Q3 2023 Tesla Inc Earnings Call

Yeah.

Yes.

Yeah.

[music].

Uh huh.

Yes.

[music].

Hum.

Yeah.

[music].

New factories, and we believe pistol.

Meaningful room for improvement there.

Hmm.

Regarding autopilot and AI, our vehicles now driven over half a billion miles with FSP beta.

Self driving data.

And that number is growing rapidly.

We recently completed.

10000.

GPU cluster of H, one hundreds, we think probably bringing it into operation faster than anyone's ever bought brought that much.

Compute per unit time into production.

Since training is the fundamental limiting factor on progress with full self driving and vehicle autonomy.

We're also seeing.

Significant promise with FSD version 12. This is the end to end.

AI, where it's at.

Proton count in controls out.

Really you can think of it as there's just a.

Large bitstream coming in and in a tiny bit stream going out.

Hi.

<unk> reality.

Sure.

A very small set of outputs.

Which is actually kind of how humans work the vast majority of.

Human data input is.

<unk> from our eyes.

And so we are.

Like the car.

Photons in controls out.

With neural nets, just neural nets in the middle.

Yeah.

It's very interesting to think about that.

Okay.

We will continue to invest significantly in AI development.

As this is really the domestic game changer.

<unk>.

And success in this regard in the long term.

I think.

Has the potential to make tests are the most valuable company in the world by far.

If you have fully autonomous cars at scale.

Fully autonomous.

Humanoid robots that are truly useful.

It's not clear what the limit is.

Yes.

Regarding energy storage redeployed.

Gigawatt hours of energy storage products in Q3.

And as this business grows the energy vision is becoming our highest margin.

Business.

<unk> in service now contribute over half a billion dollars.

Quarterly profit.

The cyber trucking to let people excited about cyber truck I am to have driven the car, it's an amazing product.

I do want to emphasize that there will be.

Got it.

Challenges in reaching volume production with the cyber truck.

And then and making a cyber truck.

Cash flow positive.

This is this is simply normal for.

When you've got a product with a lot of new technology.

Any new vehicle brand, new vehicle program, but especially one that is.

As.

Different and advanced as the cyber truck.

You will have problems proportionate to how many new things you are trying to solve at scale. So I just want to emphasize that one I think.

Essentially our best product ever.

And I think it is our best product ever.

It is going to be.

Require immense work to reach volume production.

And be cash flow positive.

At a price that people can afford.

Often people do not understand what is truly hard that's why I say prototypes are easy production is hard.

People think its the idea or you make a prototype.

Just add a car and as soon as the dining car is.

Is that just anyone can do it it just required.

New factories, and we believe this tool.

Taste and does require effort to design a prototype.

Meaningful room for improvement there.

The difficulty of going from prototype to volume production.

Hmm.

Guarding autopilot and AI, our vehicles now driven over half a billion miles with FSP beta for self driving beta.

Is a 10% harder to get volume production that to make the prototype in the first place and then it is even harder than that to reach positive cash flow that is why there.

And that number is growing rapidly.

We recently completed.

10000.

If not been <unk>.

New cars startups that have been successful.

GPU cluster of <unk>, hundreds, we think probably bring it into operation faster than anyone's ever bought brought that much.

For 100 years perfect from Tesla.

So.

Compute per unit time into production.

I just want to temper expectations for cyber truck.

Since training is the fundamental limiting factor on progress with full self driving and vehicle autonomy.

Yes.

It's a great product, but financially it will take.

We're also seeing.

On a year to 18 months before it is a.

Significant promise with FSP version 12. This is the end to end.

Significant positive cash flow contributor.

AI, where it's at.

I wish there was some way to.

Photon count in controls out.

So that would be different but.

Really you can think of it as well.

That's just my best guess.

Is it just a.

Large bloodstream, it's coming in and in a tiny bit stream going out.

Okay.

So did it really.

Hi.

Dressing reality okay.

That is all.

So we have over.

So a very small set of outputs.

1 million people, who have reserved the car.

Which is actually kind of how humans work the vast majority of.

Slipped to it's not a demand issue.

To make it.

Human data input is.

We need to make it at a price that people can afford.

<unk> from our eyes.

Suddenly difficult things.

Hi.

So we are.

In conclusion, we continue to focus on.

Like the car.

Photons in controls out.

Ah ramping production while maintaining.

With neural nets, just neural nets in the middle.

Positive cash flow.

Yeah.

<unk>.

And we continue to target.

It's very interesting to think about that.

I would expect to have around $1 8 million vehicle deliveries.

Okay.

We will continue to invest significantly in AI development.

David earlier this year.

As this is really the domestic game changer.

The Tesla AI team is I think one of the world's best and I think it is actually by far the world's best when it comes to real World AI.

And success in this regard in the long term.

I think.

Has the potential to make tests are the most valuable company in the world by far.

I'll say that again Tesla has the best real World AI team on Earth period.

If you have fully autonomous cars at scale.

And it's getting better.

And lastly, I wanted to thank all of our employees.

Fully autonomous.

Humanoid robots that are truly useful.

A lot of extra effort during uncertain times. Thank you very much for your hard work and the impact that you are making.

It's not clear what the limit is.

Yes.

Regarding energy storage, we deployed four gigawatt hours of energy storage products in Q3.

Thank you very much Elon and our CFO <unk> have some opening remarks as well thanks Martin.

Deliveries in Q3 outpaced production and we had yet another record quarter of profitability in our energy business.

And as this business grows the energy vision is becoming our highest margin.

To listen to the Tesla team for their continued focus on operational excellence as we navigate through a period of economic uncertainty high interest rates and shifting consumer centric as Ilan mentioned Q3 operational.

Business.

<unk> in service now contribute over half a billion dollars.

Quarterly profit.

The cyber trucking to let people excited about cyber truck I am to have driven the car, it's an amazing product.

And financial performance was impacted by planned downtime for our factory outlets.

I do want to emphasize that there will be.

This was necessary to allow for further factory improvements and production rate and fees.

Got it.

Challenges in reaching volume production with the cyber truck.

And then and making a cyber truck.

Despite this factory shutdowns.

Cost per Waco decreased to approximately $37 five.

Cash flow positive.

This is this is simply normal for.

We saw sequential decreases in material costs and freight.

When you've got a product.

Using the cost of our vehicles is our top priority.

Product with a lot of new technology.

Any new vehicle brand, new vehicle program, but especially one that is.

On the operating expenses front R&D expenses continued to rise to cyber due to cyber truck prototype builds and pilot production testing combining with spend on AI technologies like folks are driving optimal to intelligence.

As.

Different and advanced as the cyber truck.

You will have problems proportionate to how many new things you are trying to solve at scale. So I just want to emphasize that while I think.

And we'll continue to make investments in these areas and hence our capital expenditure than R&D will continue to grow in the near term.

Is.

Essentially our best product ever.

However, our focus is to continue making investments to positive cash flow from operations. This.

And I think it is our best product ever.

It is going to be.

Acquire immense work to reach volume production.

In this year itself, we have generated operating cash flows of approximately $8 9 billion and free cash flows of approximately $2 3 billion.

And be cash flow positive.

At a price that people can afford.

Our other businesses are becoming more prominent on a standalone basis with the annuity business, leading the charge primarily from the growth in megabyte deposits.

Often people do not understand what it is truly hard that's why I say prototypes are easy production is hard.

People think its the idea or you make a prototype.

Our services and other businesses.

Just I had a car and as soon as they are tiny in car is.

On a year on year basis also continued to show progress.

It's just anyone can do it it just required.

<unk> momentum as we benefit from our growing fleet.

Taste and does require effort to design a prototype.

As regards our pricing strategy. In addition to what we have shared before I want to elaborate that moves car buying happens with one of our other pharma finance it and hence we also view pricing in terms of monthly cost for the customer and therefore as interest cost in the U S have risen substantially it has required us towards.

The difficulty of going from prototype to volume production.

Is a 10000% harder to get volume production that to make the prototype in the first place and then it is even harder than that to reach positive cash flow that is y.

Have not been <unk>.

Just the price of our vehicles to keep marketing costs in parity.

New cars startups that have been successful.

We've tried to offset such adjustments.

For 100 years perfect from Tesla.

Focus on reducing costs.

So.

There is an inherent lag in cost reductions, which in turn impacts market.

I just want to temper expectations for cyber truck.

To that extent, we recently announced a partner vehicle leasing program in the U S. Whereby you can get outstanding the model y or as low as $399.

Yes.

It's a great product, but financially it will take.

I don't know a year to 18 months before it is a.

In conclusion as we navigate through.

Significant positive cash flow contributor.

Challenging economic environment, we're focused on reducing costs maximizing delivering volumes.

I wish there was some way to.

So that would be different but.

We continue making investments in the future in particular AI and other.

That's just my best guess.

An explanation platform.

Okay.

We believe this strategy positions us well for the long term once again I would like to thank the Tesla team for their efforts in the last call.

So does it really.

<unk> is.

Is off the charts, we have over.

1 million people, who.

We've reserved the car.

Thank you very much and now let's go to investor questions.

So it's not a demand issue.

We have to make it.

First the Investor question comes from Craig how many cyber truck deliveries do you anticipate for 2024.

And we need to make it at a price that people can afford.

And Stanley difficult things.

In conclusion, we continue to focus on.

It's difficult to make an accurate guess at this point.

Ah ramping production while maintaining.

Going back to what I said earlier that the ramp is going to be extremely difficult.

Positive cash flow.

And we continue to target.

I would expect to have around $1 8 million vehicle deliveries.

And.

Okay.

Stated earlier this year.

There's no way around that if you try to make it.

The Tesla AI team is I think one of the world's best and I think it is actually by far the world's best when it comes to real World AI.

If we just try to do some copycat.

Vehicle design of which there are.

200 models that are slightly.

Slight variations on a theme and the conversion engine world.

I'll say that again Tesla has the best real World AI team on Earth period.

<unk>.

Just.

Patients without a difference.

And it's getting better.

It's <unk>.

Really not that hard, but if you wanted to do something radical and innovators and something really special liquids tactically cyber truck.

And lastly, I wanted to thank all of our employees who are making.

A lot of extra effort during uncertain times. Thank you very much for your hard work and the impact that you are making.

It is extremely difficult because theres nothing to copy.

Thank you very much Elon and our CFO wipe out have some opening remarks as well thanks Martin.

You have to invent not just the car, but the way to make required.

So.

<unk> deliveries in Q3 outpaced production and we had yet another record quarter of profitability in our energy business.

The more unchartered territory less predictable Bianca.

The outcome now I can say that if you said it well.

Congratulations to the Tesla team for their continued focus on operational excellence as we navigate through a period of economic uncertainty high interest rates and shifting consumer sentiment as Ilan mentioned Q3 operational and.

Where where things end up.

I think we will end up with roughly a quarter million dollars cyber trucks here.

And.

Right.

So we're not I don't think we're going to reach that upward rate next year.

And financial performance was impacted by planned downtime for our factory outlets.

I think.

We probably reached at some time in 2025.

This was necessary to allow for further factory improvements and production rate and fees.

That's my best guess.

Despite this factory shutdowns.

Thank you.

The second question is can you provide a progress update on the <unk> hundred 80 cell, particularly progress towards performance improvements and cost savings outlined on battery day. Thank you.

Cost per Waco decreased to approximately 37500 <unk>.

We saw sequential decreases in material cost and freight.

Do you see the cost of our vehicles is our top priority.

Sure thing Martin.

On the operating expenses front R&D expenses continued to rise to cyber due to cyber truck prototype builds and pilot production testing combining with spend on AI technologies like folks are driving optimal to intelligence.

<unk> thousand 688 cell production in Texas increased 40% quarter over quarter Congrats.

Congrats to the Texas team for producing our $20 million sell off of one line.

Texas is now our primary quarters as Haiti facility.

And we'll continue to make investments in these areas and hence our capital expenditure than R&D will continue to grow in the near term.

We're heavily focused on quality scrap is down 40% quarter over quarter with the increased volume and yield improvements cell costs consistently improved month over month within the quarter. Although we have a lot more work to do to achieve our steady state goals.

However, our focus is to continue making investments to positive cash flow from operations. This.

And that is our priority.

This year itself, we have generated operating cash flows of approximately $8 9 billion and free cash flows of approximately $2 3 billion.

<unk> with 10% higher energy than our model YSL startup production online two in Texas.

This quarter, we convert to building, 100% cyber truck sales to simplify and focus the factory as we ramp all four lines and phase one over the next three quarters phase.

Our other businesses are becoming more prominent on a standalone basis with the annuity business, leading the charge primarily from the growth in megabyte to pilot.

Phase two of the Texas 46, 80 facilities currently under construction the additional four lines incorporate further capital efficiencies of our phase one and our target is for them to start producing in late 2024.

Our services and other businesses.

On a year on year basis also continued to show progress.

<unk> momentum as we benefit from our fleet.

As regards our pricing strategy. In addition to what we have shared before I want to elaborate that moves call buying happens with one of our other pharma finance it and hence we also view pricing in terms of monthly cost for the customer and therefore as interest cost in the U S have risen substantially it has required us towards.

Lastly in keto, our retooling to enable large scale pilot runs of our next generation cell designs. It is long term goal is to be the launch pad for new cells. One generation ahead of our mass production facilities, enabling faster iteration and smoother ramp ups of new designs.

Thank you.

The next question.

Just the price of our vehicles to keep the monthly cost embedded.

From institutional investors could you please provide an update on capacity.

We're trying to offset currency adjustments.

Expansion plans for company's factories in Berlin in Austin.

Focus on reducing costs firewall data and inherent lag in cost reductions, which in turn impacts market.

And the opening schedule of Giga factory in Mexico.

Berlin and the Austin factory. The current priority is actually maximize the output from our existing lines up by laser focus on efficiency improvements.

To that extent, we recently announced a partner vehicle leasing program in the U S. Whereby you can get outstanding the model y or as low as $3 99.

Always maintaining a high quality and are reducing per unit cost will be as critical as growing production volume.

In conclusion as we navigate through.

Challenging economic environment, we're focused on reducing costs maximizing delivery volumes.

For Mexico, we are working on infrastructure and factory design in parallel with the engineering development of the new production that will be manufactured there.

Continuing making investments in the future in particular AI and other.

An explanation platform.

We believe this strategy positions us well for the long term once again I would like to thank the Tesla team for their efforts over the last quarter.

That's all I can share for that.

In Mexico, we're laying the groundwork to.

Begin construction.

Thank you very much and now let's go to investor questions.

And.

All the long lead items.

Right.

First the Investor question comes from Craig how many cyber truck deliveries do you anticipate for 2024.

We wanted to just get a sense for.

The global economy is like before we go full tilt on the Mexico factory.

I am worried about the high interest rate environment that we're in.

I struggle to make an accurate guess at this point.

Yes.

Going back to what I said earlier that the ramp is going to be extremely difficult.

Kenneth <unk>.

For the vast majority of people buying a car is about the monthly payments.

And.

And as interest rates rise.

Okay.

There's no way around that if you try to make it.

The proportion of that monthly payment that is interest increases naturally.

If we just try to do some copycat.

So.

Vehicle design of which there are.

That's.

If interest rates remain high or expect for even higher its that much harder to for people to buy the car is over Canada reported.

200 models that are slight.

Slight variations on a theme and the Kibosh mentioned world.

Sure.

Just <unk>.

Tom.

Distinctions without a difference.

So and we are tracking up wave at this point for <unk>.

And it's really not that hard, but if you wanted to do something radical and innovators.

Selling cargos, but not just in revenue, but in unit volume if you compare that to the other vehicles that are.

Nothing really special liquids tactically cyber truck.

It is extremely difficult because theres nothing to copy.

Number two and number three and whatnot that cost much less in a car.

You have to <unk>, not just the car, but the way to make require.

So.

So the more unchartered territory less predictable.

We're just hitting law of large numbers situations here I know people want to advertising we are advertising.

Now I can say that if you said it well.

I think there is some.

We're well things end up.

Just wondering if there is a.

I think we will end up with roughly a quarter million dollars cyber trucks here.

Something to be gained on the advertising front I don't think its nothing.

Great.

And.

Employing people have a car that is great, but they cannot afford it.

But.

I don't think we're going to reach that upward rate next year.

That's really helpful.

I think.

So.

Probably reach it sometime in 2025.

That is really the thing that must be solved is to make the car affordable.

That's my best guess.

Thank you.

Or.

The second question is can you provide a progress update on the <unk> hundred 80 cell, particularly progress towards performance improvements and cost savings outlined on battery day. Thank you.

Bearish versus counterpart for any amount of money.

So that.

They can't afford it you can't afford it.

This is victor.

Oh sure thing Martin.

40, <unk> hundred 80, <unk> cell production in Texas increased 40% quarter over quarter.

Okay. Thank you very much.

The next question is when do you expect all of the Highland to be available in the U S. I just wanted to address that Unfortunately, we don't answer product related questions on timings on the earnings call. So let's go to the next one.

Congrats to the Texas team for producing our $20 million sell off of one month.

Texas is now our primary quarters Haiti facility.

Heavily focused on quality scrap is down 40% quarter over quarter with the increased volume and yield improvements cell costs consistently improved month over month within the quarter. Although we have a lot more work to do to achieve our steady state goals.

Current sell side consensus assumes that Tesla will deliver $2 3 million vehicles in 2024, representing 28% growth versus 2023 guidance.

And that is our priority.

This growth rate achievable without any mass market launches in 2024.

This average upsell with 10% higher energy than our model YSL started production online two in Texas are this quarter, we convert to building a 100% cyber truck sales to simplify and focus the factory as we ramp all four lines and phase one over the next three quarters.

<unk> expect to return to its 50% long term CAGR.

Thanks for the question when you look at 2024.

A lot of moving pieces.

Phase two of the Texas 46, 80 facilities currently under construction the additional four lines incorporate further capital efficiencies of our phase one and our target is for them to start producing in late 2024.

No I'm just talking about what is happening in the macroeconomic environment.

So we're focused on growing our volumes in a very cost efficient manner.

We are carefully reviewing all our options and we'll be able to provide a much more meaningful update at our next earnings call.

Lastly in keto, our retooling to enable large scale pilot runs of our next generation cell designs.

Yes, I mean, the risk of stating the obvious.

As long term goal is to be the launch pad for new cells. One generation ahead of our mass production facilities, enabling faster iteration and smoother ramp ups of new designs.

Is it possible to have a compound growth rate of 50% forever or you will exceed the massive known universe.

Thank you.

So.

But I think we will grow very rapidly much faster than any other car company on earth by far.

Our next question from institutional investors could you. Please provide an update on capacity.

The expansion plans for company's factories in Berlin in Austin.

Thank you.

Next question is do you have an approximate timeline in mind for the robo taxi driven or non driven what excites you. Most about how this project is progressing.

And the opening schedule of Giga factory in Mexico.

Berlin and the Austin factory. The current priority is actually maximize the output from our existing lines.

With Robo taxis.

Laser focus on efficiency improvements.

Necessarily non driven.

[laughter].

Always maintaining a high quality and are reducing per unit cost will be as critical as growing production volume.

Sure.

The.

I guess I am very excited about our progress with autonomy.

For Mexico, we are working on infrastructure and factory design in parallel with the engineering development of the new production that will be manufactured there.

<unk>.

The.

And to end.

Nothing but nets.

A self driving software is amazing.

That's all I can share.

In Mexico, we're laying the groundwork to.

Hi.

Ill begin construction.

Thanks, Neal around Austin with no interventions.

And.

All the long lead items.

So.

Great.

We wanted to just get a sense for.

Yes, it is clearly the right move.

The global economy is like before we go full tilt on the Mexico factory.

<unk>.

Yes so.

I am worried about the high interest rate environment that we're in.

So, it's really really pretty amazing.

I just can't emphasize this enough.

And obviously if that same.

For the vast majority of people buying a car is about the monthly payments.

Software and approach World.

Enable optimist to be useful things.

And as interest rates rise.

And.

The proportion of that monthly payment that is interest increases naturally.

And they've locked with two children.

How to do things simply by looking.

So.

That's.

Got it.

If interest rates remain high or even higher.

So.

So extremely exciting.

Just that much harder to for people to buy the car except for Canada reported.

And long term.

<unk>.

Okay.

As I mentioned before.

So and we are tracking up wave at this point for model y to be the best selling cargos, but not just in revenue, but in unit volume if you compare that to the other vehicles that are.

Given that economic output is.

Number of people times productivity.

If you no longer have a constraint on.

Number two and number three and whatnot that cost much less than our car.

When people effect, where you've got a humanoid robot that can do as much as you'd like.

Okay.

Your your economy is why is the internet.

So.

We're just hitting law of large numbers situations here I know people want us to advertising we are advertising.

In peripheral.

Okay intents and purposes.

Sure.

I think there is some.

There are some interest there is.

So.

And I don't think anyone is going to do better than Tesla not by a long shot.

Something to be gained on the advertising front I don't think its mapping.

The first dynamic is impressive but the robot lacks a brain.

Good.

Employing people have a car that is great, but they cannot afford it.

The.

Wizard of Oz.

It doesn't really help.

Hey man.

So that is really the thing that must be solved is to make the car affordable.

Yeah. Thanks, Brian .

And then.

Youll see us be able to design.

Four.

Humanoid robots such.

The average person counterpart for any amount of money.

Such way that it can be mass manufacturing.

They simply can't afford it you can't afford it.

And then at some point the robust will manufacture the robots.

This is victor.

Now, obviously, we need to make sure that.

That's a good place for humans in that future and where does not create some variance of the terminator.

Okay. Thank you very much.

Would come.

The next question is when do you expect all of the Highland to be available in the U S. I just wanted to address that Unfortunately, we don't answer product related questions on timings on the earnings call. So let's go to the next one.

<unk>.

So we're going to put a lot of effort into localized controller humanoid robot.

So you basically anyone will be able to shut it off locally.

And you can't change that.

Current sell side consensus assumes that Tesla will deliver $2 3 million vehicles in 2024, representing 28% growth versus 2023 guidance.

Even if you.

Rebecca software update Counterchange that it has to be hardcoded.

Thank you the.

Is this growth rate achievable without any mass market launches in 2024, and Windows Tesla I expect to return to its 50% long term CAGR.

Our next question is why was the price dropped on FSP. If it is getting better and robot taxi is expected soon.

Thanks for the question when you look at 2024.

Well, we just wanted to make it more affordable.

A lot of moving pieces.

Awesome Walker will try it.

Just talking about what is happening in the macroeconomic environment.

Yes.

Thank you overtime.

So we're focused on growing our volumes in a very cost efficient manner.

Price of FSP will increase proportionate towards value so.

And are carefully reviewing all our options and we'll be able to provide a much more meaningful update at our next earnings call.

It would provide the current prices are kind of it.

Temporary low.

Yes, I mean, the risk of stating the obvious.

Thank you the.

The next question is again on FSP.

Is it possible to have a compound growth rate of 50% forever or you will exceed the massive known universe.

Mercedes is accepting legal liability for when it's level three autonomous driving system drive pilot is active is Tesla planning to accept legal liability for FSD and if so when.

So.

But I think we will grow very rapidly much faster than any other car company on earth by far.

So there's a lot of people that assume we have legal library.

Thank you.

Next question is do you have an approximate timeline in mind for the robo taxi driven or non driven what excites you. Most about how this project is progressing.

Judging by the lawsuits.

We're certainly not being let off the hook on that front.

Wed like to or wouldn't like it.

So.

<unk> taxes.

I think it's important to remember for everyone that savings of system is limited.

Necessarily non driven.

[laughter].

Key roads in Nevada, and some certain cities in California doesn't work in the snow or the song and must have a weaker mark planes only 40 miles per hour. Our system is meant to be holistic in.

The.

I guess, Sam I'm very excited about our progress with autonomy.

Im.

The.

I mean any conditions. So we obviously have a much more capable approach but.

And to end.

Nothing but nets.

With those kind of limitations.

A self driving software is amazing.

Really not very useful.

Yes, I think.

Okay.

Neil around Austin with no interventions.

Somebody who understands the proclivity of Tesla AI.

So.

<unk>.

Very very few.

Yes, it is clearly the right move.

It's basically baby hei.

<unk>.

It has to understand reality in order to drive.

Yeah. So.

So, it's really really pretty amazing.

Okay.

Maybe maybe hei.

And obviously if that same.

Thank you <unk>.

Software and approach World.

Next question on Optimus will Optimus be working on Giga factory lines next year, if so how many which your guess will be deployed.

Enable optimist to be useful things.

And.

And they've locked with two children.

How to do things simply by looking.

Got it.

I think at this point.

So.

So extremely exciting.

I'm not ready to discuss.

And long term.

It tells us the Artemis program.

<unk>.

But we will make.

As I mentioned before.

Provide periodic updates online.

Given that.

So as you can see where.

Output is.

Optimists a year ago.

Number of people times productivity.

Could barely walk.

If you no longer have a constraint on.

And now it can be yoga.

[laughter].

When people effect, where you've got a humanoid robot that can do as much as you'd like.

So.

A few years from now completed your ballet.

Your your economy is why is the internet.

Okay.

Sure.

It sounds goods.

<unk>.

And the last question from investors is.

Okay intents and purposes.

Sure.

Neural net path planning represent a significant advance in capability on safety for FSD, what steps is Tesla taking to make this technology available outside the U S.

So I.

And I don't think anyone is going to do better than Tesla not by a long shot.

Yes cost dynamics is impressive, but the robot lacks a brain.

<unk>.

Yes, our purchased <unk> to try to get more.

Wizard of Oz.

A more places we are trying to make it work the Hunter partners.

Hey man.

Yes.

So the reason we don't do it in all countries simultaneously is that it would take much longer to get to make it work anywhere at all.

Yeah. Thanks, Brian .

And then.

Youll see us be able to design.

So.

Humanoid robots such.

Such way that it can be mass manufacturing.

That's why it's currently just North America.

And then at some point thrombus will manufacture the robots.

Yeah.

And also for most parts of the World you have to get approval before deploying things.

Now, obviously, we need to make sure that.

That's a good place for humans and that future that we did not create some variance of the Terminator.

In the U S. You can deploy things at risk or to take liability for your point.

Outcome.

<unk>.

So we're going to put a lot of effort into localized controller humanoid robot.

So.

Yes.

Whereas most countries require.

So you basically anyone will be able to shut it off locally.

Some sort of extensive approval program.

And you can't change that.

So.

Even if you.

We only want to go through that expensive.

Rebecca software update Counterchange that it has to be hardcoded.

Program.

When we think it's kind of it.

Ready for primetime in that country.

Thank you.

Question is why was the price dropped in FSD.

I apologize just one on in those countries, but.

It is getting better and robot taxi is expected so soon.

We can keep.

Finding ways to make it better.

Okay.

It needs to drive.

Well, we just wanted to make it more affordable.

It needs to drive.

Walker will try it.

Such that it exceeds the.

Yes.

Even unsupervised.

Thank you overtime.

Difficult exceeds the probability of injury of the human.

Price of FSP will increase proportionate towards value seller.

Okay got significantly better.

So it provides the current price is a kind of a.

A lower prevalent even treating human pipeline.

Temporary low.

I think what we're tracking to that point very quickly.

Thank you.

Obviously in the past have been overly optimistic about this.

The next question is again on FSP.

Mercedes is accepting legal liability for when it's level three autonomous driving system drive pilot is active is Tesla planning to accept legal liability for FSD.

The reason I have been overly optimistic is that the progress tends to.

Sort of looks like a logged in logged curve.

Which is that.

You have.

If so when.

Rapid initial improved improvements to.

So there's a lot of people that assume we have legal library.

So that if you were to extrapolate that.

Judging by the lawsuits.

Rapid.

Yes.

We're certainly not being let off the hook on that front.

Fairly linear rate of improvement.

Wed like to or wouldn't like it.

You get yourself driving.

So.

Quite quickly, but then.

It's important to remember for everyone that savings in the system is limited.

Okay.

The rate of improvement kerbs over logarithm quickly.

Two roads in Nevada, and some certain cities in California doesn't work in the snow or the fog and must have a weaker mark planes only 40 miles per hour.

As far as to asymptote.

That's not happened several times I would characterize our progress.

<unk> railroads AI as a series of stacked log kurtz.

Our system is meant to be holistic in driving any conditions. So we obviously have a much more capable approach but.

With those kind of limitations.

I think that is also true in other parts of <unk> like <unk> and whatnot.

Really not very useful.

This backlog curves.

I think so.

Okay.

Somebody who understands the proclivity of.

Each log curve is higher than the last one.

Tesla AI.

System.

It keeps document keeps taking amongst eventually.

Very very few.

Got to FMC.

It's basically baby hei.

Thank you, let's now go to analyst questions. The first question comes from will Stein from Truest will please go ahead and on mute yourself.

It has to understand reality.

In order to drive.

Maybe maybe hei.

Great. Thanks, so much for taking my question and thanks for all the updates today.

Thank you.

The next question on Optimus will Optimus be working on Giga factory lines next year, if so how many which your guess will be deployed.

I think at this point.

I'm not ready to discuss details of the Artemis program.

But we will make.

Provide periodic updates online.

So as you can see where.

<unk> a year ago.

Between month production roughly.

Early work.

And now it can do yoga.

With my guess so it's just that they happen to spin will happen is that the.

[laughter].

So.

It started this year spend next year and get to 2025 technically there are three calendar years in there, but there is actually only 18 18 months not three years I'd be very disappointed if it took us.

A few years from now.

Roy do ballet.

Okay.

It sounds goods.

And the last question from investors is.

Neural net path planning represent a significant advance in capability on safety for FSD, what steps is Tesla taking to make this technology available outside the U S.

Third is shocking if it took us three years.

18 months from initial deliveries.

You have to reach volume and reach prosperity.

An immense I can't tell you how much blood sweat and tears level required to achieve that is just.

Our approach has been to try to get more.

A more places we've tried to make it work the hardest problem is.

Staggering.

And I've been through it many times.

So the reason we don't do it in all countries simultaneously is that it would take much longer to get to make it work anywhere at all.

Okay.

No.

So.

Similar path for the Nexgen platform, so I mean, theres like unique complexity to it yes.

That's why it's currently just North America.

Truckers.

Yeah.

Yes, I mean, we dug around grateful soccer satisfactory network.

And also for most parts of the World you have to get approval before deploying things.

Nobody.

Every rig to exert great better than themselves and so.

In the U S. You can deploy things at risk or to take liability for your point.

Uh huh.

It is it is.

So.

Yes.

Subtract from others.

Whereas most countries required.

For those special products that comes along only once in a long while.

Some sort of extensive.

Global program.

So.

We only want to go through that extensive global program.

And special products that come along once in a long while are just incredibly difficult to.

When we think it's kind of it.

Ready for primetime in that country.

Bring to market to reach volume to be prosperous.

I apologize.

And in those countries, but.

It's fundamental to the nature of the newness.

We can keep buying.

Finding ways to make it better.

Okay.

<unk>.

So now.

Okay.

It needs to drive.

That's sort of high volume low cost.

It is a driver.

Such that it exceeds the.

It's more of a vehicle is.

Actually much more conventional.

Even unsupervised significantly exceeds the probability of injury of the human.

In terms of like the technologies, we're putting in there where we didn't have to and then had been.

Figure out were significantly better.

400, stainless steel or at Mega.

With a lower probability of intriguing than human pipeline.

On castings.

The largest hot stamping and the world are new.

I think what we're tracking to that point very quickly.

Hi, Bob.

Obviously in the past have been overly optimistic about this.

The reason I've been overly optimistic is that the progress tends to.

Sort of looks like a logged in logged curve.

Which is that.

You have.

Rapid initial improved improvements to.

So that if you were to extrapolate that.

With regard.

So rapid.

Yes.

Fairly linear rate of improvement.

You get to self driving.

Quite quickly, but then.

Okay.

The rate of improvement kerbs over quickly.

As far as to asymptote.

Sure.

That's not happened several times I would characterize our progress.

<unk> rebels AI as a series of stacked log curve.

I think that is also true in other parts of <unk> like <unk> and whatnot.

This backlog curves.

Okay.

Each log curve, that's higher than the last one.

It keeps vacuum English keeps taking amongst eventually.

Aerospace.

Thank you, let's now go to analyst questions. The first question comes from will Stein from Truest will please go ahead and on mute yourself.

Great. Thanks, so much for taking my question and thanks for all the updates today.

We we learned earlier on the call it sounds like you.

You don't think the truck will ramp to significant volume until its third year of production should we have a similar anticipation for the ramp of the next Gen platform or is there any reason that we should be maybe more optimistic or pessimistic about the rent profile.

While there thank you.

Yes, I mean.

To be clear just.

It's not really the third year of production, it's kind of like the 18th month of production.

Roughly.

My guess so.

They happened to what will happen is that the.

It starts this year spends next year against the 2025 secondly, there are three calendar years in there, but there is actually only 18 18 months about three years.

Very disappointed if it took us.

So it's shocking if it took us three years.

18 months from initial deliveries.

Im.

You have to reach volume and enrich prosperity with an immense I can't tell you how much blood sweat and tears level required to achieve that is just.

Staggering I have been through it many times.

And then.

Okay.

Yeah.

Similar path for the Nexgen platform, so I mean, theres like unique complexity to it yes Saturday truckers.

Thank you.

I mean, we dug around great for saga satisfactory network nobody.

Generally.

Every rig to exert great better than themselves and so.

Hi.

It is it is.

So I'm trying to others.

The special product.

<unk> that comes along only once in a long while.

And special products that come along once in a long while are just incredibly difficult to.

Bring to market to reach volume to be prosperous.

It's fundamental to the nature of the newness.

So now.

That's sort of high volume low cost.

It's more of a vehicle is.

Actually much more conventional.

In terms of like the technologies, we're putting in there we didn't have to and then.

<unk> hundred stainless steel or at Mega.

Tom castings are.

The largest hot stamping and the world or a new hybrid.

Virtually quiet in the same way as Sava trial, I think it will be.

Quite a fast ramp.

Okay.

As long as I'm, saying, we're doing everything possible to simplify that vehicle in order to achieve.

In.

Units per minutes.

That is.

Is unheard of in the auto industry.

Okay.

Some of it doesn't make it easier automotive ultimately lower costs.

In terms of a lower cost.

Yes.

Speak there is.

It'll be cool, but I have to tell the story.

<unk>.

It's not meant to be.

Yes.

<unk>.

Oh in magic.

So that it may be.

It'll be.

So beautiful, but it's.

No.

Its utilitarian.

The utility.

Let's not forget many cases travel suspension.

As an example.

Yes.

Sure.

I mean, the same truck has a lot of bells and whistles.

Alright. Thank you very much let's go to pier Farah <unk> from New Street research.

Hey.

Can you hear me opine, yes, yes.

Hey.

Just like a follow up question on the <unk>.

And pricing and other terms so I agree with you that as if it improves we should see value.

Increasing but again, it's like the ultimatum.

The values of SSD, which is to be able to handle that.

The robo taxi is not going to necessarily interest everybody and you have a bit of a degraded version that would be like a chauffeur sevens, whereas a characterized by it says that you still have to beans.

And around and then there is like the hands on.

Is on the version of the service.

And I guess you know.

Yes should be like much lower.

Costs lower.

<unk> kind of.

Volumes of the studies that could have a very large penetration on your installed base and more expensive one that would remain at a lower penetration level. So I'm just wondering if you'll take investments.

Last but not least lags the simplest version necessity of Santiago.

Daily volume are going to work from a technical perspective, probably default LG made prototypes.

Possession genworth to Teva.

And so I'm wondering how you take that into account in how youre thinking like the financial contribution of <unk> over time and whether it includes evolve your pricing.

AUM is up kind of yesterday.

Inquiries are addressed.

Yes.

If fully autonomous vehicle.

I think Joe you sort.

What are the economics of the autonomous vehicle are truly astounding.

In a positive way.

And Youll get a passenger vehicles today, they may only get about 10 to 12 hours of usage per week.

If you're if you're driving out a half a day on average.

That's roughly 10 hours a week out of 168 hours.

And then there's also you're going to.

Banking and insurance.

So you've got to take care of the cost like Theres a lot of overhead.

So.

Yeah.

Yeah.

The economics of the system arent just.

Insanely positives.

Given that the card like all of the cars, we're making and have made for awhile. We believe are capable of full autonomy.

Tom.

So then if you if you're able to say decreased utility of that car by.

It goes by which the only means that you're being used.

But maybe 30 hours a week.

Out of 168, so it's still not as resource unit that sort of assumes less than a third of the household.

The we call it.

Is doing something useful.

Increase the failure that bye bye.

By five but it still cost the same.

Like you have something.

And then we were a hardware company with software margins.

<unk> follow up.

Yes.

Over to you for the comment on incentive topic for ULA.

Is that okay.

It's about like your gross margin in the quarter could you give us a sense of.

Like in the in housing gross margin evolved sequentially, how much was the impact of idle costs.

We were not we are unplugging and our pursuit of additional cost downs for 2024, and we do have a good pipeline of them and work on both the engineering side and the factory operation side.

How much was led to a sequential benefit the imaging of products and ramping up the betting in Austin and then I saw this massive jump in energy storage.

Various companies of supply. So if you can give us some background on that and tell us how we should think about that gross margin going forward.

Intention is to maintain or exceed the trend that you saw.

We're trying as hard as we possibly can.

Thanks for the question so in terms of.

The timing of the next Gen products.

Can you share that.

You have a few different aspects of your question.

No not at this time.

So.

And just as a follow up obviously price is also a driver of demand, but that's obviously not happening in a vacuum.

If I just look at from Q3 perspective.

Now, obviously factoring idle time had an impact.

It did impact by.

And you mentioned that.

I won't give you the exact percentage, but it had a decent impact.

I think you mentioned it at some point during this call that Youre also maybe hitting the law of large numbers on some of your products can you just share how you're thinking about price elasticity just at this point in this macro environment.

In the quarter.

And.

When you look at.

Equally which we're trying to do.

We did see certain of our other factories ramping up pretty well.

Any thoughts along those lines.

I think that this very significant price elasticity.

Right.

They actually contributed pretty low to the margin for this quarter in fact.

To be totally Frank if I car cost the same as Rev board over to a buyer pool.

One of the factories.

It came pretty close to in terms of volume and cost to where we are.

Well at least it for.

Are they likely to.

It's worth noting that a lot of these incentives like the tax credit or not.

Of an established factor which of Fremont.

That was a positive in the quarter.

But they are actually very difficult for the average person to access because they most people do not have <unk> brand.

And when it comes to energy margins.

Megabytes Department was the key driver there.

We've been 75 to $1 is burning a hole in their bank account.

And that product has done well.

<unk>.

On the Costco also will enable.

For larger people are living paycheck to paycheck and.

Able to do a lot there.

But I do want to caution that megabyte deployments automate lumpy.

With a lot of that bigger credit card debt mortgage debt.

<unk>.

So.

Yes, we had a great quarter. This is ed, but depending upon where we are trying to deploy that product in the world in different markets.

Yeah.

The first reality for most people.

Surgical pool.

People who are.

High income earners.

You would see the estimate and it would be.

And that's a highest buick.

The other question on deployment because of trying to get the product feedback that base layer product and the product in terms of yes, yes.

From a service, earning overturns vessels a year.

To understand what life is like for someone who is earning 50 or 60 or 70 hospitals here.

Okay. Thank you very much and let's go to Rod Lache from Wolfe Research.

For those people.

So.

Rockville preterm mute yourself.

<unk>.

So people.

People like this these tax credits just they can't they can't front $7500 for <unk>.

Thanks.

Really nice to see the radar.

Vehicle cost improvement despite the downtime that you took.

18 months.

Or even six months to get the tax credits and they actually did okay. So even habit penetrates higher dollars of taxes.

Taken out about $2000 out of that average vehicle costs over the past year can you give us maybe a sense of the rate of improvement that you see.

So.

<unk>.

Yeah.

From the changes that you alluded to the fact, we can give you alluded to is there a way maybe to convey the speed of improvement on your existing product from here.

So it's really just.

The vast majority of people.

How much money they have to pay immediately and how much per month that's.

That's it.

And can stop right there.

And then related to that can you share the timing of your next gen that the lower priced product that you talked about earlier this year.

And our cars so much more expensive dinner at Paul when you look at it that way.

Yeah. So just in terms of product margins there were lots of puts and takes when you look into this.

Yes, one other thing I'll add.

When you look at Kearl.

Car buying in general.

There are certain things, which we control and there are certain things, which we don't control.

We're trying to get to the next set of optics.

But not in EBITDA.

Yet.

Snakes, who wants a great call exactly.

That will get some benefits from our cost reduction efforts, which are underway.

Got it.

So in aggregate these like.

One hand, we just finished our factory, albeit late in Q3.

Honestly I would say, it's like somewhat correlates with B why doesn't everyone work from home crowd.

Some of these factors are still in the early downstairs in Q4 were still not up to where we want those factors to visible impact in the near term.

Mike.

I mean this is like some real Mario intranet box from people as their wives around work from home like what about all the people that have to come to their factory and filled the cars.

Like I mentioned, we're a little bit I don't think cyber trial, which is going to be another headwind, which we are dealing with.

People that have to go through to the restaurant.

On top of all that.

Major food and delivery of food.

So the overall uncertainty in the macroeconomic environment.

What are you talking about.

I mean.

Even makes it harder to predict precisely as to where we land.

How detached from reality.

Work from home crowd have to beat.

Yes, this is something which is in.

While we take advantage of all those who cannot work from home.

The one thing, which we're observing everyday and reacting to it.

<unk>.

I mean, you have to say.

Why did I sleep in the factory so many times.

On a daily basis.

I would just say that on the cost reduction efforts like we.

It mattered.

<unk>.

We are not we are unplugging and our pursuit of additional dropdowns for a timeline for when you have a good pipeline of them and work on both the engineering side on the back of the operation side and.

So.

Okay.

So I just can't emphasize again.

<unk> customers right.

Our intention is to.

Alright.

To maintain or exceed the trend that you saw.

It's not it's not an optional thing for most people it is a necessary thing.

We're trying as hard as we possibly can.

The timing of the next Gen products.

<unk>.

We have to make our cars more affordable.

Can you share that.

So people can buy it in.

You know I keep harping on this interesting, but I mean, it's just.

Not at this time.

Okay, and just as a follow up obviously price is also a driver of demand, but that's obviously not happening in a vacuum.

Interest rate risk.

Wages of the cost per car I mean, we're looking at.

And then the internal analysis, which.

And you mentioned that.

Sure.

Thank you.

I think you mentioned at some point during this call that you also may be hitting the law of large numbers on some of your products can you just share how youre thinking about price elasticity just at this point in this macro environment.

More or less on track that.

But when you look at the cost or the price reductions we've made in.

So the model y.

And you compare that to how much peoples' monthly payment hasbro's imputed interest rates.

And any thoughts along those lines.

The price of the model Y is almost unchanged.

I think that this very significant price elasticity.

If you factor in the change in interest rate yes.

I mean to be totally Frank if I car cost the same as Rab board nobody with buyer pool.

Just wanted to I think the thing that matters is the monthly.

How much of that money to put down and do they literally have that any of our chemical war checkups.

Or at least it very unlikely too.

Okay.

And then.

It's worth noting that a lot of these incentives like the tax credit and whatnot.

What is the monthly payment and it doesn't matter how the script that monthly payment is principal interest or whatever it is just a number and that number has to.

But theyre actually vertical for the average person to access because they must have or do not have 10 grand.

Now of course, they're bank counter go negative.

Is it.

We're even 75 to $1 burning a hole in their bank account.

So.

Uh huh.

Got it going from near zero interest rates to the current very high interest rates.

Hello.

People are living paycheck to paycheck and.

<unk>.

With with a lot of debt.

The actual monthly payment is basically the same.

What caught that mortgage debt.

So.

It's just a bunch more of it is going to interest.

Yes.

The reality for most people.

And if there are some some incremental challenges beyond that which is the difficulty of getting credit at all has increased and so the number of people who simply cannot get credit period.

Sometimes they're called for.

People who are.

High income earners.

And that's a highest be like.

How much of this earning opportunities desktops here.

Even if they've got a drive and everything's Saturday.

To understand what life is like for someone who is earning 50 or 60 or $70000 a year.

The banks are.

Yeah.

A little gun shy on handing out credit given.

Unless people.

Given that a bunch of them kick the bucket earlier this year.

So.

And there's also just fewer options even if they were planned that creditors Fairbanks to go there.

So there's a lot of people like this these tax credits just they can't they can't front 75 or $1 four.

Digital bank still exist.

Speaker 1: new factories and we believe there's still a meaningful room for improvement there.

If you can rank does not exist you have to establish a relationship with a new bank.

18 months.

Or even six months to get over the tax credit and they actually did.

And.

Speaker 1: Regarding odopad and AI, our vehicles now driven over half a billion miles with FSD beta, full self driving beta, and that number is scoring rapidly.

So.

Even habit.

A lot of regional banks.

I'd say our dollars of taxes.

Guidance.

So.

I mean, even credit Suisse.

Yeah.

That's that was a shocker.

So it's really just.

Speaker 1: We recently completed a 10,000 GPU cluster of 8,100. We think probably bring it into operation faster than anyone's ever brought that much.

Okay.

160 year old ish.

As regard to paperless.

How much money they have to pay immediately and how much per month.

Swiss institution.

That doesn't exist anymore.

<unk>.

It sounds like there.

Let's mind blowing.

And our cars, so much more expensive than or up or when you look at it that way.

Sure.

And I think there's still quite a few should choose to drop on the bad credit situation.

Speaker 1: compute per unit time into production since training is the fundamental limiting factor on progress with full self-driving and vehicle autonomy.

Okay.

Yes, one other thing.

Commercial real estate, obviously is.

When you look at.

Car buying and journal.

Okay.

Terrible shape.

We're trying to get to the next set of <unk>.

<unk>.

Speaker 1: We're also seeing significant promise with FSD version 12. This is the end-to-end AI where it's photon count-in, controls-out. Really, you can think of it as just a large bitstream coming in and a tiny bitstream going out.

Credit card debt has been rising.

We're not even not in EBITDA, just next who wants a great call exactly.

Significantly.

Current interest rates our use areas.

Yeah.

So now they get these like.

Alright.

<unk> percent interest rates, meaning like.

No.

Honestly I would say, it's like somewhat correlates with B why doesn't everyone work from home crowd.

Over time.

Becomes.

Hi.

Yeah.

I was extremely punishing.

I mean this was like some real Mario <unk> from people is there wasn't a work from home like what about all the people that have to come to the factory and pulled the cars are all people that have to go to.

Always paying 20% interest on the credit card fees that cannot pay them off and you cannot pay them off and you're still accruing interest of 20%.

Speaker 1: into a very small set of outputs, which is actually kind of how humans work. The vast majority of human data input is optics from our eyes. And so we are, like the car, photons in, controls out.

At your at best headed to a bad place.

The restaurant and major food and delivery of food.

Okay.

Thank you now let's go to next question from George from Canaccord.

What are you talking about you.

I mean.

Okay.

Thank you for taking my question just to focus on the cost.

How detached from reality doesn't work from home crowd have to be.

Per vehicle coming down in future quarters as you've discussed.

While they take advantage of all those who cannot work from home.

So.

Our written remarks, I'm curious as to what the levers of that could be is it more scale more factory utilization is it material cost reductions.

I mean, you have say like why did I sleep in the factory so many times.

Speaker 1: We will continue to invest significantly in AI development, as this is really the mass game changer.

Because it mattered.

So.

Things like Giga casting I mean can you just kind of give us some data points that give us confidence that that's going to come down over time, and if I can sneak one in please there are press reports.

Speaker 1: and I mean success in this regard in the long term, I think.

Okay.

So I just can't emphasize again.

Speaker 1: has the potential to make Tesla's valuable company in the world by far.

And I know how apparel as it is to believe some of these.

Important customers.

[laughter].

Yes.

It's not an optional thing for most people it is a necessary thing.

Thanks.

Speaker 1: If you have, or fully autonomous cars, at scale.

They say that you've included radar as an option and some model wise in China and I'm just here to ask if that's true and if so why thank you.

We have to make our cars more affordable.

Speaker 1: and fully autonomous humanoid robots that are truly useful.

So people can buy it in a night.

We've got included radar.

I keep harping on this interesting, but I mean, it's just.

Uh huh.

Interest rate raises the cost per car.

We have radar as.

Speaker 1: Regarding energy storage, we deployed all gigwit hours of energy of storage products in Q3.

Turbo designed randomized experiment in the model S and X.

We're looking at and an internal analysis, which.

Thats it.

Sure.

We will see whether that experiment is worth it.

We think it is more or less on track that.

Speaker 1: And as this business grows, the energy vision is becoming our highest margin of business. Energy and service now contribute over half a billion dollars to quarterly profits.

When you look at the cost or the price reductions we've made in.

But there are no plans to.

Great radar into.

So the model y.

Three and y.

And you compare that to how much peoples' monthly payment has risen due to interest rates.

They are just as humans drive well and in fact, an excellent chairman pure a driver can drive amazing safety simply with their eyes.

Speaker 1: I have the Cybertruck. I know a lot of people are excited about the Cybertruck. Yeah, I am too. I've driven the car. It's an amazing product.

The price of the model Y is almost unchanged.

If you factor in the <unk>.

The car will far exceed that.

Speaker 1: I don't emphasize that there will be enormous challenges in reaching volume production with the cyber truck and then in making a cyber truck.

And then transfer it yes, which is wonderful.

Average human safety, just with physical far far far.

Wanted to say the thing that matters is the monthly pay it's how much money they have to put down and do they literally have them if I count oil checkpoints.

Because the car is looking in all directions at once so we don't have is the back of my head. So.

The computer never gets tired and never get distracted.

Speaker 1: cash flow positive. This is this is simply normal for

And then.

Where does the monthly payment and it doesn't matter how the prescript that monthly payment is principal interest or whatever it is just a number and that number has to.

Hopefully.

Speaker 1: When you've got a product with a lot of new technology, or any new brand new vehicle program, but especially one that is...

And.

So.

Radar is.

Now of course, they're bank category negative.

Is it.

I saw it what really matters is how much does it affect the probability of an accident.

No.

Speaker 1: different and advanced as the cyber truck. You will have problems proportionate to how many new things you're trying to solve at scale. So I just don't emphasize that one I think this is potentially up.

<unk> grown from near zero interest rates to kind of the.

And.

Very high interest rates.

In order for the radar to be effective you have to.

Yes.

Yields do radar only breaking through to actions that are better radar only otherwise you get this.

The actual monthly payment is.

Basically the same.

It's just a bunch more of it is going to interest.

Disambiguation problem between vision and radar.

And there are some some incremental challenges beyond that which is the difficulty of getting credit at all has increased and so the number of people who simply cannot get credit period.

Speaker 1: I think it is our best product ever. It is going to be...

That's why we actually turned off the radar.

Historically that we had shipped at all three and why you used to have radar, but returned at all because at the radar actually generated more noise than signal.

Speaker 1: require immense work to reach volume production and be catchable positive at a price that people can

Even if they've got a job and everything's solid base.

Now the Tesla design radar is a high resolution radar.

Speaker 1: Um, often people do not understand what is truly hard. That's why I say prototypes are easy. Production is hard. Uh, people think it's the idea or you make a prototype, you design a car. And as soon as they're designing a car is.

The banks are.

You know.

Has.

Some potential to be useful.

A little gun shy on handing out credit given.

But the jury is still very much out on whether that is in fact the case.

Given that a bunch of them kicked the bucket earlier this year.

And there's also the sheer options, even if they plan that creditors Fairbanks ago.

Yeah.

Okay.

Speaker 1: Is there just anyone can do it? It just required.

I think on the cost question I guess from the vehicle side like as drew mentioned earlier, we are always trying to engineer our product to be cheaper to make them more efficient to make that comes obviously on the engineering side as we come up with new innovations, but as well on the supply chain side with our partners, we work with them to automate some of their lines or move there.

Digital banks don't exist yet.

It does not exist.

Speaker 1: taste, it does require effort to design a prototype. But the difficulty going from a prototype to volume production is like 10,000% harder to get volume production than to make a prototype in the first place. And then it is even harder than that to reach positive cash flow. That is why there have not been new cars start up that have been successful for a hundred years. For a fortune.

So how much of a relationship with a new bank.

And.

So.

A lot of regional banks are.

Eitan.

I mean, even credit Suisse I mean geez that's.

<unk>.

Bottleneck center high costs as well on the logistics side getting parts of the factory.

160 year old ish.

Swiss institution.

That doesn't exist anymore.

Yeah go ahead.

It's not like a one thing that you have to have this you have to attack cost everywhere.

Thats My boy.

<unk>.

And I think there's still quite a few should it choose to drop on the bad credit situation.

And we do it or especially at all time operations efficiency.

Speaker 1: I just want to temper expectations for cyber truck.

All of that all the people I would say, there's a whole laundry list of things, which we are chasing we internally call. It attack cost attack when industry going line by line and saying how can we make it better.

Commercial real estate, obviously is.

Okay.

Speaker 1: It's a great product, but financially, it will take...

Terrible shape.

<unk>.

Speaker 1: A year to 18 months before it is a significant pie of catch a contributor. I wish there

Credit card debt has been rising.

And it's a grind and grind line gave us.

Significantly the credit card interest rates or use areas.

I'm David <unk>.

Alright for.

Game of Thrones, but pennies.

From a 20% interest rates, meaning like Richard overtime.

First approximation and through better 40000 dollar car.

It becomes.

Hi.

And roughly 10000 die.

I was extremely punishing.

Items in that car.

Salaries paying 20% interest on the credit card fees that cannot pay them off.

Speaker 1: You know, so it's really the demand is off the charts. We have over a million people rivers of the car.

Each thing on average cost per box.

Cannot pay them off and you're still accruing interest of 20%.

So in order to get the costs down say by 10%.

At U S headed to a bad place.

I have to get 40.

Speaker 1: So, it's not a demand issue, but we have to make it. We need to make it at the price that you can afford. And it's a family difficult thing.

Out of each part on average.

It is a game of pennies.

Thank you let's go to next question from George from Canaccord.

We play it willingly.

Yes, let me just.

We've done it many many times.

Yes.

Thank you for taking my question just to focus on the cost.

Speaker 1: In conclusion, we continue to focus on ramping production while maintaining positive cash flow. And we continue to target, expect to have around 1.8 billion vehicle deliveries as stated earlier this year.

And.

Even something as simple as like a.

Per vehicle coming down in future quarters as you discussed.

Stinker.

There's too many stickers and internally and declare that nobody else has this.

In your written.

Mark So I'm curious as to what the levers are that could be is it more scale more factory utilization is it material cost reductions.

Something as simple as a QR code you might think well, putting a QR code on part why not just put them put them on their side.

Speaker 1: Um, the Tesla AI team is, I think, one of the world's best. And I think it is actually by far the world's best when it comes to real world AI.

The things like Giga casting I mean could you just kind of give us some data points that give us confidence that that's going to come down over time, and if I can sneak one in please there are press reports.

We're actually going to use that occurred.

Also pending yes.

And then inevitably sometimes with your car doesn't go on properly or you can't read a property and then we can stop the line drinking more than a penny.

And I know how apparel as it is to believe some of these.

Speaker 1: I'll say that again, Tesla has the best real world AI team on Earth period.

They say that you've included radar as an option and some model wise in China and I'm just here to ask if that's true and if so why thank you.

Absolutely.

So chip chipping away.

With it I mean, it is trying to it is it does feel like digging a tunnel with a spoon at times.

Speaker 1: And lastly, I wanted to thank all of our employees who are making a lot of extra effort during concert and times. Thank you very much for your hard work and the impact that you're making.

We've not included radar.

Very much excuse me.

We have radar as.

Yes.

Okay.

Speaker 2: Thank you very much, Elon, and NRCF for a wipe-off had some opening remarks as well. Thanks, Martin. The vehicle delivers in Q3 outpace production, and we had yet another record quarter of our free-to-beauty amounts, energy bills.

Turbo designed randomized experiment in the model S and X.

And on top of it like this that we did some factory upgrades. So we expect wanting to grow up that would also bring some savings from higher production.

It.

We'll see whether that experiment is worth it.

<unk>.

But there are no plans to it too.

Speaker 2: Congratulations to the 13 for the continued focus on operational excellence as we navigate through a period of economic until 20 Hard interest rates and shifting consumer

Integrate radar into.

Then on the flip side, we're going to be ramping a new product like cyber truck, which we talked about so yeah. So those are the puts and takes with three or more people.

And why.

Yeah, just as humans drive well and in fact, an excellent chairman pure drivers can drive it with amazing safety simply with their eyes.

Speaker 2: As Elon mentioned, our Q3 operational and financial performance was impacted by planned downturns for our factory upgrade.

Yeah.

Like some accidentally some brick a goal that we had shut in the chemical.

Carnival will far exceed that.

Average human safety, just with physical far far far.

Speaker 2: This was necessary to allow for further factory improvements and production rate increase.

Unfortunately.

Because the cars looking in all directions at once so we don't have is the back of my head so.

And it's.

We're trying to be very rigorous about improving the quality and capability of the car because.

Speaker 2: Despite those factorization downs, our cost per vehicle decreased to approximately 37,500. We saw sequential decreases in material costs and trade. But using the cost of our vehicles is our top right.

And the computer never gets tired and never get distracted.

Yes.

Any fool can.

Hopefully.

To reduce the cost of a car by making it worse.

And.

Sure.

Leading.

Radar is.

Externality and capability.

Speaker 2: On the operating expenses front, R&D expenses continue to rise due to cyber-transported type builds and pilot production testing, combined with spend on AI technologies like full-fabriving, optimal, and dojo. We have and will continue to make investments in these areas, and hence our capital expenditure, then R&D will continue to grow in the near term.

Sure.

Our cordless with any any tool that like if you want to like lose weight and you said it well.

Yeah.

What really matters is how much does it affect the probability of an accident.

Sure.

And.

15 pounds right away well you could talk to your almost.

In order for the radar to be effective you have to be able to do radar only breaking yet due to actions that are better radar only otherwise you get this.

But then you are sitting here with went home.

There is still fat.

[laughter] separately.

Disambiguation problem between vision and radar.

Thanks, Mike.

Speaker 2: However, our focus is to continue making investments through positive cash flow from operations. This year itself, we have generated operating cash flows of approximately 8.9 billion and free cash flows of approximately 2.3 billion.

Yes.

That's why we actually turned off the radar and cars that historically that we had shipped at all three and why I used to have radar, but we turned it off because the radar actually generated more noise than signal.

Yes, you actually have to is it less food and walked workout.

Doctors effects, yes.

Yeah Super fun, because food is delicious.

Our Tesla design radar is a high resolution radar that has.

I personally in front of you.

Speaker 2: Another business is becoming more prominent on a standalone basis with energy business leading the charge primarily from the growth in megabyte tip palm.

Love working at NFIB will do I wish I could but I don't.

Some potential to be useful.

Unless moving the mouse <unk> consists of working out in which case I love moving forward.

But the jury is still very much out on whether that is in fact the case.

Okay.

Speaker 2: Our services and other businesses on a year-on-year basis also continue to show positive momentum as we benefit from our goal in three.

Yeah.

Alright, let's go to Colin Langan from Wells Fargo.

Okay.

Moving on the cost question I guess from the vehicle side like you know as drew mentioned earlier, we are always trying to engineer our product to be cheaper to maintain more efficient to make that comes obviously on the engineering side as we come up with new innovations, but as well on the supply chain side with our partners, we work with them to automate some of their lines or move there.

Speaker 2: As regards our pricing strategy, in addition to what we have shared before, I want to elaborate that no score buying happens with one or other power of financing. And hence, we also view pricing in terms of monthly costs for the customer. And therefore, as interest costs in the US have written substantially, it has required us to adjust the price of our workers to keep the monthly costs in balance.

Hello culling.

<unk> can.

Can you on mute yourself.

Oh, sorry about that.

Irina.

That's great. Thanks, very good question.

You said in the commentary that Youre not going full tilt on the plant in Mexico and tell their signs that the economy is strong.

Bottleneck center high costs as well on the logistics side getting parts of the factory.

Can continue at a 50% canker without that plant and.

It's not.

It's not like a one thing that you have to fix it is you have to attack cost everywhere.

Speaker 2: So try to offer such adjustments where I focus on reducing costs. However, there is an inherent lag in cost reduction, which in turn impacts much.

Wherever that come from and any color on what you mean sort of knock on full tilt to that plant get delayed indefinitely.

And we do it here, especially on all time illustrations efficiency.

All of the <unk>, Yes, I mean, I would say, there's a whole laundry list of things, which we are chasing we internally call it that that posture dock.

Speaker 2: To that extent, we recently announced a partner with the US, whereby you can get a standing rate on why, or as you are $3.99.

Hello.

No we're definitely making the factory in Mexico, we feel very good about that.

Literally going line by line and saying how can we make it better.

Put a lot of effort into looking into for locations and feel very good about that location.

And it's a grind and grind.

Speaker 2: In conclusion, as we navigate through a challenging economic environment, we'll focus on reducing costs, maximizing delivery volumes, and continuing making investments in the future, in particular AI and other next-generation platforms.

And we are going to build a factory there.

Jim gave a phrase that.

Game of Thrones, but pennies.

That would be great.

I mean, the first approximation, if you've got a $40000 car.

The question is really just one of timing and.

And roughly 10000.

Okay, I'm, just going to be a broken record on the financial front. It's just the interest rates have to come down.

Speaker 2: We believe this strategic position has run for the long term. Once again, I would like to thank the 13th for the effort in the last couple.

Items in that car that means each day on average cost per box.

So in order to.

If interest rates keep rising.

Get the costs down say by 10%.

Fundamentally reduce affordability.

40.

Speaker 3: Thank you very much. And now let's go to investor questions. The first investor question comes from Craig. How many Cybertruck deliveries do you anticipate for 2024?

Out of each part on average.

It is just the same as increasing the price of the car. So I just don't have visibility into it. If you can tell me what the interest rates are I can tell you want to.

It is a game of tonnage.

A replay it willingly.

Willingly.

Yes.

We've done it many many times.

Okay.

And.

Sure.

Where should both factory, we're gonna Bulletin.

Speaker 1: I still go to make an accurate guess at this point.

Even something as simple as like a.

And I mean, I think will.

Sticker.

We'll start.

Yes, it does.

Speaker 1: Going back to what I said earlier that the ramp is going to be extremely difficult.

And our initial phases of construction next year.

Too many speakers may internally in the cloud that nobody else has this.

But I am still somewhat.

No.

Something as simple as a QR code you might think well Panera QR code on a on part why not just put them put them on their side.

Scarred by 2009.

Speaker 1: Like, like, so there's no way around that. If you try to make, if we just try to do some copycat vehicle design, of which there are literally 200 models that are...

When.

If general Motors and Chrysler went bankrupt.

We're actually going to use that chiara occurred.

So that's now 14 years ago.

Also pending yeah exact.

Exactly and then inevitably synaptic your car doesn't go on properly or you can't read a property clinic and stop the line.

It's.

That has served its my mind, where the branding iron.

Speaker 1: like variations on a theme in the Kewash mansion world.

Drinking more than a penny.

Because.

Speaker 1: just distinctions without a difference, uh, then, you know, it's really not that hard, but if you want to do something radical and innovative and something really special, like the fact that like the cyber truck, um, it is extremely difficult because there's nothing to copy. You have to invent not just the car, but the way to make the car.

Absolutely.

Tesla was.

So others chip chipping away.

Just hanging on by a thread.

During that entire time.

I mean, it is trying to it is it does feel like digging a tunnel with a spoon times.

And we closed a financing round in 2008 at six P M.

Very much excuse me.

Remember 24th Christmas Eve, and if we had not close that financing round.

Yes.

Okay.

And on top of it like this that you know we did some factory upgrades. So we expect wanting to go up that would also bring some savings from higher production.

Would a bounce payroll two days after Christmas.

So.

Speaker 1: So the more uncharted the territory, the less predictable the outcome. Now I can say that if you say it will.

We actually closed around over the last hour last day that it was possible.

Trustful several weeks.

On the flip side, we're going to be ramping a new product like cyber truck, which we talked about so yeah. So those are the puts and takes but we are more capable.

And then barely made it through 2009.

Speaker 1: I think we'll end up with roughly a quarter million Cybertrucks a year.

So I'm like.

Wanted to just I don't want to be.

Don.

At top speed.

Yeah, but there's not like some accidentally some gold break a goal that we shut in the chemical.

Speaker 1: And we're not, I don't think we're going to reach that output rate next year. I think we're probably reach it sometime in 2020.

Into uncertainty.

A lot of wars going on in the World, obviously as well.

Unfortunately.

And it's.

Yes.

We're trying to be very rigorous about improving the quality and capability of the car because.

So.

And we have room here.

Speaker 3: Thank you. The second question is, can you provide a progress update on the 4680 cell, particularly progress towards performance improvements and cost savings outlined on battery day? Thank you.

The Texas. She said, we still have enough room in this building for cyber truck in Hawaii.

Yes.

Any fool can.

To reduce the cost of a car by making it worse.

There's plenty of growth opportunities still to have inside the building where our team Mardi is we'll start 2000 acres. There is also a lunch like we're actually only occupying a tiny corner.

Leading.

Speaker 3: Sure thing, Martin. 4680 cell production in Texas increased 40% quarter over quarter. Congrats to the Texas team for producing their 20 million cell off of line one. Texas is now our primary 4680 facility. We're heavily focused on quality. Scrap is down 40% quarter over quarter. With the increased volume and yield improvements, cell costs consistently improved month over month within the quarter, although we have a lot more work to do to achieve our steady state goals.

Reality and capability.

So COVID-19 sort of any any forward.

<unk>.

Mike if you want to like lose weight and sell out and it was over.

We could.

If we could technically to oil the scaling.

15 pounds right away well you could talk you're almost.

Yes sure.

So.

But then youre sitting there with one on.

Hmm.

You saw that.

Personnel is our biggest challenge and.

Yeah.

And that the greater Austin area only has generously at the greater Austin area. Only has 2 million people. So people are moving here and they're willing to move here.

Thanks, Mike.

Yeah.

Yes, you actually have to eat less food and walked workout versus actual way.

Sure.

Similar to the housing crisis.

Speaker 4: The Sivertruck Cell with 10% higher energy than our Model Y Cell started production online to in Texas. This quarter we convert to building 100% Sivertruck cells to simplify and focus the factory as we ramp all four lines and phase one over the next three quarters.

Dr. Sebastian yes.

Got to live somewhere.

Yeah Super fun experience delicious.

Yeah.

I don't love working at unnecessarily will do I wish I could but I don't.

Okay.

So I don't know I mean, I'm just curious.

Moving the mouse <unk> consistent working out in which case I love working with us.

I'm, not saying things will rebound I'm, just saying there might be.

Speaker 4: Phase two of the Texas 4680 facility is currently under construction. The additional four lines incorporate further capital efficiencies over phase one, and our target is for them to start producing in late 2024.

Okay.

I think.

Alright, let's go to Colin Langan from Wells Fargo.

Okay.

Tesla is a it is an incredibly capable ship.

Yeah.

We need to make sure.

Hello, Colin.

Speaker 4: Luckily in Kato, we're retooling to enable large-scale pallet runs of our next generation cell designs. Kato's long-term goal is to be the launch pad for new cells. One generation ahead of our master of expertise, enabling faster iteration and smoother ramp-ups of new to-stock.

<unk>.

Okay.

Can you on mute yourself.

Macro economic conditions a stormy.

Sorry about that.

Even if the best ship is still gonna have stopped.

Irina.

That's great. Thanks, very good question.

Tough times of weaker ships will sink, we're not going to change but.

You said in the commentary that Youre not going full tilt on our plant in Mexico and tell their signs that the economy is strong.

Okay.

Speaker 3: Thank you. The next question from institutional investors, could you please provide an update on capacity expansion plans for companies, factories in Berlin and Austin and the opening schedule of Gigafactory Mexico?

Even a great ship in a storm.

Has has challenges.

Can you continue at a 50% CAGR without that plant.

Yes, that's the one we'll apply to everyone that stops and.

And not just not just the auto industry.

And wherever that come from and any color on what you mean sort of knock on full tilt to that plant get delayed indefinitely.

Glad everyone anything.

<unk>.

So apart from the necessary sort of staples like.

Okay.

Speaker 1: Berlin and Austin factory, the current operarity is actually maximized the output from our existing lines by laser focus on efficiency improvements. As always, maintaining a high quality and the reducing per unit cost will be as critical as growing production volume. For Mexico, we're working on infrastructure and factory design in parallel with the engineering development of the new production. That's will be manufacturing there. That's all I can share for that. in Mexico...

No we're definitely making the factory in Mexico, we feel very good about that we put a lot of effort into looking at different locations and feel very good about that location.

Our food and stuff, but.

So I just I don't know.

If interest rates start coming down we will accelerate.

And we are going to go back to there.

That's going to be great.

<unk>.

Alright.

The question is really just one of timing and.

Is there any scope when he's got good got any any any any guesses on that.

Okay.

There's going to be a broken record on the financial front, it's just interest rates have to come down.

I'd love to be less wrong.

And I apologize if I'm, if I'm, perhaps more paranoid than I should be.

Right.

If interest rates keep rising.

It might also be the case because I am.

Speaker 1: big end construction and doing all the long lead items. But I think we want to just get a sense for the global economy is like before we go full tilt on the Mexico factory. I'm worried about the high interest rate environment that we're in. It's I just can't have that enough that the vast majority of people buying a car is about the monthly payment. Okay!

Can you just fundamentally reduce portability.

Ah PTSD from 2009 Big time.

It is just the same as rider increase in the price of the car. So I just don't have visibility into if you can tell me what the interest rates are I can tell you one of them.

Sure.

And then 2017 through 19 were not picnic either there was very very tough going.

Okay.

When we spoke factory, we're gonna Bulletin.

So.

The auto industry is also saw cyclic.

And I mean, I think we will.

We'll start.

There are people.

And our initial phases of construction next year.

Hesitate to buy a new car.

Okay.

And if there is uncertainty in the economy.

I am still somewhat.

Scarred by 2009.

Yeah.

So it's.

When.

Speaker 1: the proportion of that monthly payment that is interest increases naturally. So.

Apart from these two very well in good economic times and they.

If general Motors and Chrysler went bankrupt.

So well that's now 14 years ago.

But don't do as well in.

In tough economic times.

It's.

Speaker 1: If interest rates remain high or if they go even higher, it's that much harder to for people to buy the car. They simply kind of report it.

That has served as my mind, where the branding iron.

So it's just.

Whereas if somebody is selling bread and I think so.

Because.

Fred.

Tesla was.

Just hanging on by a thread.

Yeah.

Yes.

Speaker 1: So, um, and we are tracking, I believe at this point for model Y to be the selling car on us, not just in revenue, but in unit volume, if you compare that to the other vehicles that are.

During that entire time proton I mean.

For all the time.

You don't have to have breitzman.

We closed a financing round in 2008 arent at six P M.

Especially the warrants going on and then that impacts the sentiment.

24th Christmas Eve, and if we had not closed a financing round.

We're reading about.

Speaker 1: you know, number two or number three and whatnot, they cost much less than our car.

Or is it all over the world.

We were a bounce payroll two days after Christmas.

Got it.

Plenty of new card tends to not be front of mind.

So we actually closed around over the last hour of the last day that it was possible.

Speaker 1: We're just hitting low of large numbers situations here. I know people want to advertise and we are advertising. I think there is some

Alright. Unfortunately, that's all the time, we have today. Thank you very much for all of your good questions and we will see you again in three months. Thank.

Stressful San Luis.

And then barely made it through 2009.

Thank you very much.

So I'm like.

[noise] mhm.

Speaker 1: Something to be gained on the advertising fund, I don't think it's about thing. But informing people of a car that is great, that they cannot afford, doesn't just really help. I'm.

I wanted to just I don't want to be.

John .

At top speed.

Into uncertainty.

A lot of wars going on in the World, obviously as well.

Speaker 1: So that is really the thing that must be solved is to make the car portable.

Yes.

So.

And we have room here, but in Katy, Texas, you said, but we still have room in this building for with cyber charter Mcguire.

Speaker 1: Or, you know, the average person can't buy it for any amount of money. But they can't afford it, they can't afford it. So this is.

There's plenty of growth opportunities still to have inside the building margin Martinez will start 2000 acres. Here. There is also a large contract were actually only occupying a tiny corner or is the plan that we have.

Sure.

Speaker 3: Okay. Thank you very much. Uh, the next question is when do you expect model free Highland to be available in the U S um, I just wanted to address that. Unfortunately, we don't answer product related questions and timings on earnings calls. So let's go to the next one.

Technically all the scaling.

Yes.

Sure.

So.

Personnel is our biggest challenge in it.

That the greater Austin area only has generously at the greater Austin area. Only has 2 million people. So people are moving here and they're willing to mirror here, but there is.

Speaker 3: Current sales side conferences assumes that Tesla will deliver 2.3 million vehicles in 2024, representing 28% growth versus 2023 guidance. Is this growth rate achievable without any mass market launches in 2024? And when does Tesla expect to return to its 50% long-term cater?

Similar to the housing crisis.

They've got to live somewhere.

Yeah.

Okay.

So I don't know I mean, I'm just curious.

Speaker 2: Thanks for the question. When you look at 2024, there are a lot of moving pieces. You know, I'm just talking about what is happening in the micro-mic environment.

I'm, not saying things rebound I'm, just saying there might be.

I think.

Okay.

Tesla is a it is an incredibly capable ship.

Speaker 2: So we're focused on growing our volumes in a very cost-efficient manner.

But if.

Speaker 2: and are careful reviewing all our options, and we'll be able to provide a much more meaningful update at our next earnings call.

We need to make sure.

Okay.

Macro economic conditions, both stormy.

Even if the best shop is still going to have <unk>.

Speaker 1: Yeah, I mean, the risk of stating the obvious, it's not possible to have a compound growth rate of 50% forever or you will exceed the mass of the known universe.

Tough times of weaker ships will sink, we're not gonna sink but.

Hi.

Okay.

Even a great show up in a storm.

Has has challenges.

Speaker 1: But I think we will grow very rapidly, much faster than any other car company on earth by far.

The vessel will apply to everyone that starts and.

And not just not just the auto industry.

Glad everyone anything.

Speaker 1: Next question is, do you have an approximate timeline in mind for the robot taxi driven or non-driven? What excites you most about how this project is progressing? The robot taxi is like that, certainly.

So apart from the necessary sort of staples.

Our food and stuff, but.

Yeah.

I don't know.

If interest rates start coming down we will accelerate.

Speaker 1: I guess I'm very excited about our progress with autonomy.

Alright.

Scott when he's got good got any any any any guesses on that.

Speaker 1: The end-to-end, nothing but net.

I'd love to be less wrong.

Speaker 1: I still driving software is amazing.

And I apologize if I'm, if I'm, perhaps more paranoid than I should be that might also be the case, because I am a PTSD from 2009 big time.

Speaker 1: It drives me all around Austin with no interventions.

<unk>.

And in 2017 through 19 were not picnic either there was very tough going.

So.

Speaker 1: So it's really, really pretty amazing.

The auto industry is also source cyclic.

There are people.

Tend to hesitate to buy a new car.

Speaker 1: software and approach will enable optimists to be useful things, and enable optimists to learn how to do things simply by looking. So extremely exciting.

And if there is uncertainty in the economy.

Yes.

So it says.

Apart from these two very well in good economic times and they.

But don't do as well in.

The top economic times.

So it's just.

Whereas if somebody is selling bread, then I think in other people's joint at bread.

Yes.

Yeah, you bet, if really for all time.

You don't have to have breitzman.

Especially the warrants going on and then that impacts a sentiment yes.

What we're reading about.

Or is it all over the world.

Speaker 1: on people effectively you got a humanoid robot that can do as much as you'd like.

<unk>.

Plenty of new car tends to not be front of mind.

Speaker 1: Your economy is quasi-infinite, or infinite for all

Alright. Unfortunately, that's all the time, we have today. Thank you very much for all of your good questions and we'll see you again in three months. Thank.

Thank you very much.

Speaker 1: I don't think anyone's gonna do it better than Tesla, let by a long shot.

[noise].

Speaker 1: Yeah, thanks a lot.

Speaker 1: And then you also need to be able to design the humanoid robot in such a way that it can be mass manufactured.

Speaker 1: Now, obviously we need to make sure that there's a good place for humans in that future, that we do not create some variance of the Terminator outcome.

Speaker 1: So we're going to put a lot of effort into low-glace control of the humanoid robot. So you know, if they stay in there, they won't be able to shut it off locally.

Speaker 1: Like a software update can't change that, it has to be hard-coded.

Speaker 3: Thank you. The next question is, why was the price dropped on FSD if it is getting better and Robotaxi is expected so soon?

Speaker 1: Well, which is wanted to make it more affordable as an author will try it.

Speaker 1: Thank you over time for you.

Speaker 5: Price of FSD will increase, proportionate to its value. So it will regard the current price as a kind of a...

Speaker 3: Thank you. The next question is again on FSD, Mercedes is accepting legal liability for when it's level three autonomous driving system drive pilot is active. Is Tesla planning to accept legal liability for FSD? And if so, when?

Speaker 5: Well, there's a lot of people that assume we have legal liability, judging by the lawsuits.

Speaker 5: We're certainly not being let down off the hook on that front. Whether we like, would like to, or wouldn't like to.

Speaker 5: I mean, I think it's important to remember for everyone that Mercedes' system is limited to a few roads in Nevada and some certain cities in California, it doesn't work in the snow or the fog, it must have a deep car marked lanes, only 40 miles per hour. Our system is meant to be holistic and drive in any conditions, so we obviously have a much more capable approach, but with those kind of limitations.

Speaker 5: You know, I think some people understand the profundity of Tesla AI.

Speaker 5: system, most of it, very, very, very few. It's basically baby AGI. It has to understand.

Speaker 3: Thank you. The next question on Optimus, will Optimus be working on gigafactory lines next year? If so, how many, which you guess will be deployed?

Speaker 5: I'm not ready to discuss details of the autonomous program.

Speaker 5: Provide periodic updates online. Uh, so as you can see where, you know, optimists a year ago.

Speaker 5: And now I can do yoga.

Speaker 3: That's good. And the last question from investors is, your own path planning represent a significant advance in capability and safety for FSD. What steps is that we're taking to make this technology available outside the US?

Speaker 5: Yeah, our approach has been to try to get it, like the more places we try to make it work, the hot of the problem is. So the reason we don't do it in all countries simultaneously is that it would take much longer to make it work anywhere at all. So.

Speaker 5: And, and also for most parts of the world, you have to get approval before deploying things. Whereas in the U S you can deploy things at risk or take liability for your point. So, um, it's, uh, whereas most countries require.

Speaker 5: Um, so we all really want to go through that extensive approval program when we think it's kind of ready for prime time in that country. I apologize.

Speaker 5: It really needs to drive such that it can...

Speaker 5: even uncivilized, significantly exceeds the probability of injury of a human.

Speaker 5: It's significantly better, a lower probability of a treatment than a human by far.

Speaker 5: I think we're tracking to that point very quickly. Um, obviously in the past, I've been overly optimistic about this. Um, the reason I've been overly optimistic is that the progress tends to sort of look like a log, a log curve, which is that.

Speaker 1: I bet if you were to extrapolate that rapid fairly linear rate of improvement.

Speaker 5: the brain of improvement curves over logarithmicly as far as the asymptote.

Speaker 5: That's not happened several times. I would characterize that progress in real-world AI as a series of stacked log curves.

Speaker 5: I think that's also true in other parts of AI, like LLMs and whatnot, series of stacked log curves. Each log curve gets higher than the last one.

Speaker 3: Thank you, let's not go to analyst questions. The first question comes from Will Stein from truest will. Please go ahead and unmute yourself.

Speaker 6: Great, thanks so much for taking my question and thanks for all the updates today.

Speaker 6: We learned earlier in the call, it sounds like you don't think the truck will ramp to significant volume until its third year of production. Should we have a similar anticipation for the ramp of the next-gen platform, or is there any reason that we should be maybe more optimistic or pessimistic about the ramp profile there? Thank you.

Speaker 5: To be clear, it's not really the third year of production. It's kind of like the 18th month of production, roughly.

Speaker 1: my guess. So it's just that they happen to it'll happen. They've got the thoughts this year spans next year and gets to 2025. So technically, there are three calendar years in there. But there's actually only 18, 18 months, not three years, I would be very disappointed if it took us. And that would be shocking if it took us three years. But 18 months from initial deliveries.

Speaker 5: to have to reach volume and and reach prosperity with an immense I can't tell you how much the blood sweat and tears level required to achieve that is just staggering. I've been through it many times and then here we go.

Speaker 1: similar path for the next platform? I mean, there's like unique complexity to Cybertruck. Yeah. Yeah, I mean, Cybertruck is, yeah. Yeah, I mean, we dug our own grave with Cybertruck, you know, nobody, you know, in general, I probably, nobody digs their grave better than themselves. And so, you know, it is, it is,

Speaker 1: So the special product that comes along only once in a long while.

Speaker 5: And special products that come along once in a long while are just incredibly difficult to.

Speaker 1: brings market to reach volume to be prosperous. It's fundamental to the nature of the the munis. So now the sort of high.

Speaker 5: much more conventional. Yeah, in terms of like the technologies we're putting into it, we didn't have to invent how to bend full hard stainless steel, or have mega 9000 ton castings, or the largest hot stamping in the world, or new, yeah, high voltage.

Speaker 5: my situation they?

Speaker 1: So that's why you're saying we're doing everything possible to simplify that vehicle in order to achieve

Speaker 1: units per minute level that is on heard of in the order of industry.

Speaker 4: Yeah, I mean, the simplification makes it easier to automate. It also makes it lower cost. Yeah, it's intrinsically lower cost. Yeah.

Speaker 1: It'll be cool, but it's huge. It's huge. It's not meant to be.

Speaker 4: you know, Owen magic. It's can get you from A to B. But it will be so beautiful. But

Speaker 4: That's not for opportunities, it's travel, it's a extension. Yeah, it's an example. Yes.

Speaker 3: All right, thank you very much. Let's go to Pierre Ferragut from Newstreet Research.

Speaker 7: Hey, can you hear me fine? Yes, yes, I have a first like a follow-up question on the FSD and pricing and adoption. So I agree with you that as FSD improves, we should see its value increasing. But I guess like the ultimate

Speaker 7: values of FSD which is to be able to handle like a robo-taxi is not going to necessarily interest everybody and you have a bit of a degraded version that would be like a chauffeur service where the car drives by itself but you still have to be in the car and around and then there is like the hands-on, eyes-on version of the service and and I guess you know

Speaker 7: There should be much lower cost, lower feature kind of that, that is a variant for the series that could have a very large penetration on your install base and more expensive one that would remain at the lower penetration level. So I'm just wondering if you're taking that.

Speaker 7: And last but not least, like the simplest version of FSD are available and are going to work from a technical perspective probably before like the ultimate RoboTaxi version can work if ever. And so I'm wondering how you take that into account in how you're thinking like the financial contribution of FSD over time and whether you could evolve your pricing along that kind of tiers to increase adoption. Thank you.

Speaker 5: I think, I think, here you, you know, sort of the economics of a political cycle, or truly astounding in a positive way.

Speaker 5: You look at past vehicles today, they only get about 10 to 12 hours of usage per week. That's, you know, if you drive an hour and a half a day on average, that's roughly 10 hours a week out of 168 hours.

Speaker 5: And then there's also you've got to have parking and insurance.

Speaker 4: You got to take care of the car. Like there's a lot of put overhead.

Speaker 4: It's like the economics of the system are just insane.

Speaker 4: given that the card, the older the cards were making and have made for a while. We believe a capable of full autonomy.

Speaker 4: So then if you, if you're able to say, increase the utility of that car by a factor of five, which totally means that you've been used or maybe.

Speaker 4: um out of 168 so it's still not as if source unit that source seems less than a third of the hours Of the week are it is doing something useful? um

Speaker 4: You've increased the value of that life by five, but it still costs the same.

Speaker 4: Like you have to feel like, then we're a hardware company with software modules.

Speaker 7: Here do you follow up? Yes, I have a queue for the owner on each front of the topic for you. They have is that so please it's about like your growth margin in the quarter. Could you give us a sense of

Speaker 7: Like, in how the gross margin evolved sequentially, how much was the impact of idle costs, how much was like the sequential benefit, I imagine, of production ramping at Berlin and Austin. And then I saw like this massive jump in energy storage, very strong positive surprise. So if you can give us the background on that and tell us, you know, how we should think about that gross margin going forward.

Speaker 2: the types of a question. So it comes off, you haven't seen the three aspects of your question. So if I just look at from Q3 perspective.

Speaker 2: You know, obviously, factory idle time had an impact.

Speaker 2: It did impact by, I mean I won't give you the exact percentage, but it had decent impacts for the

Speaker 2: You know, when you look at the other pieces which we're trying to do.

Speaker 2: We did see certain of our other factories ramping up pretty well.

Speaker 2: right? And they actually contributed pretty well to the margin for this quarter. In fact,

Speaker 2: One of the factories came pretty close to, in terms of per unit cost, to where we are for some of our other established factor, which is Fremont. So that was a positive in the quarter.

Speaker 2: When it comes to energy margins, you know, Megapack deployment was the key driver there. And that product has done well. On the Costco also, we've been able to do a lot there.

Speaker 2: But I do want to caution that, you know, megapart deployments are a bit lumpy.

Speaker 2: So yes, we had a great quarter of this period, but depending upon where we are trying to deploy that product in the different markets.

Speaker 2: you would see periods where there would be longer pressure on deployment because of us trying to get the product to that track base. Yeah, product in transit. Yes.

Speaker 3: Okay, thank you very much. And let's go to Rod Lash from Ball Research. Rod still free to unmute yourself.

Speaker 8: Thanks. Really nice to see the rate of vehicle cost improvement despite the downtime that you took. You've taken now about $2,000 out of the average vehicle cost over the past year. Can you give us maybe a sense of the rate of improvement that you see from the changes that you alluded to, the factory changes you alluded to? Is there a way maybe to convey the speed of improvement on your existing product from here?

Speaker 8: And then related to that, can you share the timing of your next that the lower priced product that you talked about earlier this year?

Speaker 2: Yeah, so just in terms of product margins, there are lots of puts and takes when we look at this.

Speaker 2: You know, there are certain things that we control and there are certain things that we don't control.

Speaker 2: You know, we get, we expect that we'll get some benefits from our cost reduction efforts, which are all on the way. So, on the other hand, we just finished a fact here with relating to three.

Speaker 2: Some of these factors are still in the early round phase in Q4. We're still not up to where we want those factors to be, so they'll impact in the near term.

Speaker 2: Just like, you know, mention we're going to be ramping fiber drives, which is going to be another headwind which we're dealing with.

Speaker 2: On top of all that, you know, there's overall uncertainty in the macroeconomic environment.

Speaker 2: which even makes it harder to predict precisely as to where we land.

Speaker 2: But yes, this is something which, you know, it's an evolving thing, which we're observing every day and reacting to it.

Speaker 9: I would just say that on the cost reduction efforts, like, we, we are not. We are, I'm flagging in our pursuit of additional drop downs for 2024. and we do have a good pipeline of of them and work on both the engineering side and the factory operations side. And, um, you know, our intention is to, like. Maintain or exceed the trend that you saw.

Speaker 8: The timing of the next-gen products, can you share that?

Speaker 8: not at this time. Okay, and just as a follow-up, obviously price is also a driver of demand, but that's obviously not happening in a vacuum.

Speaker 8: And you mentioned that – I think you mentioned at some point during this call that you're also maybe hitting the law of large numbers on some of your products. Can you just share how you're thinking about price elasticity, just at this point and in this macro environment, and any thoughts along those lines? I think … … … .

Speaker 4: I mean, to tell you frankly, if that car costs the same as a rap board, nobody would buy a rap board.

Speaker 4: It's worth noting that a lot of these incentives, like the tax credits or whatnot, but they're actually very difficult for the average person to access because most people do not have 10 grand, or even $75 per dollar is running a hole in their bank account. Dasch.

Speaker 4: A large number of people are living paycheck to paycheck with a lot of debt, like a credit card debt, mortgage debt.

Speaker 4: it's uh that that's that's reality for most people it's it's sometimes difficult for uh people who are you know high income earners that you know and i'd say high it'd be like

Speaker 4: someone who's earning over $20,000 a year to understand what life is like for someone who is earning $50,000 or $60,000 or $70,000 a year, which is most people.

Speaker 1: So for a lot of people, these tax creditors, they can't front $75 for 18 months, or even six months to get for the tax credit. And they actually don't, in case they even have that, then I'm very powered by those taxes. So it's really just,

Speaker 4: and a car is still much more expensive than a raffle when you look at it that way.

Speaker 2: Yeah, one other thing to add, you know, when you look at, you know, car buying in general, we're trying to get to the

Speaker 5: Not an EV adapter, just who wants a great car? Exactly. It's not a, you know, sometimes you get these like...

Speaker 4: You know, honestly, I would say it's like somewhat correlates with the, why doesn't everyone work from home crowd? I'm like, uh, I mean, this was like some real Marie Antoinette vibes from people that say, why does everyone work from home? Like, what about all the people that have to come to the factory and, and fill the cars? What about all the people that have to go to the restaurant and make your food and deliver your food? It's like, what are you talking about? You.

Speaker 4: How detached from reality does a work-from-home crowd have to be while they take advantage of all those who cannot work from home?

Speaker 1: I mean, you have to say, like, why did I sleep in the factory so many times? Because it mattered.

Speaker 4: So I just can't emphasize how important cost is.

Speaker 4: It's not an optional thing for most people. It is a necessary thing.

Speaker 4: so people can buy it. And I, you know, I keep harping on this interest thing, but I mean, it's just...

Speaker 4: It's just right raises the cost of the car. I mean, we're looking at an internal analysis which I don't really feel like we think is more or less on track that when you look at the cost of the price reductions we've made in the Model Y.

Speaker 4: And you compare that to how much people's monthly payment has risen due to interest rates. The price and model one-

Speaker 4: to factor in the premium and interest rates. Yes, which is what I was trying to say. The thing that matters is the monthly pay, it's how much money do they have to put down and do they literally have that in their bank account or will they check that? And then what is the monthly payment? And it doesn't matter how, if that monthly payment is principal interest or whatever, it's just a number and that number has to.

Speaker 4: not cause their bank counter-negative. That's it.

Speaker 4: You know, going from near zero interest rates to kind of the current very high interest rates.

Speaker 4: the actual monthly payment is basically the same.

Speaker 4: And there are some incremental challenges beyond that, which is the difficulty of getting credit at all has increased. And so, the number of people who simply can't get credit, period.

Speaker 4: Here if they've got a job and everything's followed, they, you know, the banks are...

Speaker 4: a little gun-shy on handing out credit, given that a bunch of them kicked the bucket earlier this year.

Speaker 4: Yeah, there's also just fewer options. Even if they want to hand out credit, there's fewer banks to go there. It's like, does your bank still exist? Well, uh, it's your bank does not exist. You have to establish a relationship with a new bank and um, you know, so a lot of regional

Speaker 4: I mean, even Credit Suisse, I mean, geez, that's, that was a shocker. You know, in a, like a 160 year old-ish Swiss institution. Um.

Speaker 5: And I think there's still quite a few shoes to drop on the bad credit situation. Commercial real estate obviously is.

Speaker 4: in a terrible shape.

Speaker 1: significantly the credit card interest rates are us area.

Speaker 1: I know it's over 20% interest rates, meaning like, which over time is just, it becomes.

Speaker 4: of the extremely punishing, because if you're always paying 20th cent interest on the credit card, it means they cannot pay them off. But you cannot pay them off and you're still recruiting interest at 20%. That you had

Speaker 3: Thank you. Now let's go to next question from George from PanicCord.

Speaker 3: Thank you for taking my question. Just to focus on the cost.

Speaker 10: per vehicle coming down in future quarters as you discussed.

Speaker 10: in your written remarks. I'm curious as to what the levers of that could be. Is it more scale, more factory utilization? Is it material cost reductions? Is it things like giga casting? I mean, can you just kind of give us some data points to give us confidence that that's going to come down over time? And if I can sneak one in, please, there are press reports.

Speaker 10: And I know how perilous it is to believe some of these. But they say that you've included radar as an option and some model-wise in China. And I just here to ask if that's true. And it's so wide. Thank you.

Speaker 4: We have radar as a Tesla-designed radarized experiment in the Model S and X. That's it. We'll see whether that experiment is worth it.

Speaker 4: But there are no plans to integrate radar into three and why.

Speaker 4: And just as humans drive well, and in fact, an excellent human human driver can drive with amazing safety simply with their eyes. The car will will far exceed the average human safety just with vision far, far, far. Because, I mean, the car is looking at all directions at once, and we don't have eyes in the back of my head. So and the computer never gets tired and never gets distracted. Get drunk, hopefully. And.

Speaker 4: you know, what really matters is how much does it affect the probability of an accident.

Speaker 4: And in order for the radar to be effective, you have to be able to do radar only breaking, you have to do actions that are radar only. Otherwise, you get this, this inviguation problem between vision and radar.

Speaker 4: Um, that's why we actually turned off the radar in cars historically that we had shipped it all three and Y used to have radar, but we turned it off because the radar actually generated more noise than signal.

Speaker 4: Now the Tesla design radar is a high resolution radar that has some potential to be useful that the jury is still very much out on on where that is in fact the case.

Speaker 5: But now I'm like, on the cost question, I guess from the vehicle side, like, you know, as Drew mentioned earlier, we are always trying to engineer our product to be.

Speaker 5: cheaper to make and more efficient to make that comes obviously on the engineering side, as we come up with new innovations, but as well on the supply chain side with our partners, we work with them to automate some of their lines, remove their, um, you know, bottlenecks and their high costs as well on the logistics side, getting parts of the factory, it's not, it's not, it's not like a one thing that you have to, it's, you have to attack costs everywhere. And, and we do it ruthlessly at all times.

Speaker 2: all of the above. Yeah. I mean, I would say there's a whole longer list of things which we are chasing. We internally call it the cost attack, where we're literally going line by line and saying, how can we make it better?

Speaker 1: And it's a grind. The grind. It's a game of things. I guess it's like Game of Thrones, but pennies. Is I mean, the first prox makes me if you better $40,000 car. And roughly 10,000 items in that car. It that means each thing on average cost more books.

Speaker 4: So in order to get the cost down, say by 10%, you have to get $0.40 out of each part on average.

Speaker 5: We play it. Willingly. We play it. Yeah. We've done it many, many times. And you know, even something as simple as like a sticker.

Speaker 4: You know, like there's too many figures internally in the car that nobody ever sees. Uh, there's, you know, um, something as simple as a QR code. You might think, well, putting a QR code on a, on part one, I just put them, put them on there. It's like, well, are we actually going to use that QR code? Uh, also pending. Yeah, exactly. And then inevitably, sometimes the QR code doesn't go on properly or you can't read it properly and then it stops the line. Pretty more than a penny. Yeah, absolutely.

Speaker 2: So, it's tripping away with it. I mean, it is trying to, it just feels like digging a tunnel with a spoon at times. Very much escaping position. Yeah. You know, on top of it, like we said, you know, we did see on factory upgrades, so we expect volume to go up. That would also bring some savings from high production.

Speaker 2: But then on the flip side, we're going to be ramping a new product like Cybertruck, which we talked about.

Speaker 2: So, yeah, so those are the real puts and takes that we are working for.

Speaker 5: Yeah, but there's not like some accidentally, you know, some gold brick of gold that we've threatened to go up. Unfortunately, and it's, you know, we're trying to be very rigorous about improving the quality and you.

Speaker 4: Yeah, that's like any fool can reduce the cost of a car by making it worse. I just you know, deleting functionality and capability and

Speaker 5: that's not called the any tool. But if you want to lose weight and say, well, I need to lose whatever.

Speaker 4: 15 pounds right away. Well, you could talk your arm off, but then you're sitting there with one arm, and you're still fat.

Speaker 4: So it's sort of like, uh, yeah, you actually have to eat less food and work out. That's the actual way. And doctors, the books. Yeah.

Speaker 4: You know, super fun because we're just delicious and Firstly, I'm not a huge, but I don't love working at. I know if I will do I wish I could but I don't Let's move into mouse controls consistently working out in which case I love moving

Speaker 3: All right, let's go to Colin Langen from Wells Fargo.

Speaker 11: Sorry about that. Can you hear me now? Yeah, I'm here. That's great. Thanks for answering my question. You said in a commentary that you're not going full tilt on the plant in Mexico until there's signs that the economy is strong. Can you continue at a 50% CAGR without that plant? And where would that come from? And any color on what you mean sort of not going full tilt? Could that plant get delayed indefinitely? Or what are you talking about?

Speaker 4: No, we're definitely making the factory in Mexico. We feel very good about that. We put a lot of effort into looking at different locations and we feel very good about that location.

Speaker 4: And we are going to build a factory there. And it's going to be great. The question is really just one.

Speaker 4: Uh, yeah, you know, there's going to be a broken record on the on the interest front It's just the interest rates have to come down. Um, like like if if interest rates keep rising

Speaker 4: You just fundamentally reduce affordability. It is just the same as right increasing the price of the car. So I just don't have visibility. If you can tell me what the interest rates are, I can tell you when, you know,

Speaker 4: when we should we should pull the factory we're gonna pull it um and i mean i think we'll

Speaker 4: We'll start the initial phases of construction next year. But I am still somewhat scarred by 2009 when the General Motors and Christel were bankrupt. So well,

Speaker 4: hanging on by thread during that entire time. And with them, I mean,

Speaker 1: So we, we actually closed that round on the last hour of the last day that it was possible. Um, stressful to say the least, um, and then barely made it through 2009. Um, so I'm like, I want to just, I don't want to be.

Speaker 5: So, um, and we have room here, like in Texas, you said, where we still have it in this building. It's not full with Cybertruck and Model Y. And, you know, there's plenty of growth opportunities still to have inside the building where our team already is. We also have 2000 acres here. There's also a bunch of, we're actually only occupying a tiny corner of the land that we have. Um, so, you know, we could, we could technically do all the scaling, that's for your, just here.

Speaker 4: I mean, personnel is our biggest challenge and it's in that the greater Austin area only has, generously, the greater Austin area only has two million people. So people are moving here and they're willing to move here, but there is somewhat of a housing crisis. They got to live somewhere.

Speaker 5: I don't know. I mean, I'm just curious. I'm not saying things will be bad. I'm just saying they might be.

Speaker 4: Like, Tedley is an incredibly capable ship, but we need to make sure, like, if the macroeconomic conditions are stormy, even if the best ship is still going to have tough times, the weaker ships will sink. We're not going to sink.

Speaker 4: But, you know, even a great ship in a storm has challenges. Now that storm will apply to everyone, not just us, and not just the auto industry.

Speaker 12: So, you know, apart from necessary sort of staples like food and stuff, but, um,

Speaker 4: All right. I'm very good. Very good. Got any guesses on this. I'd love to be less wrong. And I apologize if I'm perhaps more paranoid than I should be, because that might also be the case, because I have PTSD from 2009. Great time.

Speaker 4: And in 2017 through 19, we're not big bank either. That was very top going. So.

Speaker 5: You know, the low order industry is also so much bike-like because there are people

Speaker 1: can to hesitate by a new par in this uncertainty in the economy.

Speaker 4: So it's, you know, product companies do very well in good economic times and they don't do as well in...

Speaker 4: You know, whereas if somebody is selling bread, then I think, you know, that people still eat bread.

Speaker 4: Yeah, any bread, we free the full all the time, but you far you don't have to have bread.

Speaker 4: especially if there's war going on, and then that impacts your sentiment. Yeah. I mean, people are reading about war is all over the world. If the, you know, playing...

Speaker 3: All right. Unfortunately, that's all the time we have today. Thank you very much for all of your good questions, and we'll see you again in three months.