and you know so there's 597 00:38:08,460 --> 00:38:11,810 you know a set of this that. We control, you know we have a 598 00:38:11,810 --> 00:38:15,530 pipeline of cost reductions, but we are getting tailwinds in the 599 00:38:15,530 --> 00:38:18,290 commodity space right now as Carn mentioned, that's helpful 600 00:38:20,090 --> 00:38:22,530 variability around average selling prices. 601 00:38:22,530 --> 00:38:26,050 You know goes back to Elon's point and we don't control 602 00:38:26,050 --> 00:38:31,690 interest rates, we don't control macro consumer sentiment, but we 603 00:38:31,690 --> 00:38:34,170 have an obligation to be responsive to that to ensure 604 00:38:34,170 --> 00:38:37,330 that we're matching supply and demand and keeping things 605 00:38:37,330 --> 00:38:39,710 balanced. And so this is how we're 606 00:38:39,710 --> 00:38:44,550 managing the next handful of quarters and soon enough these 607 00:38:44,550 --> 00:38:48,230 quarters will be behind us. They won't be part of the 608 00:38:48,430 --> 00:38:50,790 present value of future cash flows of the business. 609 00:38:51,630 --> 00:38:54,510 And so we wanna make sure we keep that view and make sure 610 00:38:54,510 --> 00:38:57,590 that the long term of the business is exactly the way that 611 00:38:57,590 --> 00:39:00,190 we want it to be it. Will suit, yeah. 612 00:39:01,800 --> 00:39:02,680 All right. Thank you very much. 613 00:39:02,800 --> 00:39:05,920 And now let's go to analyst questions. 614 00:39:06,200 --> 00:39:09,120 The first question comes from Dan Levi from Barclays. 615 00:39:09,440 --> 00:39:11,720 And then feel free to unmute. Yourself. 616 00:39:14,960 --> 00:39:17,400 Great. Good evening. 617 00:39:17,400 --> 00:39:20,480 Thank you. Bob, wanted to start first with 618 00:39:20,480 --> 00:39:24,240 the with a question about here at Person AI and Dojo. 619 00:39:24,240 --> 00:39:27,160 It's pretty clear it sounds like you're accelerating your focus. 620 00:39:27,990 --> 00:39:32,190 Can you maybe provide us with a sense of what the process is of 621 00:39:32,870 --> 00:39:35,470 refining a product, Is it more machines and and maybe you could 622 00:39:35,470 --> 00:39:41,070 give us a sense of you know when the the payout starts to when 623 00:39:41,070 --> 00:39:43,630 you start to see the payout and what the resource outlay is. 624 00:39:44,030 --> 00:39:47,390 You know what should we expect on the OpEx front as a result of 625 00:39:47,390 --> 00:39:51,230 this? Sorry, are you saying how much 626 00:39:51,230 --> 00:39:53,950 are we gonna spend on Dojo or yeah? 627 00:39:54,310 --> 00:39:55,830 Warranty of Dojo. Yes. 628 00:39:58,630 --> 00:40:01,030 Well, we're not going to be open loop on our Dojo expenditures. 629 00:40:01,030 --> 00:40:07,390 So but I mean I think we, we will be spending you know for 630 00:40:07,390 --> 00:40:10,430 the north of a billion for the next year on on you know flip 631 00:40:10,710 --> 00:40:13,110 through the end of next year, it's whatever billion dollars in 632 00:40:13,110 --> 00:40:21,110 Dojo. And yeah, so we've got a truly 633 00:40:21,110 --> 00:40:25,110 staggering amount of of video data to do training on. 634 00:40:25,450 --> 00:40:26,610 And this is another thing I like. 635 00:40:26,610 --> 00:40:29,770 In order to copy us. You also need to spend billions 636 00:40:29,770 --> 00:40:35,690 of dollars on training compute. I mean it's like and it's also 637 00:40:35,690 --> 00:40:38,930 hard to you know you need the data, you need the training 638 00:40:38,930 --> 00:40:41,130 computer. It's like they think well things 639 00:40:41,530 --> 00:40:44,050 needed to actually achieve it at scale toward generalized 640 00:40:44,050 --> 00:40:47,050 solution for autonomy is it's this is this is one of the 641 00:40:47,050 --> 00:40:50,860 hardest problems ever. You know, you see a lot of AI 642 00:40:50,860 --> 00:40:54,860 companies doing, you know, Llms and and and whatnot and I'll say 643 00:40:54,940 --> 00:40:57,100 if they're so great, why can't they make yourself a great 644 00:40:57,100 --> 00:41:02,180 driving car? Because it's harder, that's why. 645 00:41:05,260 --> 00:41:08,460 So but I do think those, let's say, I think there's, you know, 646 00:41:08,460 --> 00:41:12,660 great, great AI companies out there, but but just 647 00:41:12,660 --> 00:41:16,190 fundamentally the the. About the the staggering amount 648 00:41:16,190 --> 00:41:19,350 of data we've got to process is going to process somehow and 649 00:41:19,350 --> 00:41:21,950 custom silicon is the best way to do that. 650 00:41:24,750 --> 00:41:30,030 So that that's what Dojo is is designed to do is is you know 651 00:41:30,270 --> 00:41:35,150 optimize for for video training it's it's not optimized for all 652 00:41:35,150 --> 00:41:40,390 of them it's optimized for video training with with with video 653 00:41:40,390 --> 00:41:45,650 training you have a a. A much higher ratio of compute 654 00:41:45,650 --> 00:41:51,250 to memory bandwidth. So this you know whereas LMS 655 00:41:51,250 --> 00:41:53,210 tend to be memory bandwidth choked. 656 00:41:55,650 --> 00:42:00,210 So that's that's it. I mean like so we're also we 657 00:42:00,210 --> 00:42:04,690 have some, we're using a lot of the video hardware continued to 658 00:42:04,810 --> 00:42:08,410 you. We'll actually take the video 659 00:42:08,410 --> 00:42:10,690 hardware as fast as NVIDIA was delivered to us. 660 00:42:11,290 --> 00:42:16,760 Tremendous respect for Jensen. Kind of video on they've done an 661 00:42:16,760 --> 00:42:23,880 incredible job and and frankly I don't know if they could deliver 662 00:42:23,880 --> 00:42:28,400 us enough Gpu's we we might not be Dojo but they can't. 663 00:42:29,280 --> 00:42:33,680 So because they got so many customers they've been kind 664 00:42:33,680 --> 00:42:37,360 enough to you know but nonetheless prioritize something 665 00:42:37,360 --> 00:42:45,010 about our GPU orders but. Yeah, the, the, the sheer 666 00:42:45,010 --> 00:42:47,970 magnitude of video training because like I said, we're not 667 00:42:47,970 --> 00:42:49,370 trying to just get as good as human. 668 00:42:49,370 --> 00:42:52,930 We want to get to, you know, 10 times better than human, maybe 669 00:42:52,930 --> 00:42:56,130 100 times better than human. Right now I believe there's 670 00:42:56,130 --> 00:42:58,370 something on the order of 1,000,000 automotive deaths per 671 00:42:58,370 --> 00:43:01,290 year. And and if you say permanent 672 00:43:02,130 --> 00:43:04,850 serious injuries, I think it's probably closer to 10 million 673 00:43:04,850 --> 00:43:09,930 per year. And you know, so it matters if 674 00:43:09,930 --> 00:43:15,300 you're, if you're, you know. Twice as good as as humanity 10 675 00:43:15,300 --> 00:43:18,660 times you know like 10 times better than here would would 676 00:43:18,740 --> 00:43:23,620 still mean 100,000 deaths on and and a million severe permitted 677 00:43:23,620 --> 00:43:25,900 injuries. So it's like OK well we'd 678 00:43:25,900 --> 00:43:28,900 probably be 100 times better So there's there's really you know 679 00:43:29,020 --> 00:43:33,620 it's a March of 9th and and we want to achieve as perfect 680 00:43:34,500 --> 00:43:39,740 safety as possible and to ask truly mind boggling amounts of 681 00:43:39,740 --> 00:43:41,980 video and and and computer needed for that. 682 00:43:42,380 --> 00:43:45,420 So and then I just, yeah, I do think there's this other 683 00:43:45,420 --> 00:43:49,260 applications for for Dojo, but we just definitely needed for 684 00:43:49,260 --> 00:43:51,900 video training. Right. 685 00:43:51,900 --> 00:43:55,420 Just to just to add to what Elon mentioned, so you know the 686 00:43:55,420 --> 00:43:59,580 numbers that he mentioned are you know between R&D spend and 687 00:43:59,580 --> 00:44:05,900 capital spend and you know this is moving quickly you know and 688 00:44:05,900 --> 00:44:09,620 so we provide a three-year outlook on our capital expense 689 00:44:09,860 --> 00:44:13,350 we are considering. These paid expenses in that 690 00:44:13,350 --> 00:44:17,070 outlook and as that moves up and down, we'll continue to update 691 00:44:17,230 --> 00:44:21,670 our guidance in the queue. Yeah, I wanna say the big, the 692 00:44:21,670 --> 00:44:25,830 fundamental rate limiter on the progress of both self driving is 693 00:44:25,830 --> 00:44:29,030 trading. But that's if if we had more 694 00:44:29,030 --> 00:44:31,270 training compute we would get it done faster. 695 00:44:32,390 --> 00:44:36,030 So that's that's it. And it's just difficult to 696 00:44:36,030 --> 00:44:38,230 predict how quickly we can execute on it. 697 00:44:40,710 --> 00:44:41,690 Create. Thank you. 698 00:44:42,450 --> 00:44:46,490 Just as as a follow up, I recognize you know there's 699 00:44:46,490 --> 00:44:50,010 there's incredible macro uncertainty right now, but 700 00:44:50,490 --> 00:44:54,810 you're sticking with your near term your volume target 50% 701 00:44:54,810 --> 00:44:57,930 kegger. As we just think about sort of 702 00:44:57,930 --> 00:45:01,050 in the in the year ahead, you know cyber truck is going to be 703 00:45:01,050 --> 00:45:04,090 some contribution. You know there's going to be 704 00:45:04,090 --> 00:45:07,730 some help for further EV penetration growth, but to to 705 00:45:07,730 --> 00:45:12,460 what extent are you willing to? Sacrifice on pricing to keep 706 00:45:12,460 --> 00:45:18,060 that 50% volume kegger intact. Or, you know, are you? 707 00:45:18,060 --> 00:45:21,220 Thinking differently about margins versus your prior 708 00:45:21,220 --> 00:45:23,860 commentary of willing to sacrifice on margins to get more 709 00:45:23,860 --> 00:45:26,780 share. It's not like getting what 710 00:45:26,860 --> 00:45:30,380 share, it's just that you can think of every car that we that 711 00:45:30,380 --> 00:45:35,980 we sell or produce that that that has a full autonomy 712 00:45:35,980 --> 00:45:40,840 capability as. Actually, something that in the 713 00:45:40,840 --> 00:45:44,240 future may be worth as much as five times what it is today 714 00:45:46,640 --> 00:45:49,960 because, you know, average passion is big. 715 00:45:50,200 --> 00:45:53,880 Pastor Bickle is doing like maybe 10 hours of driving a 716 00:45:53,880 --> 00:45:55,760 week. You know, one if if it's sort of 717 00:45:55,760 --> 00:45:58,320 1 if let's say it's 1 1/2 hours there, on average that's 10 718 00:45:58,320 --> 00:46:05,840 hours a week. Ish if you've got an autonomous. 719 00:46:07,310 --> 00:46:13,950 If that that vehicle is able to operate autonomously and and and 720 00:46:13,990 --> 00:46:16,590 and use be used in some so we either either dedicated 721 00:46:16,590 --> 00:46:19,430 autonomous or partially autonomous like like Airbnb like 722 00:46:19,790 --> 00:46:23,510 maybe sometimes you allow your card to be used by others 723 00:46:24,230 --> 00:46:26,790 sometimes you want to use it exclusively just like you know 724 00:46:26,790 --> 00:46:33,150 Airbnb you know drink Airbnb with a room in your hands you 725 00:46:33,150 --> 00:46:36,230 know that the the value is just tremendous so. 726 00:46:36,980 --> 00:46:38,260 I think it's sort of it would be. 727 00:46:39,700 --> 00:46:42,620 I think it makes it does make sense to sacrifice margins in 728 00:46:42,620 --> 00:46:46,820 favor of making more vehicles because we think in the not too 729 00:46:46,820 --> 00:46:50,900 busy future they will have have a dramatic valuation increase. 730 00:46:50,900 --> 00:46:54,340 I think the test of fleet value increase at the point of which 731 00:46:54,340 --> 00:46:56,900 we can upload full self, you know full self driving and it's 732 00:46:56,900 --> 00:47:02,580 approved by regulators will be the single biggest step change 733 00:47:02,660 --> 00:47:09,030 in asset value maybe in history. Thank you. 734 00:47:09,190 --> 00:47:12,310 Let's go to the next analyst. The question comes from Emmanuel 735 00:47:12,310 --> 00:47:16,550 Rosner from Deutsche Bank. Thank you very much. 736 00:47:17,230 --> 00:47:20,270 Two questions for me as well. First, following up on on the 737 00:47:20,270 --> 00:47:24,670 autonomy, So you know before you start launching these dedicated 738 00:47:24,670 --> 00:47:29,510 Robo Taxi vehicles on unexisting vehicles, you're improving FSD. 739 00:47:29,550 --> 00:47:33,790 You know incrementally what is your latest targeted timing to? 740 00:47:34,410 --> 00:47:38,130 Essentially release a non beta version or an ISOF version that 741 00:47:38,130 --> 00:47:42,290 would trigger much higher take rates and would Tesla benefit 742 00:47:42,290 --> 00:47:51,970 from lowering the price of FSD? Well, obviously as. 743 00:47:52,530 --> 00:48:01,170 People have sort of made fun of me, and perhaps the quite fairly 744 00:48:01,170 --> 00:48:03,290 have made fun of me, my predictions about. 745 00:48:04,010 --> 00:48:10,170 Achieving full sub driving have been optimistic in the past. 746 00:48:11,730 --> 00:48:14,250 The the reason they've been optimistic is what it tends to 747 00:48:14,250 --> 00:48:18,610 look like is the we'll make rapid progress with the new 748 00:48:18,610 --> 00:48:24,210 version of of FSD but but then it will curve over 749 00:48:24,250 --> 00:48:28,690 logarithmically so. So first logarithmic curve looks 750 00:48:29,010 --> 00:48:33,450 like you know just fairly straight upward line diagonal 751 00:48:33,450 --> 00:48:35,820 up. And so if you extract like that 752 00:48:36,020 --> 00:48:37,540 it then you you have a great thing. 753 00:48:37,540 --> 00:48:39,980 But then it's actually logarithmic. 754 00:48:39,980 --> 00:48:41,420 It curves over. And then there's been a series 755 00:48:41,420 --> 00:48:43,060 of log that stacked logarithmic curves. 756 00:48:44,380 --> 00:48:49,220 Now I don't. I don't. 757 00:48:49,220 --> 00:48:51,460 I'm the the, the, the boy who cried FSB. 758 00:48:53,260 --> 00:48:58,220 But I I I think I think we'll be better than human by the end of 759 00:48:58,220 --> 00:49:04,360 this year. That's not to say we're treated 760 00:49:04,360 --> 00:49:09,200 by regulators and and I'm saying that then that would be in the 761 00:49:09,200 --> 00:49:12,320 US because we got to focus on one market 1st. 762 00:49:12,800 --> 00:49:14,880 But I think we'll be better than here and by the end of this 763 00:49:14,880 --> 00:49:16,880 year. I've been wrong in the past, I 764 00:49:16,880 --> 00:49:22,080 may be wrong this time and that the from the price of FSD. 765 00:49:22,240 --> 00:49:25,160 So the way thing is the price of FSD is actually very low. 766 00:49:26,730 --> 00:49:29,890 It's not high. When you go back to what I say 767 00:49:29,890 --> 00:49:33,650 earlier, the value of the car increases dramatically if it is 768 00:49:34,210 --> 00:49:39,890 actually autonomous. You know $58,000 is is actually 769 00:49:39,890 --> 00:49:47,930 a low price, not a high price. And that we will offer and you 770 00:49:47,930 --> 00:49:51,810 know and we do sort of offer FSD as a sort of monthly 771 00:49:51,810 --> 00:49:54,530 subscription, although like most people don't know that. 772 00:49:55,940 --> 00:49:58,380 So I recommend like maybe trying it out as a monthly subscription 773 00:49:58,380 --> 00:50:01,500 so you don't have to go with the $15,000 thing. 774 00:50:01,500 --> 00:50:08,660 But I think yeah, yeah, the the obviously if the car is built 775 00:50:08,860 --> 00:50:14,380 several times it's original price, $15,000 is actually a low 776 00:50:14,380 --> 00:50:18,540 price for it. Thank you. 777 00:50:18,540 --> 00:50:22,020 And the next question comes from William Stein from Trust. 778 00:50:22,700 --> 00:50:26,490 William, go ahead and unmute. Great. 779 00:50:26,890 --> 00:50:29,330 Thank you very much for taking my question. 780 00:50:31,290 --> 00:50:36,450 I'd like to ask about the stick on this A I topic. 781 00:50:38,210 --> 00:50:42,210 We've read you know with great interest the developments in 782 00:50:42,210 --> 00:50:46,850 Dojo today and you've spoken about FSD but you've also Elon 783 00:50:46,850 --> 00:50:51,290 you started this X dot a I company and you know for 784 00:50:51,290 --> 00:50:53,840 investors that think that. There might be quite a bit of 785 00:50:53,840 --> 00:50:59,520 value in the AI features and products of Tesla. 786 00:51:00,280 --> 00:51:03,440 It might be concerning to see you, you know, pursuing another 787 00:51:03,440 --> 00:51:07,280 endeavor where AI is the focus. So can you talk about how X dot 788 00:51:07,280 --> 00:51:14,200 AI might overlap, might perhaps compete with Tesla or in other 789 00:51:14,200 --> 00:51:18,560 ways perhaps it it enhances the value of of what Tesla does? 790 00:51:18,880 --> 00:51:22,580 Thanks very much. Yeah, I I think we'll actually 791 00:51:22,580 --> 00:51:26,980 enhance the value of Tesla there. 792 00:51:27,260 --> 00:51:32,620 There were just some some of the world's best AI engineers and 793 00:51:32,620 --> 00:51:35,980 scientists that were willing to join a startup, but they were 794 00:51:35,980 --> 00:51:39,580 not willing to join a large, relatively established company 795 00:51:39,580 --> 00:51:42,300 like like Tesla. So I was like that that's 796 00:51:42,300 --> 00:51:44,660 actually how it got started. I was interviewing a few people 797 00:51:44,660 --> 00:51:46,380 and they're like, no, we we want to do a startup. 798 00:51:46,380 --> 00:51:50,380 I was like and that's all I I I couldn't convince them to join. 799 00:51:51,050 --> 00:51:56,210 Tesla so, so it's like OK well you know better to start up that 800 00:51:58,170 --> 00:52:02,170 that I run that's then then they go work somewhere else that's 801 00:52:02,170 --> 00:52:07,450 kind of the the genesis of of XAI&XAI is is focused on a sort 802 00:52:07,650 --> 00:52:15,610 of a GI. Yeah so it's but I'd like so I 803 00:52:15,610 --> 00:52:22,320 think there will be some. Value that XAI brings to Tesla. 804 00:52:24,920 --> 00:52:27,800 You know also for some of the best for the very best people in 805 00:52:27,800 --> 00:52:30,000 the world, they really just want to look at interesting problems. 806 00:52:30,000 --> 00:52:34,080 If you take say you know amateur science group you know really 807 00:52:34,080 --> 00:52:37,880 what convinced the Charlie Coleman to leave Apple where it 808 00:52:37,880 --> 00:52:47,240 was very happy and well compensated and both at the. 809 00:52:48,430 --> 00:52:50,150 Where we think it's the best material science group in the 810 00:52:50,150 --> 00:52:53,510 world was that he got to work at both Tesla and SpaceX. 811 00:52:53,710 --> 00:52:57,950 He he wasn't willing to leave Apple if it was just how slow, 812 00:52:57,950 --> 00:53:00,470 but he was like to know it was Tesla and SpaceX. 813 00:53:01,150 --> 00:53:02,590 So sometimes you get the best out in the world. 814 00:53:02,590 --> 00:53:04,950 That's the kind of thing you know you need to do. 815 00:53:05,350 --> 00:53:08,990 And that actually has been very beneficial to Tesla so. 816 00:53:10,070 --> 00:53:14,510 If you know if I can squeeze one more mundane question in, I 817 00:53:14,670 --> 00:53:19,220 wonder if you think you can hit. The 1.8 million unit number with 818 00:53:19,220 --> 00:53:23,660 current pricing or you anticipate needing to continue 819 00:53:23,660 --> 00:53:26,900 to lower prices because it seems like they've are stabilized, the 820 00:53:26,900 --> 00:53:29,940 trends are stabilized in the last maybe month and a half. 821 00:53:29,940 --> 00:53:34,620 Should we expect a sort of continued decreases or or more 822 00:53:34,620 --> 00:53:36,180 stabilization for the rest of the year? 823 00:53:42,140 --> 00:53:44,180 You know, we have. We have a really. 824 00:53:45,410 --> 00:53:47,890 We started the referral program, which I think will be quite 825 00:53:47,890 --> 00:53:51,930 effective. You know, as as Zach was saying 826 00:53:51,930 --> 00:53:55,570 earlier, we don't control the macroeconomic conditions. 827 00:53:55,570 --> 00:53:58,970 So if interest rates continue to rise that reduces the 828 00:53:58,970 --> 00:54:03,530 affordability of cars, you know, and and for a lot of people 829 00:54:03,530 --> 00:54:06,730 they're really trying to balance that's, you know, barely 830 00:54:06,730 --> 00:54:09,770 breaking even every month. In fact, if you look at the rise 831 00:54:09,770 --> 00:54:11,970 in credit card debt, they are in fact not breaking even every 832 00:54:11,970 --> 00:54:15,410 month. Credit card debt is this looking 833 00:54:16,250 --> 00:54:21,730 scary? So yeah, we're like, which is 834 00:54:21,730 --> 00:54:22,930 don't control the micro conditions. 835 00:54:23,930 --> 00:54:26,450 If micro conditions stable, I think prices will be stable. 836 00:54:26,450 --> 00:54:30,490 If they're not stable then we would have to lower prices, 837 00:54:31,490 --> 00:54:33,930 yeah. Thank you. 838 00:54:34,330 --> 00:54:36,450 Let's go to Colin Rush from Oppenheimer. 839 00:54:38,850 --> 00:54:41,650 That's so much, guys. You know is you're building out 840 00:54:41,650 --> 00:54:45,930 Dojo and implementing what truly is going to be a highly complex 841 00:54:46,530 --> 00:54:48,370 set of software. Can you speak to the maturity of 842 00:54:48,370 --> 00:54:52,170 the operating system and how much software you're expecting 843 00:54:52,170 --> 00:54:58,050 to use in that? System This is a custom software 844 00:54:58,050 --> 00:55:06,610 stack so but it is design such that you can run at the high at 845 00:55:06,610 --> 00:55:14,530 a high level high torch. And JAX, so, but then yeah we 846 00:55:14,530 --> 00:55:18,290 have to customize it to actually run on a custom silicon. 847 00:55:18,890 --> 00:55:23,210 So this the software stack is a combination of open source 848 00:55:23,210 --> 00:55:26,290 software and then and that tells the software all the way to the 849 00:55:26,290 --> 00:55:29,890 bear silicon, which is the case for the first computer in the 850 00:55:29,890 --> 00:55:34,450 car. OK. 851 00:55:34,490 --> 00:55:35,730 Thanks so much. That's super awful. 852 00:55:35,730 --> 00:55:37,570 And then can you speak to how you're managing some of the 853 00:55:37,570 --> 00:55:40,590 geopolitical risks? Relative to your capacity 854 00:55:40,590 --> 00:55:43,470 expansion, you know, obviously as you guys continue to grow at 855 00:55:43,470 --> 00:55:45,070 this rate, you're going to be putting some folks out of 856 00:55:45,070 --> 00:55:48,750 business and you know there's going to be some impacts around 857 00:55:48,750 --> 00:55:50,550 regional economies. So just want to understand how 858 00:55:50,550 --> 00:55:53,070 you're thinking about that in terms of some of your CapEx 859 00:55:53,070 --> 00:55:54,830 plans and and how you're managing some of those 860 00:55:54,830 --> 00:55:57,550 relationships with with different countries and regions? 861 00:56:02,190 --> 00:56:06,830 Well, we, yeah, this is a period of unusual geopolitical risk. 862 00:56:09,360 --> 00:56:14,320 So I think we're the best we can do is you know have factories 863 00:56:14,320 --> 00:56:19,320 and many parts of the world such that if things get difficult one 864 00:56:19,320 --> 00:56:22,840 part of the world we you know, we can still keep keep things 865 00:56:22,840 --> 00:56:28,280 going in the rest of the world. Thank you. 866 00:56:28,280 --> 00:56:32,240 The next question comes from Mark Delaney from Goldman Sachs. 867 00:56:37,090 --> 00:56:39,210 Thank you very much for taking that question. 868 00:56:39,290 --> 00:56:42,410 Tesla has been making progress reducing costs and did so again 869 00:56:42,410 --> 00:56:44,170 last quarter. Can you give an update on when 870 00:56:44,170 --> 00:56:46,570 you think automotive clouds per vehicle could be under the 871 00:56:46,570 --> 00:56:49,970 historical $36,000 per vehicle level and what are the key puts 872 00:56:49,970 --> 00:56:55,530 and takes together? This is I think it was asked 873 00:56:55,530 --> 00:56:57,690 since in the past this is very difficult to forecast. 874 00:56:58,050 --> 00:57:01,810 You know there's a series of costs that we manage in series 875 00:57:01,810 --> 00:57:03,330 of costs in which we don't control. 876 00:57:04,640 --> 00:57:08,880 And so you know, particularly on the commodity side where labor, 877 00:57:08,880 --> 00:57:12,920 Costco, etc, it's just hard to say. 878 00:57:13,160 --> 00:57:16,440 Yeah, We saw very inflationary, like strong inflationary 879 00:57:16,440 --> 00:57:23,040 pressures for a while last year and and now which obviously 880 00:57:23,040 --> 00:57:24,800 makes it very difficult to reduce COGS. 881 00:57:26,640 --> 00:57:29,480 You know, now we're seeing what seemed to be deflationary 882 00:57:29,480 --> 00:57:33,520 pressures. Certainly deflationary deflation 883 00:57:33,520 --> 00:57:37,330 is a pressure. But we're seeing, you know, 884 00:57:37,330 --> 00:57:40,570 commodity prices dropped, dropping as as was mentioned 885 00:57:40,570 --> 00:57:43,770 there, you know, as car mentioned a moment ago. 886 00:57:44,970 --> 00:57:50,050 And I think what do you think basically the trend should be 887 00:57:50,050 --> 00:57:52,330 deflationary commodity low definitely. 888 00:57:53,050 --> 00:57:55,130 Is that and then? There's also the the unit 889 00:57:55,130 --> 00:57:57,290 economics improves as volumes grow. 890 00:57:57,330 --> 00:57:59,690 That's the other thing we're seeing as we're becoming a 891 00:57:59,690 --> 00:58:02,490 bigger and bigger part of a lot of suppliers, economies of scale 892 00:58:02,650 --> 00:58:04,910 come into play. There's equipment depreciation 893 00:58:04,910 --> 00:58:07,350 that comes into play, equipment Douglas Commission five to seven 894 00:58:07,350 --> 00:58:10,590 years ago that used to be a part of the peace price that's 895 00:58:10,590 --> 00:58:13,990 completely amortized. So we'll see situations or peace 896 00:58:13,990 --> 00:58:17,150 price come down because that equipment contribution has gone 897 00:58:17,150 --> 00:58:19,430 away. And then just we continue to 898 00:58:19,430 --> 00:58:22,430 have this mentality of continuous improvement in terms 899 00:58:22,430 --> 00:58:26,590 of Labor, reducing labor, improving automation and and 900 00:58:26,590 --> 00:58:27,990 just continue to get better at what we do. 901 00:58:27,990 --> 00:58:30,710 So we have seen I think every quarter we have seen an 902 00:58:30,710 --> 00:58:32,430 approved. Of course, the commodities 903 00:58:32,430 --> 00:58:35,910 spiked up and down. Just in general, the trend is 904 00:58:36,110 --> 00:58:40,750 towards being more efficient. Yeah, when and totally agreeing 905 00:58:40,750 --> 00:58:41,830 there. Unless the prices weren't 906 00:58:41,910 --> 00:58:43,430 absolutely insane there for a while. 907 00:58:43,830 --> 00:58:45,270 Yeah, and they're recovering now. 908 00:58:45,750 --> 00:58:47,030 But also don't know what used to. 909 00:58:47,310 --> 00:58:49,550 Be, Yeah. And you know we're still early 910 00:58:49,550 --> 00:58:52,630 in the ramps. Well, not early in the ramp, but 911 00:58:52,830 --> 00:58:55,670 early in the cost down curve. I lost an umbrella, yeah. 912 00:58:56,070 --> 00:58:58,190 So it takes time to work the cost out at first. 913 00:58:58,190 --> 00:59:00,700 It's a focused on ramp. Ramp. 914 00:59:00,700 --> 00:59:03,260 It brings cost. And well be and then your and 915 00:59:03,420 --> 00:59:04,460 quality cost. Yeah. 916 00:59:04,460 --> 00:59:07,580 And then once that stabilizes, we can divert bandwidth to cost 917 00:59:07,580 --> 00:59:11,380 reduction. And so Austin Berlin saw quite a 918 00:59:11,380 --> 00:59:14,660 decent amount of cross reduction and a fundamental basis from Q1 919 00:59:14,660 --> 00:59:16,420 to Q2. We'll continue to do that work. 920 00:59:16,420 --> 00:59:20,180 That will be helpful as though we're just gonna keep shipping 921 00:59:20,180 --> 00:59:24,060 away at it. Yeah, packaging is a big, big 922 00:59:24,060 --> 00:59:27,900 element to it just takes 2. Logistics is normalizing, which 923 00:59:27,900 --> 00:59:31,520 is great. That Cuba legalization, 924 00:59:32,360 --> 00:59:37,000 something that team has been very focused on, So every bit of 925 00:59:37,000 --> 00:59:38,560 it. Yeah. 926 00:59:38,880 --> 00:59:41,440 It's hard. Logistics is under appreciated. 927 00:59:42,880 --> 00:59:46,120 Yeah. So saying goes like that was one 928 00:59:46,120 --> 00:59:49,080 of tactics was one of logistics, yeah. 929 00:59:49,080 --> 00:59:51,640 And we've made tremendous improvements in cost and all 930 00:59:51,640 --> 00:59:57,520 fronts you know express costs. We are down or down pre 931 00:59:57,520 --> 01:00:01,240 pandemic. Expect cost levels now and our 932 01:00:01,240 --> 01:00:06,240 goal is to go further down. Yeah. 933 01:00:06,240 --> 01:00:09,480 So when we look at our progress from Q1 to Q2 on cost, know the 934 01:00:09,480 --> 01:00:13,320 way that we look at internally and normalize for the impacts of 935 01:00:13,320 --> 01:00:16,120 mix shift with Austin and Berlin being a higher percentage of our 936 01:00:16,120 --> 01:00:20,240 mix, normalize for S&X being a higher percentage of our mix in 937 01:00:20,240 --> 01:00:24,600 Q2 versus Q1, the sequential cross reduction, it might be the 938 01:00:24,600 --> 01:00:27,450 largest we've had in a while. Anything. 939 01:00:27,650 --> 01:00:31,090 It's great work on behalf of the test, the team, and we just 940 01:00:31,090 --> 01:00:33,610 gotta keep it up. Yeah, it's a good game of 941 01:00:33,610 --> 01:00:35,570 pennies, but Game of Thrones is good pennies. 942 01:00:38,810 --> 01:00:40,130 Mark, do you have a follow up question? 943 01:00:40,730 --> 01:00:43,010 I think you're muted. Yep. 944 01:00:43,050 --> 01:00:44,610 Yeah. Thank you very much for all the. 945 01:00:45,010 --> 01:00:47,490 Details on that. Maybe you could put a finer 946 01:00:47,490 --> 01:00:51,250 point on the downtime impact that you spoke about in your 947 01:00:51,290 --> 01:00:54,650 prepared comments in terms of production impact. 948 01:00:54,650 --> 01:00:57,450 And then also to what extent there's a margin impact from 949 01:00:57,570 --> 01:01:00,330 those that you're playing in the square? 950 01:01:00,410 --> 01:01:09,730 Thank you. Yeah, the, the downtime, you 951 01:01:09,730 --> 01:01:13,890 know, we don't know exactly the number of cars impacted because 952 01:01:13,930 --> 01:01:16,250 you know, kind of the way that we go into downtime windows for 953 01:01:16,250 --> 01:01:19,150 upgrades. Is you know, we set aside a 954 01:01:19,150 --> 01:01:22,070 period of time but then the team is challenged it as quickly as 955 01:01:22,070 --> 01:01:24,870 possible so that we can get the factories up and running again 956 01:01:24,870 --> 01:01:29,110 and minimize that. So it's not, it's not profound 957 01:01:29,110 --> 01:01:33,230 reduction, quite small. Too much if the weeds here. 958 01:01:33,230 --> 01:01:35,670 I mean like we're asking for level of precision that is not 959 01:01:36,470 --> 01:01:39,790 possible to answer, so let's move on. 960 01:01:40,310 --> 01:01:42,240 Yep. I think this is unfortunately 961 01:01:42,240 --> 01:01:47,040 all the time we have for today, so we'll speak to you all in the 962 01:01:47,040 --> 01:01:48,760 next three months. Thank you very much. 963 01:01:48,840 --> 01:01:49,120 Thank you.