Q2 2024 Tesla Inc Earnings Call
We published the same thing because this webcast.
Operator: Transcribed by https://otter.ai During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please use the raise hand button to join the question queue.
Speaker Change: During this call we will discuss our business outlook and make forward looking statements. These comments are based on our predictions and expectations as of today.
Speaker Change: Fuel events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC.
Speaker Change: During the question and answer portion of today's call. Please limit yourself to one question and one follow up.
Speaker Change: Please use the raise hand button to join the question queue.
Operator: Before we jump into Q&A, Elon has some opening remarks. Elon, thank you.
Speaker Change: Before we jump into Q&A Elon has some opening remarks Elon.
Elon R. Musk: So to recap, we saw large adoption acceleration for EVs, and then a bit of a hangover as others struggled to make compelling EVs. Hence, there have been quite a few competing electric vehicles that have entered the market. And mostly, they have not done well, but they have discounted their EVs very substantially, which has made it a bit more difficult for Tesla. We don't see this as a long-term issue, but really, it's fairly short term.
Elon: Thank you so to recap.
Elon: We saw launch.
Adoption exploration Evs, and then a bit of a hangover of others struggled to make compelling UBS.
Elon: Quite a few.
Elon: Electric vehicles that have entered the market.
Elon: Mostly they are not done well, but they have discounted there is very substantial.
Elon: Essentially which has made us put more to it.
Tesla: The board with Tesla.
Tesla: See this as a long term issue, but it really is.
Speaker Change: Short term.
Elon R. Musk: And we still firmly believe that EVs are best for customers and that the world is headed for fully electrified transport, not just cars but also aircraft and boats. Despite many challenges, the Tesla team did a great job executing, and we did achieve record quarterly revenues. Energy storage deployments reached an all-time high in Q2, leading to record profits for the energy business.
Elon: And we still firmly.
Elon: We believe that Evs are best for customers.
The world is headed.
Elon: Fully electrified transporting.
Elon: As the cars, but also.
Elon: Aircraft and boats.
Speaker Change: Despite many challenges the <unk> team did a great job of executing and we did achieve record quarterly revenues.
Speaker Change: Energy storage deployments reached an all time high in Q2, leading to record profits for the energy business.
Elon R. Musk: And we're investing in many future projects, including AI training and adverts, and a great deal of infrastructure to support future products. We won't get too much into the product roadmap here because that is reserved for the product announcement event. But we are in fact developing to deliver a more affordable model in the first half of next year. The really biggest differentiator for Tesla is autonomy. And in addition to that, we have scale economies, and we're the most efficient electric vehicle producer in the world. While others are pursuing different parts of the AI robotics stack, we are pursuing all of them. This allows for better cost control, more scale, quicker time to market, and a superior product.
Speaker Change: And we're investing in many future projects, including.
Speaker Change: AI training and inference.
Speaker Change: Video infrastructure to support future products.
Speaker Change: We won't get too much into the product roadmap here because that is.
Speaker Change: Reserved for.
Speaker Change: <unk> announcement events.
Speaker Change: But we are on track to deliver a more affordable model in the first half of next year.
Speaker Change: The big but really by far the biggest differentiator for Tesla is autonomy.
Speaker Change: And in addition to that we have scale economies.
Speaker Change: If you break the most sufficient electric vehicle producer in the world.
Speaker Change: So.
Eric: This is Eric.
Speaker Change: While others are pursuing different parts of the AI robotics that we're pursuing all of them. This allows for better cost control more scale quicker time to market and superior product.
Elon R. Musk: Applying not to register your time to vehicles but to autonomous humanoid robots like Optimus. Regarding full self-driving and robotaxi, we've made a lot of progress with full self-driving in Q2. And with version 12.5 beginning rollout, we think customers will experience step-change improvements in how well supervised full self-driving works. Version 12.5 has five times the parameters of 12.4 and will finally merge the highway and city stacks. So the highway stack, at this point, is pretty old. So often the issues people encounter are on the highway, but with 12.5 we've finally merged the two stacks. I still find that most people actually don't know how good the system is.
Speaker Change: Applying not to just do autonomous.
Nickels: Nickels, but two autonomous humanoid robots like optimists.
Nickels: Regarding costs are driving.
Nickels: And robo taxi.
Nickels: We've made a lot of progress with wholesale revenue in Q2 and with version 12, five beginning rollout.
Nickels: We think customers will experience a step change improvements in.
Speaker Change: How well supervised parcel Dragon works.
Nickels: With version 12, five has five times the parameters of $12 four and will mode and finally merged the highway and steady stacks.
Speaker Change: So with the highway Cytosorb at this point is pretty old.
Nickels: So often issues people and counter or on highway.
Nickels: But with.
Nickels: With $12 five we were finding merge the two sacks.
Nickels: Okay.
Nickels: We'll find out.
Speaker Change: Most people actually don't know how good the system is and I would encourage anyone to understand to some better to simply try now.
Elon R. Musk: And I would encourage anyone to understand the system better to simply try it out and let the car drive you around. One of the things we're going to be doing to make sure people actually understand the capabilities of the car is when delivering a new car and when picking up a car for service, to just show people how to use it and just drive them around the block. I don't know why people use them at all, but they tend to continue using them.
Speaker Change: Of the car driving around.
Speaker Change: One of the things, we're going to be doing.
Speaker Change: Make sure that people actually understand the capabilities of the car is when delivering.
Speaker Change: New car.
Speaker Change: Picking up a car for service to just show people how to use it and just wrapping around the block.
Speaker Change: Once people use it out a little bit.
Speaker Change: Yes.
Speaker Change: They tend to continue using it.
Elon R. Musk: So it's very compelling, and then this, I think, will be a massive demand driver; even unsupervised full self-driving will be a massive demand driver. And as we increase the mile-between intervention, it will transition from supervised full self-driving to unsupervised full self-driving, and we can unlock massive potential in the fleet. We postponed the sort of Robo Taxi or the sort of..., product unveil by a couple months where it's shifted to 10-10 on the 10th of October.
Speaker Change: It's very compelling.
Speaker Change: And.
Speaker Change: And then just I think we will be.
Speaker Change: A massive demand driver, even unsupervised wholesale private won't be a massive demand driver.
Speaker Change: And as we increase the mountain between intervention.
Speaker Change: It will transition from supervised for self driving to unsupervised full self driving and.
Speaker Change: And we can unlock.
Speaker Change: A potential in the fleet.
We postponed.
Speaker Change: Robo taxis.
Speaker Change: Product.
Speaker Change: Okay.
Speaker Change: Unveil.
Speaker Change: By a couple of months wherever it's shifted to <unk>. So the 10th of October.
Speaker Change: And.
Elon R. Musk: This was because I wanted to make some important changes that I think would improve the vehicle, the sort of Robo Taxi, the thing that we're the main thing that we're going to show, and we're also going to show a couple of other things. So moving back, moving back a few months allowed us to improve the robotaxi as well as add a couple other things for the product unveil. We're also nearing completion of the self-expansion of GigaTexas, which will have the largest training cluster to date.
Speaker Change: This is because I wanted to make some important changes that I think would improve the <unk>.
Speaker Change: Sort of.
Speaker Change: The robo taxis.
Speaker Change: Main thing that we're going to show and we're also going to.
Speaker Change: Sure for a couple of other things.
Speaker Change: So moving back moving it back a few months allowed us to.
Speaker Change: Improve the.
Speaker Change: The robo taxi as well as.
Speaker Change: Add in a couple of other things for.
Speaker Change: For the product available.
Speaker Change: Okay.
Elon R. Musk: We're also nearing completion of the south expansion of Giga, Texas, which will cause our largest clip training clusters of dates will be incremental for 2800 plus 20000.
Elon R. Musk: This will be an incremental 50,000 H100s plus 20,000 of our hardware 4-Roll AI5 Tesla AI computer. With Optimus, Optimus is already performing tasks in our factory. We expect to have Optimus production version one and Unlimited Production starting early next year. This will be for Tesla Consumption. It's just better for us to iron out the issues ourselves.
Elon R. Musk: Our hardware for oil.
Elon R. Musk: AIG bias that Tesla AI computer.
Elon R. Musk: With Optimus office is already performing tests in our factory.
Elon R. Musk: And.
Elon R. Musk: We expect to have <unk>.
Elon R. Musk: <unk> production version one.
Elon R. Musk: And limited production.
Elon R. Musk: Starting early next year this will before.
Tesla consumption.
Elon R. Musk: Got it.
Elon R. Musk: So it's better for us to iron out the issues ourselves.
Elon R. Musk: But we expect to have several thousand Optimus robots produced and doing useful things by the end of next year in the Tesla factories. And then, in 2026, ramping up production quite a bit. And at that point, we'll be providing Optimus robots, too, outside customers. That'll be production version two, approximately.
Elon R. Musk: But we expect to have several thousand <unk> robots.
Elon R. Musk: Produced entering useful things by the end of next year.
Elon R. Musk: <unk> factories.
Elon R. Musk: And then in 2026 ramping up production quite a bit and it.
At that point, we will be providing optimist.
Robots too.
Elon R. Musk: Outside customers.
Elon R. Musk: <unk> production version two of optics.
Elon R. Musk: For the energy business, this is growing faster than anything else. This is really a demand constraint rather than a production constraint. So we're ramping up production in our US factory as well as building our new factory make make back factory in China. That should, you know, roughly double our output, may be tripled, potentially. In conclusion, we're super excited about the progress across the board. We're changing the energy system, how people move around, how people approach the economy. The undertaking is massive, but I think the future is incredibly bright. You know, I really can't emphasize just the importance of autonomy for the vehicle side and for optimists. All of the numbers sound crazy, I think.
Elon R. Musk: For the energy business this is growing.
Elon R. Musk: The net anything else this is where we're really.
Elon R. Musk: Demand constraint rather than production constrained so we're ramping up production.
Elon R. Musk: Our U S factory as well as.
Speaker Change: Clothing hour.
Speaker Change: Moving manufacturing in China. So.
Speaker Change: Should roughly double our output.
Speaker Change: Maybe more than doubled maybe tripled potentially so.
Speaker Change: In conclusion, we're super excited about the progress across the board.
We're changing the energy system, how to work around how we will approach the economy there.
Speaker Change: <unk> is massive but I think future's incredibly Brian.
Speaker Change: Hi.
Speaker Change: I really just.
Speaker Change: That emphasize the importance of autonomy.
For the vehicle side and for Optimists.
Speaker Change:
Speaker Change: Although the numbers sound sound Crazy.
Speaker Change: I think.
Elon R. Musk: Tesla is producing at volume with with, and supervised MSD, essentially enabling the fleet to operate like a giant autonomous, Please. And to take the valuation, I think, to some pretty crazy numbers, ARK Invest thinks on the order of $5 trillion. I think they're probably not wrong.
Speaker Change: Tessa producing at volume.
Speaker Change: Yeah.
Speaker Change: Got it.
Speaker Change: And supervised MSP essentially enabling.
Enabling the fleet to operate like a giant autonomous.
Speaker Change: Fleet.
Speaker Change: Angela.
Speaker Change: If it takes the valuation I think to some.
Speaker Change: Pretty crazy number are investing on the order of $5 billion I think are probably not wrong.
And long term optimist I think is.
Speaker Change: Achieves a valuation several times that number.
Speaker Change: I want to thank the <unk> team for strong execution and looking forward to exciting years, Inc.
Elon R. Musk: And long-term optimists, I think, achieve a valuation several times that number. I want to thank the Tesla team for strong execution and look forward to exciting years ahead. Thank you very much, Elon. And Vaibhav has opening remarks as well.
Speaker Change: Great. Thank you very much Elon and Deb I'll pass opening remarks as well.
Vaibhav Taneja: As Elon mentioned, the Tesla team rose to the occasion yet again, delivering on all fronts with some notable records. In addition to those records, we saw our automotive deliveries go sequentially. I would like to thank the entire Tesla team for their efforts in delivering a great quarter. On the auto business front, affordability remains a top of mind for customers, and in response, in Q2, we offered deductive financing options to offset sustained high interest rates. These programs had an impact on revenue per unit in the quarter.
Deb: As Ilan mentioned, the Tesla team rose to the occasion and yet again, we delivered on all fronts with some notable markets. In addition to those records. We saw our automotive deliveries sequentially I would like to thank the entire Tesla team for their efforts in delivering a great quarter.
Speaker Change: On the auto business spun affordability remains top of mind for customers and response in Q2, we offered attractive financing options to offset sustained high ultrashape. Please.
Speaker Change: These programs had an impact on revenue per unit in the quarter.
Vaibhav Taneja: These impacts will persist into Q3 as we have already launched similar programs. We're now offering extremely competitive financing rates in most parts of the world. This is the best time to buy a Tesla. I mean, if you're waiting on the sidelines, come out and get your car.
Speaker Change: These impacts will persist into Q3 as we have already launched similar programs.
Speaker Change: We are now offering extremely competitive financing this in most parts of the world. This.
Speaker Change: This is the best time to buy a Tesla.
Speaker Change: We are waiting on the sidelines come out and get your car.
Vaibhav Taneja: We had a record quarter on regulatory credits revenue and as well. However, on net, our automotives remain flat sequentially. It is important to note that the demand for regulatory credits is dependent on other OEMs' plans for the kind of vehicles they are manufacturing and selling, as well as changes in regulations. We pride ourselves on being the company with the most American-made cars and are continuing our journey to further localize our supply chain, not just in the U.S. but in Europe and China, as well for the respective factories.
Speaker Change: We had a record quarter and regulatory revenues.
Speaker Change: As well on net our automotive intense.
Speaker Change: While it remained flat sequentially.
Speaker Change: Welcome to note that the demand for regulatory.
Speaker Change: It is dependent on other Oems plans for the kind of vehicles that manufacturing and selling as well as changes in regulations.
Speaker Change: We pride ourselves to be the.
Speaker Change: The company with the most American made cost and are continuing our journey to further localize our supply chain not just in the U S, but in Europe, and China as well for the respective tactics as always our focus is on providing the most compelling product at a reasonable price we have stepped up our efforts to provide.
Vaibhav Taneja: As always, our focus is on providing the most compelling products at a reasonable price. We have stepped up our efforts to provide more trims that have an estimated range of more than 300 miles on a single charge. We believe this, along with the expansion of our supercharging network, is the right strategy to combat the change in lighting. Since the revision of FSD pricing in North America, we've seen action rates increase meaningfully, and expect this to be a driver of vehicle sales as the feature set improves further.
Speaker Change: More trends that have estimated range of more than 300 miles on a single charge. We believe this along with the expansion of our Supercharging network is the right strategy to combat changing lighting.
Speaker Change: Since the division of <unk> pricing in North America, we've seen adoption rates increase meaningfully and expect this to be a driver of weaker sales.
Speaker Change: Feature set influenced sponsor.
Vaibhav Taneja: Cost per vehicle declines sequentially when we remove the impact of cybertruck. While we are experiencing material costs trending down, note that there is latency on the cost side, and such reductions would show up in the P&L when the vehicles built with these materials get delivered.
Speaker Change: Cost per vehicle declined sequentially, when we remove the impact of cyber truck.
Speaker Change: We began experiencing material cost trending down note that the latency on the cost side.
Speaker Change: Reductions would show up in the P&L when the vehicles built with these materials get delivered.
Vaibhav Taneja: Additionally, as we get into the second half of the year, it is important to note that we are still ramping Cybertruck and Model 3 and are also getting impacted by varying amounts of tariffs on both raw materials and prediscopes. While our teams are working feverishly to offset these, unfortunately, it may have an impact on costs in the near term. We previously talked about the potential of the energy business and now feel excited that the foundation that will lead over time is bearing the expected results. Energy storage deployments have more than doubled with contribution not just from Megapack but also Powerwall.
Speaker Change: <unk> as we get into the second half of the year. It is important to note that we are still ramping cyber trust and loyalty, while also getting impacted by winning months attacks on both raw materials and finished up while our teams are working feverishly to offset these unfortunately it may have an impact on the cost in the near term.
Speaker Change: We clearly talked about the potential of the NRG business announcing excited.
Speaker Change: The foundation that was laid over time has been the expected results.
Speaker Change: No just storage deployments more than doubled with contribution not just from <unk>, but also power.
Vaibhav Taneja: Resulting in record revenues and profits for the energy business. The energy storage backlog is strong. As discussed before, deployments will fluctuate from period to period, with some quarters seeing large increases and others seeing a decline.
Speaker Change: Resulting in record revenues and profit for the energy business.
Speaker Change: Another key storage backlog is strong as discussed before deployments will fluctuate from period to be that in some quarters seeing lodging pieces and others seeing a decline there.
Vaibhav Taneja: Recognition of storage gain over time is dependent on a variety of factors, including logistics timing as we send units from a single factory to markets across the world, customer readiness, and, in the case of EPC projects, construction activity. Moving on to other parts of the business, service and other gross profits also improved sequentially from the improvement in service utilization and growth in our collision repair business. The impact of our recent reorg is reflected in restructuring other income statements.
Recognition of storage gigawatt is dependent on a variety of factors, including logistics timing as we send units from a single factory to markets across the world.
Speaker Change: And in case of EPC projects under construction activities.
Speaker Change: Moving on to the other parts of the vessel services and other gross profit also improved sequentially from the improvement in service utilization and growth in our collision repair business.
Speaker Change: The impact of our recent re org is reflected in restructuring, although total length of segment.
Vaibhav Taneja: Just to level set, this was about $642 million of charges, which got recorded in the period. And I want people to remember that we've called it out separately on the financials. Sequentially, our operating expenses, excluding such charges, decreased despite an increase in spend for AI-related activities and higher legal and other costs.
Speaker Change: We never said this was about $642 million of charge, which quarter covenant in it and I want people to remember that with call it out separately on the financial.
Speaker Change: Sequentially, our operating expenses excluding surcharges.
Speaker Change: Despite an increase in spend for AI related activities and higher legal and other costs.
Vaibhav Taneja: On the CapEx run, while we saw a sequential decline in Q2, we still expect the year to be over $10 billion in CapEx as we increase our spend to bring a 50k GPU cluster online. This new cluster will immensely increase our capabilities to scale FSD and other AI initiatives. We reverted to positive free cash flow of $1.3 billion in K2.
Speaker Change: On the Capex front with while we saw a sequential decline in Q2, we still expect.
Speaker Change: Year to be over $10 billion in Capex as we increase our spend to bring the <unk> cluster are like this new center will immensely increase our capabilities to scale FSD and other initiatives.
Speaker Change: We reverted to positive free cash flow of $1 3 billion. In Q2. This was despite restructuring payments being made in the quarter.
Vaibhav Taneja: This was despite restructuring payments being made in the quarter, and we ended the quarter with over $30 billion of cash in the investment. Once again, we've begun the journey towards the next phase for the company with the building box being placed. It will take some time, but it will be a rewarding experience for everyone involved. Once again, I would like to thank the entire Tesla team for their efforts. Great. Thank you very much, Vaibhav.
Speaker Change: Ended.
Speaker Change: Quarter with over 30 million of cash and investments.
Speaker Change: Once again, we've begun that journey towards the next phase for the company, but the building blocks in place it will take some time, but it won't be a rewarding experience for everyone involved.
Speaker Change: Once again I would like to thank the entire team for their efforts.
Operator: Now let's go to investor questions. The first question is, what is the status of the Roadster? With respect to Reuters, sir, we've completed most of the engineering, and... I think there's still some upgrades we want to make to it. But we expect to be in production with Reuters next year. Great. It'll be something special. I've got all of them right, thank you.
Great. Thank you very much come out now let's go to Investor questions. The first question is what is the status on the roadster.
Speaker Change: With respect to the roadster, which completed most of the engineering.
And.
Speaker Change: I think there is some upgrades we want to make to it.
Speaker Change: But we expect to be in production with Roche for next year.
Speaker Change: Great it'll be something special.
Speaker Change: Michael Hall of Famer I think.
Operator: Fantastic. The next question is about the timing of the RoboTaxi event, which we've already covered. So we'll go to the next question. When do you expect the first RoboTaxi ride? I guess that's really just a question, when do I expect the first, when can we do unsupervised full self-driving? It's difficult, obviously; my predictions on this have been overly optimistic in the past. So, I mean, based on the current trend, it seems as though we should get miles between interventions to be high enough that it's too far enough in excess of humans that you could do it unsupervised, possibly by the end of this year. I would be shocked if we cannot do it next year.
Speaker Change: At Essex.
Speaker Change: The next question is about timing of Robo taxi event, which we've already covered absolutely. We will go to the next question. When do you expect the first robo taxi ride.
Speaker Change: Yeah.
Speaker Change: But that's really just a question of when to expect the first one can read your unsupervised for subscribers.
Speaker Change:
Speaker Change: It's difficult obviously.
Speaker Change: My my predictions of this have been overly optimistic in the past so.
Speaker Change: I mean based on the current trend it seems as though.
Speaker Change: You should get miles between interventions.
Speaker Change: Hi.
Speaker Change: Three high enough.
Speaker Change: That too far in excess of humans that you could do.
Speaker Change: <unk> provides possibly by the end of this year I would be shocked if we cannot do it next year.
Elon R. Musk: So next year seems highly probable to me based on the points of view plus the points of the curve of miles between intervention. That trend exceeds [inaudible] for sure next year. So, yeah. Thank you very much.
Speaker Change: So the extra seems highly probable estimate based on once a week plus the points of the curve.
Myles: Myles screen intervention.
Myles: The trends exceeds.
Myles: Procurement.
But for sure next year.
Myles: Yes.
Myles: Yeah.
Operator: Our third question is: the Cybertruck is an iconic product that wows everyone who sees it. Do you have plans to expand the cyber vehicle lineup to a cyber SUV or cyber van? I think we want to limit product announcements to when we have special specific product announcement events rather than earnings calls. Great, thank you. Our next question is, what is the current status of 4680 battery cell production and how is the ramp-up progressing? 4680 production ramped strongly in Q2, delivering 51% more cells than Q1, while reducing COGS significantly.
Myles: Thank you very much.
Speaker Change: Third question is the cyber truck is an iconic product that wows, everyone, who sees it do you have plans to expand the cyber vehicle lineup to a cyber SUV or cyber banner.
I don't think we want to limit.
Speaker Change: Product announcements when we have a special specific product announcements events at horizon, Our next calls.
Speaker Change: Great. Thank you.
Speaker Change: Our next question is what is the current status of <unk> 4600, 80 battery cell production and how is the ramp up progressing.
Speaker Change: <unk> production ramp strongly in Q2, delivering 51% more sell side in Q1, while reducing Cogs significantly.
Operator: We currently produce more than 1400 types of trucks with 4680 cells a week and will continue to ramp output as we drive costs up further towards the cost parity target we set for the end of the year. We built our first validation cyber truck with dry cathode process made on our mass production equipment, which is a huge technical milestone, and I'm super proud of that. We're on track for production launch with dry cathode in Q4, and this will enable cell costs to be significantly below available alternatives, which was the original goal of the 4680 program. Thank you very much.
Speaker Change: We currently produce more than 1400 type of trucks out 46 80 cells are we can we will continue to ramp output as we drive cost out further towards the cost parity target we set for the end of the year.
Speaker Change: We built <unk> validation cyber truck with dry capital process based on our mass production equipment, which is a huge technical milestone in super proud of that we're on track.
Speaker Change: Full production launch with Stryker.
Speaker Change: In Q4, and this will enable cell cost to be significantly below available alternatives, which was the original goal of 46 of your program.
Speaker Change: Great.
Elon R. Musk: The next question is, any update on Dojo? Yeah, so so don't do it. I should preface this by saying I'm incredibly impressed by the videos' execution and the capability of their hardware. And what we are seeing is that the demand for video hardware is so high that it's often difficult to get the GPUs that just seem this. I guess I'm quite concerned about actually being able to get steady on Nvidia GPUs when when we want them. And I think this therefore requires that we put a lot more effort into Dojo.
Speaker Change: Thank you very much. The next question is any update on that Joe.
Joe: Yes, so <unk>.
Speaker Change: But I should preface this by saying Im.
Speaker Change: Incredibly impressed by the videos execution capability of the hardware.
Speaker Change: And what we are seeing is that better.
Demand for in video hardware, so high is that.
Speaker Change: It's often difficult to get the.
Speaker Change: Gpus.
Speaker Change: And.
Speaker Change: The purchasing space.
Speaker Change: I'm quite concerned about actually being able to get steady at Nvidia Gpus, when we want them.
Speaker Change: And.
Speaker Change: I think therefore requires that we.
Speaker Change:
Speaker Change: Put a lot more effort on their job.
Elon R. Musk: In order to have in order to ensure that we've got the training capability that we need, so we are going to double down on Dojo, and we do see a path to being competitive with NVIDIA with Dojo. And I think we kind of have no choice because the demand for Invalid is so high, and it's obviously there. They have an obligation essentially to raise the price of GPUs to whatever the market will bear, which is very high. So, I think we've really got to make Dojo work, and we will.
Speaker Change: In order to have in order to ensure that we've got the <unk> capability that we need.
Speaker Change: So we are going to double down on our term.
Speaker Change: And.
Speaker Change: We do see a path to being competitive with and video was Swift ultra and I think.
Speaker Change: We kind of have no choice because.
The demand for <unk>, so high on it.
Speaker Change: It's obviously there.
Speaker Change: If their obligation essentially to raise the price of Gpus to whatever the market will bear.
Speaker Change: Which is.
Speaker Change: Very high so.
Speaker Change: I think we're really.
Speaker Change: It's really going to make total work and we will.
Operator: Great. The next question is, what type of accessories will be offered with Optimus? and many more.
Speaker Change: Great.
Speaker Change: The next question is what type of accessories will be offered with Atlas.
Speaker Change: [laughter].
Elon R. Musk: Thank you. Thank you. Optimus is, it tends to be a generalized humanoid robot with a lot of intelligence.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: Oculus is it tends to be a generalized humanoid.
Speaker Change: Robot.
Speaker Change: A lot of intelligence. So it's like I say, we're kind of accessories.
Elon R. Musk: So it's like saying what kind of accessories will be offered by the human. It's just really intense to be able to be backwards compatible with human tasks. So it would, you know, use any accessories that a human would use. Thank you. The next question is, do you feel you're cheating people out of the joys of owning a Tesla by not advertising? We're ordering some appetizers.
Speaker Change: But where the human.
Speaker Change: It's just really intend to be able to.
Speaker Change: We backwards compatible with human tasks. So.
Speaker Change: Just any accessories that agreement with us.
Yeah.
Speaker Change: Thank you.
Speaker Change: The next question is do you feel you're cheating people out of the choice of owning a tesla by not advertising.
We're doing some advertising.
Elon R. Musk: So, yeah, yeah, I'll say something, but my fundamental belief is that we need to be providing the best for a reasonable price to the consumer. Just to give you an example, in the US alone in Q2, over two-thirds of our sales were deliveries to people who had never owned a Tesla before, which is encouraging. We've spent money on advertising and other awareness programs, and we have adjusted our strategy.
So yes.
Speaker Change: I'll touch on that in our fundamental belief is that we need to be providing the best part of our total reasonable price and because it was.
Speaker Change: Just to give you a fact in U S alone in Q2 or two thirds of our sales or two deliveries were to people who have never owned a tesla before.
Speaker Change: And which is encouraging we have spent money on advertising and other awareness programs and we have adjusted our strategy and not saying no to advertising.
Elon R. Musk: We're not saying no to advertising, but this is a dynamic process, and we know that we have not exhausted all our options and therefore plan to keep adjusting in the latter half of this year as well. Great, thanks very much.
Speaker Change: So the dynamic play and we know that we have not exhausted all our options and therefore plan to keep adjusting tuck in the later half of this year as well.
Operator: The next question is on energy growth, which we already covered in opening remarks. So we'll move on to the next one. What is the updated timeline for Giga Mexico? And what will be the primary vehicles produced initially? Well, we currently oppose Giga Mexico.
Speaker Change: Great. Thank you very much. The next question is on the energy growth, which we already covered in his opening remarks, so we'll move onto the next one.
Speaker Change: What is the updated timeline for gig in Mexico, and what will be the primary vehicles produced specially.
Elon R. Musk: I think we need to see just where things stand after the election. Trump has said that he will put heavy tariffs on vehicles produced in Mexico. So it doesn't make sense to invest a lot in Mexico if that is going to be the case.
Speaker Change: Well, we currently of course on Chicken Mexico.
Speaker Change: I think when you see just briefing stand after the election.
Speaker Change: Trump has said that heavy tariffs on vehicles produced in Mexico, So it doesn't make sense too.
Speaker Change: Invest a lot in Mexico.
Speaker Change: If that is going to be the case, so we kind of and see where things politically.
Elon R. Musk: However, we are increasing capacity at our existing factories quite significantly. And I should say that the cyber, Taxi, and Roma Taxi will be produced here at our headquarters at Geico, Texas. All right, thank you. And as will Optimus. Towards the end of next year for production version two, the high volume version of Optimist will also be produced here in Texas. Great, thank you. Just a couple more.
Speaker Change: However, we are increasing capacity at our existing.
Speaker Change: Factories quite significantly.
Speaker Change: And I should say that the cyber.
Speaker Change: Taxi Robo taxis will be.
Speaker Change: We will get produced.
Speaker Change: Here at our headquarters at Codexis.
Speaker Change: Alright, Thank you Andrew.
Speaker Change: As we're optimists.
Speaker Change: Towards the end of next year for optimal production version two high volume version of arguments were also be produced here in Texas.
Speaker Change: Great. Thank you just a couple more.
Speaker Change: Is tesla still in talks with an OEM to license FSD.
Speaker Change: There are a few major Oems, but hubs expressed interest in licensing.
Elon R. Musk: Is Tesla still in talks with an OEM to license FSD? There are a few major OEMs that have expressed interest in licensing. Tesla or Tesla full stop driving. I suspect there will be more over time. But we can't comment on the details of those discussions.
Speaker Change: Sounds about right.
Speaker Change: Those are driving.
Speaker Change: I suspect there will be more overtime.
Speaker Change: But we can't comment on the details of those discussions.
Elon R. Musk: All right, thank you. And the last one, any updates on investing in XAI and integrating Grok into Tesla software? I should say that Tesla is learning quite a bit from XAI. It's actually been helpful in advancing and then building up the new Tesla Data Center. With reviving investing, actually, I think we'd need shareholder approval of any such investment. But I'm certainly supportive of that if shareholders are, but I think we need to vote on that.
Speaker Change: Alright, Thank you and the last one any updates on investing in X AI and integrating croc into Tesla software.
I should tell is learning quite a bit from X AI, it's been actually helpful in advancing both Australia.
And then pulling up the new Tulsa data center.
Speaker Change: Regarding investing in I'd say I think we would need to have a shareholder approval of such investment.
Speaker Change: But I certainly supportive of that if shareholders are a proposal I think we need a vote on that.
Speaker Change: I think there are opportunities to integrate drop in special software yes.
Elon R. Musk: So I think that there are opportunities to integrate Grok into Tesla software, yes. All right, thank you very much. Now we will move on to analyst questions. The first question comes from Will Stein from Truist. Will, please go ahead and unmute yourself.
Speaker Change: Alright, Thank you very much and now we will move on to analyst questions. The first question comes from will Stein from Truest will please go ahead it on yourself.
Operator: Great, thanks so much for taking my question. This relates a little bit to the last one that was asked. Elon, I share your strong enthusiasm about AI and I recognize Tesla's opportunity to do some great things with the technology. But there are some concerns I have about Tesla's commercialization, and that's what I'd like to ask about. Specifically, there were some news stories through the quarter that indicated that you redirected some AI compute systems that were destined for Tesla instead to XAI, or perhaps it was to X, I'm not sure.
William Stein: Great. Thanks, so much for taking my question this relates a little bit to the last one that was asked Elon I share your.
Operator: And similarly, a few quarters ago, if you recall, I asked about your ability to hire engineers in this area, and you noted that there was a great desire for some of these engineers to work on projects that you were involved with, but some of them weren't at Tesla; they were instead at XAI or perhaps even X again. The question is, when it comes to your capital investments, your AI R&D, your AI engineers, how do you make allocation decisions among these various ventures and how do you make Tesla owners comfortable that you're doing it in a way that really benefits them? Thank you. Yeah, I mean, I think you're referring to a very, like an old article regarding GPUs. I think that she's like six or seven months old.
Speaker Change: Strong enthusiasm about AI and AR recognized tesla's opportunity do some great things with the technology, but.
William Stein: There are some concerns I have about tesla's commercialization and that's what I'd like to ask about specifically there were some new stories during the quarter that indicated that you redirected some AI compute systems that were destined for Tesla instead to X AI or perhaps perhaps it was to ask I'm not sure.
Speaker Change: And similarly, a few quarters ago, if you recall I asked about your ability to hire engineers in this area.
Speaker Change: You noted that.
Speaker Change: There was a great desire for some of these engineers to work on projects that you were involved with but some of them went to Tesla. They were instead, it X AI or perhaps even access yet again. So the question is when it comes to your capital investments Europe AI R&D Your AI engineers.
Speaker Change: How do you make allocation decisions among these various debt insurers and how do you make.
Speaker Change: Tesla owners comfortable that you're doing it in a way that really benefits.
Speaker Change: Thank you.
Speaker Change: Yes, I mean, I think you're referring to like an old article regarding.
Speaker Change: Gpus.
Speaker Change: Great that's like six or seven months old.
Elon R. Musk: Tesla said we had no place to turn them off, so it would have been a waste of Tesla capital because we would just have to order H100s and have no place to put them. So it was just, there wasn't, this wasn't a, let's pick XAI over, of course, there was no, The Tesla day specials were full, there was no place to actually put them. We've been working 24-7 to complete the south extension on the Tesla big factory here in Texas. That south extension is what will house the 50,000 H100s. We're beginning to move the H100 server racks into place there, but we really needed that to complete physically.
Speaker Change: It tells us that we have no place to turn tomorrow.
Speaker Change: So it would've been a waste of Tesla capital because we would just have to order <unk> hundreds and have no place to.
Speaker Change:
Speaker Change: So in the months services.
Speaker Change: Yes.
Speaker Change: That's <unk>.
Speaker Change: From a Tesla there was no.
Speaker Change: The percent of the business with portfolio there was no place to actually put them.
Speaker Change: The.
Speaker Change: Sure.
Speaker Change: We've been working 20 <unk> to complete the south extension on the Tesla picking back again, Texas, South extensions of our loan policy for 2008, hundreds and <unk>.
Speaker Change: We're beginning to move the.
Speaker Change: <unk> hundred <unk>.
Speaker Change: And place there but.
Speaker Change: We really needed we needed that to complete physically you Kansas.
Elon R. Musk: You can't just, you know, order compute or TPUs and turn them on. But no, you need a data center. So So I want to be clear that was, and Tesla's interests, not contrary to Tesla's interests. Does Tesla know he will have to use that capital? The split second that South Extension is able to take the GPUs, which is really just this week; we are moving the GPUs in there, and we'll bring them online. Would you like to actually hide them? There are a few left that only want to work on AGI.
Or a computer or a jeep.
Speaker Change: Gpus and turn them on.
Many of the data center.
Speaker Change: Some hospital.
Speaker Change: To be clear what that was.
Speaker Change: <unk>.
Speaker Change: So in total interest not countries tariffs et cetera.
Speaker Change: It has a note this has a non grips app gpus are catching up.
Speaker Change: Thus protecting the debt side.
Speaker Change: <unk> is able to take the Gpus.
Speaker Change: It's really just this week we are.
Speaker Change: Moving Gpus American will bring them online.
Speaker Change: With regard to.
Hi.
Speaker Change: There are two level, but only want to work on agi.
Elon R. Musk: So what I was finding was that when Tesla was trying to recruit people to Tesla, they were only interested in working on APM, not Tesla-specific problems, and they wanted to do a startup. So it was a case of either they go to a startup, and I'm involved, or they do a startup, and I'm not involved. Those are the two choices. This wasn't true: they would come to Tesla. They were not going to come to Tesla under any circumstances.
Speaker Change: So what I was finding was that.
Tesla: We're trying to attributable to Tesla.
Tesla: They were only interested in working on AGM does not cover specific problems.
Tesla: And.
Tesla: Do they want to start.
Tesla: Do a startup.
Tesla: So it.
Tesla: It was a case of either bigger to startup or.
Tesla: Alright.
Speaker Change: And I'm involved or that you're a start up and im not a role those are the two choices.
Speaker Change: It wasn't.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Comp sales were up they were not going to come to Tesla under any circumstances.
Elon R. Musk: I'm so, Um, yeah, and others. Yeah, I mean, I would even add, you know, it's a broad spectrum, and there are a lot of things which We are focused on full-time driving as Tesla and also Optimus. But there's the other spectrum of AI, which we're not working on, and that's the kind of work which other companies are trying to do, in this case, XAI. So you have to keep that in mind that it's a broad spectrum.
Speaker Change: So.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yes, and I would even add a piano.
Speaker Change: There is a broad spectrum.
There are a lot of things, which.
Speaker Change: We are focused on wholesale driving as Tesla and also optimize but there is the other spectrum.
Speaker Change: Which we're not working on and that's the kind of work, which.
Speaker Change: Like other companies are trying to do in this case that so you have to keep that in.
Speaker Change: In mindset, it's advanced spectrum, it's not just one specific type.
Elon R. Musk: It's not just one specific thing. Yeah, once again, I want to just repeat myself here. I tried to recruit them to Tesla, including saying things like, you can work on AGI if you want, and they refused. Only then was XCI graded.
Speaker Change: Yes once again.
Speaker Change: Let me just repeat myself here I tried to recruitment to Tesla.
Speaker Change: <unk> to say like you can work on HIV, one and they refuse.
Speaker Change: Only then was actually high graded.
Operator: I really appreciate that clarification. If I can ask one follow-up question, it relates to the new vehicles that you're planning to introduce next year. I understand this is not the venue for product announcements.
Speaker Change: I really appreciate that clarification, if I can ask one follow up relates to.
Speaker Change: The new vehicles that you're planning to introduce next year I understand that.
Speaker Change: This is not the venue for our product announcements, but when we think about the focus.
Operator: But when we think about the focus, I've heard on the one hand that the focus is on cost reduction. On the other hand, you also said that the Roadster would come out. Should we expect other, maybe more limited, variants like the cars that you make today but with, you know, some changes or improvements or different and some other variability in the form factors, should we expect that to be a significant part of the strategy in the next year or two? I don't want to get into details of product announcements. And I'm going to be careful of the Osborne effect here.
Speaker Change: On the one hand that the focus is on cost reduction on the other hand, you also said that the roadster wood would come out should we expect other maybe more limited variance like similar to the.
Speaker Change: The cars that you make today, but with.
Speaker Change: Some changes or improvements are different.
Speaker Change: Some other variability in the form factors. It should we expect that to be a significant part of the strategy in the next year or two.
Speaker Change: I don't want to get into the details of product announcements.
Speaker Change: And.
Speaker Change: And we have to be careful of the Osborne effect here.
Operator: So, you know, if you start announcing some great things, it could affect our near-term sales. We're done. We make great products of the future just like we have in the past. That's right.
Speaker Change: So.
Speaker Change: If you start announcing some great thing it could affect our near term sales.
Speaker Change: We're going to.
Speaker Change: Great products of the future just like we have in the past.
And our story.
Operator: Right. The next question comes from Ben Callow from Baird. Ben, please go ahead and unmute yourself.
Speaker Change: Great.
The next question comes from Ben <unk> from Baird. Please.
Speaker Change: Please go ahead and Amit yourself.
Operator: Hi, thanks for taking my question. When we think about revenue contribution, and with energy growing so quickly, and you know, optimists on the come, how do we think about, you know, the overall segments in the longer term? And then, do you think that auto revenue will fall below 50% of your overall revenue? And then, my follow-up question is just on the last call, you talked about distributing compute on your new hardware. Could you just update us and talk a little bit more about the timeline for that? And you know, how would you reward customers for letting you use their compute power in their cars? Thanks.
Hi, Thanks for taking my question, when we think about revenue contribution and with the energy growing so quickly.
Speaker Change: We are optimistic on the Com, how do we think about the overall segments longer term and then do you think the auto revenue will fall below 50% of your overall revenue and then my follow up is just from our last call you talked about.
Speaker Change: Distributed compute on your new hardware could you just update us or talk a little bit more about that the timeline for it and how you would reward customers related to user their compute power of their cars.
Elon R. Musk: Yeah, I mean, as I've said a few times, I think the long-term value of Optimus will exceed that of everything else Tesla has combined. So it's simply, you just have to consider the usefulness, the utility of a humanoid robot that can do pretty much anything you ask of it. I think everyone knows it's going to 1.1. It's 8 billion people on Earth.
Speaker Change: Yes.
Speaker Change: As I've said, a few times that I think the long term.
Speaker Change: Value of occupants will exceed that of everything else with Tesla combined.
So.
Speaker Change: It's simply just sort of a conservative.
Speaker Change: Usefulness utility.
Speaker Change: A humanoid robot.
Speaker Change: I do.
Speaker Change: Pretty much everything you asked of it.
Speaker Change:
Elon R. Musk: So it's 8 billion right there. Then you've got all of the industrial users, which is probably at least as much, if not way more. So I suspect that the long-term demand for General Purpose Humanoid Robots is in excess of 20 billion units, and Tesla has the most advanced humanoid robot in the world. It's also very good at manufacturing, which these other companies are not. [inaudible] a lot of experience with the most experienced world leaders in real world AI. So, we have all of the ingredients.
Speaker Change: I think everyone looks going forward.
Speaker Change: 8 billion people on Earth. So, it's 8 billion right there in your guidance.
Speaker Change: All of the industrial uses which.
Speaker Change: Which is probably at least as much.
Speaker Change: We're at war.
Speaker Change: So I suspect that the.
Speaker Change: Bloxom.
Speaker Change: For general purpose humanoid robots is in excess of 20 billion units.
Speaker Change:
Speaker Change: And so as.
Speaker Change: Great.
Speaker Change: As most advanced humanoid robots in the world.
Speaker Change: And it's also very good at.
Speaker Change: Manufacturing, which is southern companies or not.
Speaker Change: But a lot of experience with the most experience with the world leaders in railroad.
Speaker Change: So.
Speaker Change: We have all of the ingredients.
Elon R. Musk: I think we're unique in having all of the ingredients necessary for large-scale, high-utility, generalized humanoid robots. But that's why, you know, my process for the long term is in accordance with the ARK Invest analysis of the market cap of on the order of 5 trillion dollars for and maybe more for autonomous transport. And it's several times that number for general purpose humanoid robots. I mean, at that point, I'm not sure what money even means.
Speaker Change: I think we're unique in having all of the ingredients necessary for Parkdale.
Speaker Change: Utility generalized humanoid robots.
Speaker Change: But thats why Isle.
Speaker Change: My rough estimate long term.
In accordance with the Ark invest announcements.
Speaker Change: The market cap of on the order of five trillion for.
Speaker Change: It may be more autonomous transport.
Speaker Change: And it's several times that number for general purpose humanoid robots.
Speaker Change: I mean at that point I am not sure what money if it means.
Speaker Change: Right.
Elon R. Musk: Right, in the benign AI scenario, we're headed for an age of abundance, where there is no shortage of prisons and anyone can have pretty much anything they want. So it's a wild, very wild future we're headed for. The Distributed Compute. Yeah, just really compute. That seems like a pretty obvious thing to do. I think the weather's distributed compute becomes interesting with the next generation of Tesla AI. Chuck, which is hardware five or what we're calling a hat five, which is, from the standpoint of inference capability, comparable to B200 and a bit of B200.
Speaker Change: And then the benign scenario, we're headed for an age of abundance, where there is no shortage of goods and services.
Speaker Change: Anyone can have pretty much anything you want.
Speaker Change: So it's pretty.
Speaker Change: Very well future organic growth.
Speaker Change: And on the distributed compute.
Speaker Change #100: Yes, just really compute.
Speaker Change #100: That seems like a pretty August next year.
Speaker Change #100: Sure.
I think the weather.
Distributed computing becomes.
Speaker Change #100: Interesting is with our next generation.
Speaker Change #100: AI.
Speaker Change #101: <unk> hundred five or what we're calling AI fire.
Speaker Change #101: Which is.
Speaker Change #101: From a from the standpoint of furnace capability.
Speaker Change #101: Comparable to be 200 and benefit it would be 200.
Elon R. Musk: And we're aiming to have that in production at the end of next year and scale production in 26. So, it just seems like if you've got, you know, if you've got autonomous vehicles that are operating for 50 or 60 hours a week, it's 168 hours a week.
Speaker Change #101: And we're able to have the labs and production.
Speaker Change #101: At the end of next year and scale production in 2006.
Speaker Change #101: So.
Speaker Change #101: It is thank you for your thoughts.
Speaker Change #101: Autonomous vehicles that are operating portfolio of 60 hours a week.
Elon R. Musk: So you have somewhere above, I think, 100, I think we need a better word than GPU because GPU means Graphics Processing Unit, that there's a hundred hours plus per week of AI compute, AI inference compute from the fleet, from the vehicles, and probably some percentage from the human eye ground line that would make sense to do distributed inference, and if you're physically at some point, 100 million vehicles with AI5 and beyond, AI6 and 7 [inaudible] Humanoid robots.
Speaker Change #101: 100 to 168 hours a week so you have.
Speaker Change #102: Some are above.
Speaker Change #103: I think 100.
Speaker Change #104: Got it.
Speaker Change #104: Yeah.
Speaker Change #104: Okay.
Euronext computing I think we need a better word the GPU or CPU <unk> question, yet so.
Speaker Change #104: Yeah.
Speaker Change #104: 100000, plus.
Speaker Change #104: As per week of AI computing inherent burns compute from the fleet and vehicles.
Speaker Change #104: And probably some percentage from the humanoid robots.
Speaker Change #104: That would make sense to do distributed environments.
Speaker Change #104: And if you go to physically.
Speaker Change #104: At some point 100 million vehicles.
Speaker Change #104: With AI five and beyond.
Speaker Change #104: Six assortment whatnot.
Speaker Change #104: And there may be.
Speaker Change #104: <unk>.
Elon R. Musk: That is just a staggering amount of Inference Compute that could be used for general purposes, but computing doesn't have to be used for. For example, the Humanoid Roboto for the car. So I think... Yeah, that's a pretty obvious thing to say, like, well, it's more useful than having to do nothing. All right. Thank you. The next question comes from Alex Potter from Piper. Alex, please go ahead and unmute yourself.
Speaker Change #104: Humanoid robots that is just a staggering amount of.
Speaker Change #104: Okay furnace compute.
Speaker Change #104: It could be used for general purposes of computing doesn't have to be used for.
Speaker Change #105: The humira drove out of the car.
Speaker Change #105: So I think.
That's just a surplus liquidity obvious things too.
Michael Hall: So Michael it's more useful than halfway between ethane.
Michael Hall: Okay.
Michael Hall: Alright. Thank you. The next question comes from Alex Potter from Piper Alex. Please go ahead, Amit yourself.
Operator: Perfect. Thanks. I wanted to ask a question on FSD licensing. You mentioned that in passing previously, and I was just wondering if you could elaborate, maybe, on the mechanics of how that would work. I guess presumably this would not be some sort of simple plug and play proposition. Presumably, an OEM would need, I don't know, several years to develop its own vehicle platform that's based on FSD. I imagine they would need to adopt Tesla's electrical architecture, compute, and sensor stack.
Alexander Eugene Potter: Perfect. Thanks.
Alexander Eugene Potter: Wanted to ask a question on FSD licensing you mentioned that in passing previously was just wondering if you can elaborate maybe on the mechanics of how that would work.
Alexander Eugene Potter: Presumably this would not be some sort of simple plug and play proposition.
Speaker Change #108: Presumably you have an OEM wood.
Speaker Change #108: Don't know if several years to develop its own vehicle platform. That's based on FSC II I imagine they would need to adopt pets with electrical architecture compute center stack. So.
Operator: So, correct me if I'm sort of misunderstanding this, but if you had a cooperative agreement of some kind with another OEM, then presumably, it would take you several years before you'd be able to recognize licensing revenue from that agreement.
Speaker Change #109: Correct me if I'm misunderstanding this but if you had a cooperative agreement of some kind with another OEM then presumably it would take you several years before you'd be able to recognize licensing revenue from that agreement is that the right way to think about that.
Elon R. Musk: Is that the right way to think about that? Yes, the OEMs do not move fast. There's not really a sensor suite, it's just cameras. But they would have to integrate our AI computer and have cameras with a 360-degree view. At least the gateway, like the what that talks to the internet and communicates with the Tesla system. With that, you need kind of a gateway computer too.
Speaker Change #109: Yes.
Speaker Change #110: So not request.
Speaker Change #110: It does not really extensive suite of <unk> cameras.
But they would have to integrate our computer and have cameras with with the 360 degree view.
Speaker Change #110: <unk>.
Elon R. Musk: So it's really a gateway computer with the cellular and WiFi connectivity, the Tesla AI computer, and seven cameras, or enough cameras to get a 360-degree view. But this will, Given the speed at which the auto industry moves, it will be several years before the [inaudible] Okay, good. That's more or less what I expected.
Speaker Change #110: This is at least the gateway like what talks to the Internet and.
Speaker Change #110: And communicates with potential system.
Speaker Change #110: Bet, you need kind of a gateway computer too so it's really gateway computer.
Speaker Change #110: With both cellular and Wifi.
Speaker Change #110: Productivity.
Speaker Change #111: It sounds like at computer and seven cameras or not commerce within a 263 view.
Speaker Change #111: This will.
Speaker Change #111: Given the speed at which.
Speaker Change #111: The auto industry moves it would be several years before.
Speaker Change #111: You would see pushing volume.
Elon R. Musk: So then the follow-up question here is if you did sign an FSD licensing agreement with another automaker, when do you think you would disclose that? Would you do it right when you sign the agreement or only after that multiple years have passed and the vehicle is ready to be rolled out? I think it depends on the area.
Speaker Change #112: Okay. Good that's that's more or less what I expected. So then the follow up here is if you did sign an FSA licensing agreement with.
Speaker Change #113: With another automaker when do you think you would disclose that would you do it right. When you signed the agreement are only after that multiple years has passed and the vehicle is ready to be rolled out.
Elon R. Musk: I guess we'd be happy either way. Yeah, it depends on, you know, what kind of arrangement we enter into. A lot of those things are, we're not ironing those out yet. So we'll make that determination as and when we get to that point. Right. And the kind of deals that are obviously relevant are only if, you know, some OEM is willing to do this with a million cars a year or something significant. Not if it's like 10,000 or 100,000 cars a year. We could just make that ourselves.
Speaker Change #114: I think it depends on Omnia CRM aggregates wed be happy either way.
Speaker Change #115: Yes, it depends.
Speaker Change #115: What kind of arrangement we entered into.
Speaker Change #115: A lot of those things are not items resolved, yet so we'll make that determination as and when we get to that point.
Speaker Change #116: Alright, and the kind of deals, but there are obviously relevant our earliest.
Speaker Change #117: Some Oems going through this.
Speaker Change #117: Cars in a year or something significant.
Speaker Change #118: It looks like 10400 Dodge Chrysler.
Speaker Change #118: Could just make ourselves.
Operator: All right, thank you. The next question comes from Dan Levi from Barclays. Dan, please go ahead and unmute yourself. Good evening.
Speaker Change #118: Alright, Thank you the.
Speaker Change #119: Our next question comes from Dan Levi from Barclays. Dan. Please go ahead and omni yourself.
Operator: Thanks for taking the question. First, I wanted to start with a question about Shanghai. You've leveraged Shanghai as an export center, really, it's low cost, and that makes sense. Maybe you can just give us a sense of how the strategy changes, if at all, given the implementation of tariffs in Europe. Also, to what extent might your import of batteries from China into the US change given the tariffs? Thank you.
Dan Meir Levy: Hi, good evening, Thanks for taking the questions first wanted to start with a question on Shanghai leverage Shanghai.
As an export center.
Speaker Change #121: Really do it's low cost and that makes sense.
Speaker Change #122: Maybe you can just give us a sense of how the strategy changes if at all given the implementation of tariffs in Europe also to what extent.
Speaker Change #122: Your import of batteries from China into the U S how that might change.
Speaker Change #123: Change given the tariffs thank you.
Vaibhav Taneja: Yeah, I think I covered some parts of it in my opening remarks, but just to give you a little bit more. Just on the tariff side, the European authorities did sample certain other OEMs in the first round to establish the tariffs for cars being imported from China into Europe. While we were not picked up in our individual examination in the first round, they did pick us up in the second round.
Speaker Change #124: Yes, I think I covered some part of it in my opening remarks, but just to give you a little bit more.
Speaker Change #125: Just on the tariff side, the European targeted sample certain of other Oems in the first trial to establish the tariffs for cars being imported from China into Europe, while we were not picked up and not a neutral examination in the first half that didn't pick us up.
Speaker Change #126: Second round.
Vaibhav Taneja: They visited our factory. We worked with them, and provided them with all the information. You know, as a result, we are adjusting our import strategy out of China into Europe. But, and you know, one other thing to note is that in Q2 itself, we started building right-hand model wires out of Berlin, and we also delivered them in the UK. And, you know, we're adjusting as needed.
Speaker Change #126: They visited our factory, we worked with them providing them all the information.
Speaker Change #126: As a result, we are in <unk>.
Speaker Change #126: Testing on import strategy out of China into Europe.
Speaker Change #126: But and.
One other thing to notice in Q2 itself, we started building our model wise.
Speaker Change #126: More land and we also delivered it in UK.
Speaker Change #126: And.
Speaker Change #126: We're adjusting as needed.
Speaker Change #127: Got it.
Vaibhav Taneja: But, you know, we will keep adjusting; we're still importing Model 3s into Europe out of Shanghai. And, you know, we are still evaluating what is the best alternative to manage all this. Just on the examination by the European authorities, like I said, we cooperated with them well. We are confident that we should get a better rate than what they have imposed for now.
Speaker Change #127: We will keep adjust we're still importing model threes into Europe out of Shanghai.
Speaker Change #127: And.
Speaker Change #127: We are still evaluating what is the best Ultimate Matt There's all this.
Just on the examination by the European part is like I said, we cooperated with them well.
Speaker Change #127: We are confident that we shouldnt get a better rate than what they have imports for now but this is literally one thing and we are adjusting as fast as we can with this.
Vaibhav Taneja: But this is literally evolving, and we are adjusting as fast as we can with this. I would also add that, you know, because of this, you've seen the impact that Berlin is doing more imports into places like Taiwan, as well as the UK, as I just mentioned. So it will keep changing, and we will keep adapting as we go along. Yeah. As a follow-up, I wanted to ask about the RoboTaxi strategy, and specifically, the shareholder deck here notes that the release is going to be, one of the gating factors is regulatory approval.
Speaker Change #127: I would also add that.
Speaker Change #127: Yes.
Speaker Change #127: Because of this you've seen the impact.
Speaker Change #127: Volume is doing more imports into places like Taiwan as.
Speaker Change #127: As well as you know.
Speaker Change #127: UK I just mentioned so.
Speaker Change #127: We will keep trending and we will keep adapting as we called out.
Speaker Change #128: Greenbrier and do you think.
Speaker Change #129: Yes. Thank you.
Speaker Change #131: As a follow up I wanted to ask about.
Speaker Change #130: The rebel packaging strategy and specifically.
Speaker Change #132: The shareholder deck here notes that the relief is going to be one of the gating factors as regulatory approval. So.
Vaibhav Taneja: So maybe you can help us understand, you know, which regulations specifically are the ones that we should be looking for, the FMVSS, that's a standard, and then, you know, to what extent does the strategy shift you've done with FSD, more of a nationwide, no boundary approach, is the RoboTaxi approach, one that's more geofenced, so to speak, and is more driven by a state by state approach I mean, a solution is a generalized solution, like whatever else has been. If you see a big rainbow and whatnot, they have a very localized solution that requires high-density mapping. It's not; it's quite fragile.
Speaker Change #136: Maybe you can help us understand.
Speaker Change #134: Which regulations specific Lee are the ones that we should be looking forward to F. N B S F.
Speaker Change #129: Standard and then.
Speaker Change #133: To what extent does the strategy shift you've done with office be more of a nationwide no boundary approach is the robo taxi approach one thats more geo fence, so to speak and is more driven by a state by state approach.
Speaker Change #139: Our solution is a generalized solution like what everybody else has.
Speaker Change #138: If you see the gray mode one of it.
Speaker Change #137: Very localized solution that requires high density mapping.
Speaker Change #135: It's quite fragile.
Speaker Change #133: Okay.
Speaker Change #133: So.
Elon R. Musk: So, you know, their ability to expand our beliefs is limited. You know, our solution is a general solution that works anywhere; it would even work on a different earth. So if you rendered a new Earth, it would work on a new Earth. So this capability, I think, in our experience, once we demonstrate that something is safe enough, or significantly safer than humans, we find that regulators are supportive of the deployment of that capability. It's difficult to argue with a large number of billions of miles that show that.
Speaker Change #133: Their ability to expand our beliefs is limited.
Speaker Change #133:
Speaker Change #133: Yes.
Speaker Change #133: Our solution is.
Speaker Change #133: As a general solution that works anywhere where even work on a different one.
Speaker Change #133: So if your brand and your own work on in Europe.
Speaker Change #133: <unk>.
Speaker Change #133: So that business.
Speaker Change #133: This capability I think.
Speaker Change #141: In our experience once we demonstrate that something is taken off or significantly safer than human.
Speaker Change #141: The regulators are supportive of deployment deployment of that capability.
Speaker Change #133: It's difficult to argue with.
Brian: Sure Brian.
Brian: A large number of them.
Brian: Smiles that show that.
Elon R. Musk: In the future, unsupervised FSD is safer than humans. What regulator could really stand in the way of that? They're moderately obligated to approve.
Brian: And future unsupervised FSB assessment human quarter, what regulators could really stand in the way of that.
Brian: They would be obligated to approval.
Elon R. Musk: So I don't think regulatory approval will be a limiting factor. I suppose to say that, you know, the self-driving capabilities of that are deployed outside of North America are behind that in North America. So with version 12.5 and maybe a 12.6.
Speaker Change #142: So I don't think regulatory for approval will be preliminary factor.
Speaker Change #143: I should also say that.
Speaker Change #142: B.
Speaker Change #142: The self driving capabilities.
Speaker Change #142: Yeah.
Speaker Change #142: Our deployed outside of North America are.
Speaker Change #142: Far behind that.
Speaker Change #142: In North America so.
Speaker Change #142: With the.
Speaker Change #142: With version 12 five.
Sure.
Elon R. Musk: But pretty soon, we will ask for regular regulatory approval of The Tesla, supervised by FSB in Europe, China, and other countries, and I think we're likely to receive that before the end of the year. Thank you. Which will be a helpful demand driver in those regions. Thank you. Transcribed by https://otter.ai. The world's rules are the same across all 50 states.
Speaker Change #142: And maybe a $12 six.
Speaker Change #142: Pretty soon.
Speaker Change #142: We will ask for regular regulatory approval of.
Speaker Change #142: The Tesla <unk>.
Speaker Change #142: Supervised FSP.
Speaker Change #142: Europe, China and other countries.
Speaker Change #142: And I think we're likely to receive that.
Speaker Change #142: Before the end of the year.
Speaker Change #142: Thank you this will be a helpful demand driver in those regions.
Speaker Change #142: Thank you.
All right.
Travis: Besides Travis.
Speaker Change #145: In terms of like.
Speaker Change #145: Elon said in terms of regulatory approval.
Speaker Change #146: Vehicles are governed by assessing your aspects, which is the same across all 50 states.
Operator: So creating a generalized solution gives us the best opportunity to deploy in all 50 states reasonably. Of course, there are state, even local municipal level regulations that may apply to, you know, being a transportation company or levying taxes. But, you know, as far as getting the vehicle on the road, that's, that's all federal. And that's very much in line with what Elon was just suggesting about the data and the vehicle itself.
Speaker Change #146: The rules are the same across all 50 states, so creating a generalized solutions as a surpass opportunity in Q4.
Speaker Change #146: All in all 50 states reasonably.
Speaker Change #147: There are state and.
Local municipal level regulations that may apply to <unk>.
Speaker Change #147: <unk> transportation.
Speaker Change #148: Transportation company, you're deploying taxes, but you know as <unk>.
Speaker Change #148: One is getting the vehicle on the road.
Speaker Change #148: That's all federal and that's very much in line with what.
Speaker Change #149: I was just suggesting that the data in the vehicles.
Operator: And to add to the technology point, the end-to-end network basically makes no assumption about the location. Like, you could add data from different countries, and it'll just perform equally well there. There's almost close to zero US-specific code in there.
Speaker Change #149: And to add to the technology behind the end to end network basically makes no assumption about the location.
Speaker Change #149: Like you could add data from different countries and it was just like perform equally well there.
Speaker Change #150: This takes almost like close to zero give us specific.
Operator: It's all just data that comes from the US. Yeah, to that end of the show, it's like, you know, we can go as humans to other countries and drive with some reasonable amount of assessment in those countries. And that's how you design the FSC cell. Yeah, exactly. Great. Thanks, guys. The next question comes from George from Canaccord. George, please go ahead and unmute yourself. Hi, everyone.
Gordon: Gordon their intelligence data that comes from a U S.
To that end the show gets like we can go as humans to other countries and drive with some reasonable amount of.
Gordon: And in those countries.
That's how you design win efficacy topic, yes exactly.
Speaker Change #152: Great. Thanks, guys.
Speaker Change #152: The next question comes from George from Canaccord, George. Please go ahead inundate yourself.
Operator: Thank you for taking my questions. Maybe just to expand on the regulatory question for a second. I could be comparing apples and oranges, but you know, GM canceled its pedalless wheelless vehicle. And according to the company this morning, their decision was driven by uncertainty about the regulatory environment. And from what we understand, and again, maybe I'm wrong here, but the robo taxi that has been shown, you know, at least in images of the public, is also pedalless and wheelless.
George: Hi, everyone. Thank you for taking my questions, maybe just to expand on the regulatory question for a second and I could be comparing apples and oranges, but G. M cancelled their pedal this we'll miss vehicle.
Speaker Change #154: According to the company. This morning their decision was driven by uncertainty about the regulatory environment.
Speaker Change #155: From what we understand that and again, maybe I'm wrong here, but the robo taxi that has been shown at least in images and the public is also panelists.
Elon R. Musk: Is there a different regulatory concern just if you deploy a vehicle like that that doesn't have pedals or a wheel, and that may be different from just regular FSD on a traditional Tesla vehicle? Thank you. Well, obviously, the real reason that they cancelled it is because GM can't make it work, not because of regulators. They're blaming regulators, but that's misleading to do so. Because Waymo is doing just fine in those pockets.
Speaker Change #156: And we'll list is there a different regulatory concern just as you deploy a vehicle like that doesn't have a pedal pedals or wheel and that may not be different from just regular FSD on the traditional Tesla vehicles. Thank you.
Speaker Change #157: Well, obviously, the real reason that the capstone Christina can make it work not because the regulators that gaming regulators.
Speaker Change #158: <unk>, leading efforts to do so.
Speaker Change #158: Because <unk> is doing just fine in those buckets. So.
Vaibhav Taneja: So, it's just that the technology is not up to par. And maybe just as a follow-up, I think you mentioned that FSD take rates were up materially after you reduced the price. Is there any way you can help us quantify what that means exactly? Yeah, you know, we've shared that we've seen a meaningful increase. I don't want to get into specifics because we started from a low base.
Speaker Change #159: It's just that their technology is not tomorrow.
Speaker Change #159: Okay.
Speaker Change #164: And maybe just as a follow up I think you mentioned the FSD take rates were up materially after you reduce the price.
Speaker Change #160: Is there any way you can help us quantify what that means exactly thank you.
Speaker Change #159: Yes.
Speaker Change #161: We have shared is that how that went.
Speaker Change #162: We've seen a meaningful increase.
Speaker Change #163: I don't want to get into specific because we started from a low base.
Speaker Change #163: But we are seeing encouraging results.
Vaibhav Taneja: But we are seeing encouraging results. And the key thing here is, like Elon said, we need to experience it because words can't describe it until the time we actually use it. And that's why we are trying to make sure that every time a car is delivered, people are being shown how this thing is working. Because when you see it working, you realize how great it is. I mean, just to give you one example.
Speaker Change #165: And the key thing here is like in answer we need to expand because what <unk> described at the time, we actually use it and that's why we are trying to make sure that anytime cars getting deliver people are being short on this thing is working because when you see it working.
Speaker Change #166: Realized how great. It is I mean, just to give you. One example, so again there is a bias for example, but I haven't.
Vaibhav Taneja: So again, there's an example, but I have a more than 20-month commute into the factory almost every day. I have zero interventions on the latest stock, and the card has literated me a lot. And especially with the latest version, where, you know, we're also tracking your eye movement. The sharing lag is almost not there, as long as you're not wearing sunglasses.
Speaker Change #166: More than 20 mile commute into the factory almost every day.
Speaker Change #167: I haven't seen all interventions on the later start and the geysers concentrate ICL.
Speaker Change #167: And especially with the latest version.
Speaker Change #168: We're also tracking your iron moment.
Speaker Change #169: Sales in August almost not there as long as the marketing Sunglass wells were protecting their sunglasses.
Vaibhav Taneja: Well, we're fixing the sunglasses, Peter. It's coming soon. So you will be able to try it. We'll be able to have our sunglasses on and have the car drive. Yeah. But, you know, there's a number of times I've talked with smart people who, like, live in New York or maybe downtown Boston, and don't ever drive, and then are asking me about FSD.
Speaker Change #168: Cheers.
Speaker Change #168: So you will be able to drive.
Speaker Change #168: We will be able to have sunglass alone and had the contract.
Speaker Change #168: So.
Vaibhav Taneja: And I'm like, you can just get a car and try it. And if you're not doing that, you have no idea what's going on. Thank you. The next question comes from Pierre from Newstreet. Pierre, please unmute yourself.
Speaker Change #168: Great.
Speaker Change #170: Mr trend of our times I've talked with smart people, who.
Speaker Change #171: Like live in New York or downtown Boston and.
Speaker Change #171: Don't ever drive.
Speaker Change #171: And then are asking me about FSP on like you can just get a car and trial.
Speaker Change #171:
Speaker Change #171: And if you if youre not doing that you have no idea what's going on.
Speaker Change #171: Yeah.
Speaker Change #171: Thank you. The next question comes from Pierre from New Streets peer please limit yourself.
Speaker Change #171: Yeah.
Operator: Hey, guys, thank you for taking my question. So it's on Robotaxi. Again, and I completely get it that with a universal solution, we will get regulatory approval, we will get there eventually, clicking, clicking up my and compute, etc. But my question is more about deployments. Because I'm still like, I think once you have a car that can drive everywhere, that can replace me, it can replace the taxi, but then you have to do the right hailing service. You need a certain scale to do this.
Pierre: Hey, guys. Thank you for taking my question.
Pierre: So it's on the Robo taxi.
Speaker Change #173: Again, and I completely get it that with a universal solution, we will get regulatory approval, we get there eventually kicking kicking at mines and compute et cetera.
Speaker Change #174: And my question is more.
Speaker Change #173:
Speaker Change #173: How you think about deployment because I'm still like I'm thinking once you have a guy that can drive everywhere.
That can replace me.
Speaker Change #175: You can replace the taxi, but then to do the ride hailing service you need a certain scale.
Elon R. Musk: And that means a lot of cars on the road. And so you need an infrastructure to just maintain the cars, take care of them, etc. And so my question is, Are you already working on that? Do you already have an idea of what your plan to deploy looks like?
Speaker Change #175: And that means a lot of cars on the road and so you need an infrastructure to just maintain a gas take care of them et cetera, and so my question is.
Elon R. Musk: And is that like a Tesla only plan? Or are you looking at partners, local partners, global partners to do that? And I'll have a quick photo.
Speaker Change #176: Are you already working on that do you have already an idea of what youre planning to deploy it looks like and is that like a Tesla only plan or are you looking at partners local partners Global partners.
Speaker Change #177: To do that.
Speaker Change #178: I'll have a quick follow up.
Elon R. Musk: This would just be the Tesla network; you just literally open the Tesla app and summon a car and re-send a car to pick you up and take you somewhere. And we will have a fleet that's on the order of 7 million cars that are capable of autonomy soon. You know, in the years to come, it'll be over 10 million, over 20 million. [inaudible] and the car is able to function. 24 seven, unlike the human driver.
Speaker Change #178: So just be the Tesla network, you just literally open et cetera.
Speaker Change #179: And some of the car.
And recent Ekati pick you up in the summer.
Speaker Change #179: And.
Speaker Change #179: Okay.
Speaker Change #180: And we will have a fleet that's on the order of $7 million benefit for autonomy soon.
Speaker Change #180: In the years to come it'll be over 10 million over.
Over $20 million.
Speaker Change #180: <unk>.
Speaker Change #180: And that scale.
Speaker Change #180: Yes.
Speaker Change #180: At the end.
Speaker Change #180: The card is able to operate.
Elon R. Musk: So the capability to, like, if there's this basically instant scale with a software update. And now this is for a customer on fleet. So you can think of that as being a bit like Airbnb. You can choose to allow your car to be used by the fleet or, you know, cancel that and bring it back.
Speaker Change #180: $24 seven unlike the human drivers so.
Speaker Change #181: Got it.
Speaker Change #181: The capability to look at business basically instant scale with a software update.
Speaker Change #181:
Speaker Change #181: And.
Speaker Change #181: This was for a customer owned fleet.
Speaker Change #181: So you can think of that as being a bit like airbnb like.
Speaker Change #181: You can choose to allow you to be used by the fleet or <unk>.
Speaker Change #181: And our castle that and bring it back you.
Elon R. Musk: You'll be used by the fleet all the time, or can be used by the fleet some of the time, and then Tesla would take, would share in the revenue with the customer. But you can think of the giant fleet of Tesla vehicles as like the giant fleet of Airbnb, equivalent to Airbnb on wheels. I mean, then, you know, in addition, we would make some number of cars or Teslas that would just be owned by Tesla and be added to the fleet. I guess that would be a bit more like Uber.
Speaker Change #181: It could be used both with all the time.
Speaker Change #181: Can be used by the fleet some of the time and then sales I would say, we're sharing the revenue with the customer.
Speaker Change #181: But you can think of the giant fleet of test vehicles as like the generics with Airbnb.
Speaker Change #181: Equivalent with Airbnb on wheels.
Speaker Change #181: <unk>.
Speaker Change #182: In addition, we would make.
Speaker Change #181: Some number of cars.
For Tesla.
Speaker Change #181: Just beyond by Tesla.
Speaker Change #187: I guess that would be a bit more like Uber.
Elon R. Musk: But this will be a Tesla network, and there's an important clause we've put in every Tesla purchase, which is that the Tesla vehicles can only be used in the Tesla fleet. They cannot be used by a third party.
Speaker Change #181: But this this will be a telco network.
Speaker Change #181:
Speaker Change #181: And there is an important core switch, but in every subsequent purchase which is that the Tesla vehicles can only be used in the Tesla.
It cannot be used by third party.
Speaker Change #181: For autonomy.
Elon R. Musk: Okay, and do you think that scales like progressively so you can start in a city with just a handful of cars? You grow the number of cars over time, or do you think there is like a critical mass you need to get to to be able to offer a service that is of competitive quality compared to what Uber would be typically delivering already? I guess I'm not conveying this correctly.
Speaker Change #181: Okay.
Speaker Change #183: Do you think that scale like <unk>. So you can start in a city with just a handful of God and you you grow the number of cows overtime or do you think that you'd like a critical mass you need to get to to be able to offer like a savvy stretches of competitive quantity compared to what <unk> like EBITDA would be typically delivering already.
Elon R. Musk: The entire Tesla fleet basically becomes, You know, this is obviously, maybe there's some number of people who don't want their car to earn money, but I think most people will. It's interesting. Thank you. Our next question comes from Colin from Oppenheimer. Colin, please unmute yourself. Sorry about that, guys.
Speaker Change #189: I guess I'm, not maybe I'm not convenience virtually the entirety of our fleet basically.
Speaker Change #183: <unk> active.
Speaker Change #183: This is obviously.
Speaker Change #190: Maybe there's some number of people who don't want their carnival money, but I think most people world.
Speaker Change #184: It's instant scale.
Speaker Change #185: Thank you.
Colin: Our next question comes from calling from Oppenheimer, Colin Please limit yourselves.
Colin: Yeah.
Operator: You know, I've got two questions around energy storage, you know, with the type supply and the stationary storage. Can you talk about your pricing strategy and how you're thinking about saturation and given geographies, given that, you know, some of these larger systems are starting to shift wholesale power markets in a pretty meaningful way? So yeah, I mean, we are working with a large set of players in the market. And, you know, our pipeline is actually pretty, pretty long.
Speaker Change #188: Sorry about that guys.
Colin: Yes, I've got two questions around energy storage.
Colin: The types of fly on stationary storage can you talk about your pricing strategy and how you are thinking about saturation in given geographies given that some of these larger systems are starting to shift our wholesale power markets and a painful way quickly.
Colin: Yes.
Colin: We are working with a large set off.
Speaker Change #191: Players in the market and.
Speaker Change #191: Our pipeline is actually pretty long.
Speaker Change #191: And.
Operator: And, There's actually a very long end in terms of where you enter into a contract where delivery starts happening. And so far, we have good pricing leverage. And I'll have Mike chime in on this too.
Speaker Change #191: That is actually a way there is actually a long and in terms of where you enter into a contract with the newly started starts happening.
So far we have good pricing leverage now Mike chime in on this too.
Operator: Yeah, I mean, there's a lot of competition from Chinese OEMs, just like there is in the vehicle space. So, we're in close contact with our customers and making sure that we're remaining competitive where they're needing to be competitive to secure contracts to sell power and energy in the markets. We had a really strong contracting quarter and continue to build our backlog for 2025 and 2026.
Mike: Yes, I mean, theres a lot of competition from Chinese Oems just like there is in the vehicle space. So.
Mike: We're in close contact with our customers and making sure that we're remaining competitive and where they are needing to be competitive to to secure contracts to sell power and energy in the markets.
Mike: We had a really strong contracting quarter and continued to build our backlog for 2025 and 2026.
Operator: So we feel pretty good about where we are in the market; we realize that competition is strong, but we have a pretty strong value proposition with, you know, offering a fully integrated product, our own power electronics and site-level control. So, again, the aspect which people do not fully understand is that there's also a whole software stack which comes with our megapack. Right. And that is a unique proposition which we have, which is only available to us, and we're using it with other stuff too.
Mike: So we feel pretty good about where we are in the market we realize that.
Mike: Competition is strong, but we have a pretty strong value proposition with offering a fully integrated product with our own power electronics and site level controls so.
Mike: Yes.
Speaker Change #193: The aspect of its people.
We do not really understand is that is all.
Speaker Change #193: It's a whole software stack, which comes with our Mega back right and that is a unique proposition, which we have which is only available to us and we're using it with other stuff too but that takes us.
Operator: But that gives us much more of an edge as compared to the competition. Yeah, we find customers that they can sort of put together a hodgepodge solution. And then sometimes they'll pick that solution. And then that doesn't work.
Speaker Change #193: Much more of an edge as compared to the competition yes.
Speaker Change #194: Can you find customers better they can sort of put together a hodgepodge solution.
And then sometimes they'll pick best solutions.
Speaker Change #195: And then that that doesn't work.
Speaker Change #194: <unk>.
Speaker Change #194: And then they come back to us and we're not really seeing saturation like on a global scale theres little pockets of saturation in different markets, but.
Operator: And then they come back to us. Yeah, and we're not really seeing saturation, like on a global scale; there are little pockets of saturation in different markets, but we're more seeing that there are markets opening up given demand on the grid just continues to increase more than anyone expects. So that just opens up markets, you know, really across the world in different pockets. Yeah, even on the AI computer side, like these, these GPUs are really powerful already. And the amount of, you know, new pipeline which we're getting for people for data center backup and things like that is increasing at a pretty large scale. Thanks so much.
Speaker Change #194: We're more seeing that.
Speaker Change #194: Theres markets opening up given.
Speaker Change #194: Demand on the grid just continues to increase more than anyone expects.
Speaker Change #194: So that just opens up markets.
Speaker Change #194: It really across the world in different pockets.
Speaker Change #194: Just even on the asset side.
Speaker Change #196: These lease Gpus.
Speaker Change #196: A really powerful way.
Speaker Change #196: And the amount of.
Speaker Change #196: New pipeline, which was getting for people for data center backup and things like that is increasing at a pretty large scale.
Operator: And then the following year, so they run the 4680 process technology, you know, in the volatile process, you know, you, there's some news around your equipment suppliers, you know. Can you talk about how far along you are in potentially qualifying an incremental supplier around some of the critical process technology? Yeah, I can talk about that. You know, as you're probably referring to the lawsuit we have with one of our suppliers, look, I don't think this is going to affect our ability to roll out 4680.
Speaker Change #196: Yes.
Speaker Change #196: And then the follow up with your ancillary revenue 46%.
Speaker Change #196: Our process technology and the overall process.
Speaker Change #197: There is some news around your equipment suppliers can you talk about how far along you are in potentially qualifying and incremental supplier around some of that those critical.
Speaker Change #198: Process technology.
Yes, I can talk about that.
Speaker Change #198: Yeah.
Speaker Change #199: As you're probably referring to also do we have with one of our suppliers. Okay. I don't think this is going to affect our ability to throw out 46 a week.
Operator: You know, we have a very strong IP position in the technology, and the majority of the equipment that we use is in-house designed and some of it's in-house built. And so we can take our IP stack and have someone else build it if we need to. So that's not really a concern right now. Yeah, I think people don't understand just how much demand there will be for storage, like people are underestimating this demand by probably orders of magnitude.
Speaker Change #199: Have very strong IP position in the technology and.
Speaker Change #199: The majority of the equipment that we use is in house designed and sandwiches has built.
Speaker Change #199: And so we can we can take our IP stack and have someone else builds on this.
Speaker Change #199: If we need to so that's not really a concern right now.
Speaker Change #199: Yeah.
Speaker Change #200: People don't understand just how much demand there will be four for storage.
Speaker Change #201: They really just the pure I think our understanding this demand by orders of magnitude.
Operator: So the actual energy, total energy output of, say, the U.S. grid is, if the power plants can operate at steady state, at least two to three times the amount of energy a company produces. Because there are huge gaps, there's a huge difference between peak to trough in terms of energy or power generation. So in order for a grid to not have blackouts, it must be able to support the load at the worst minute of the worst day of the year, the coldest or hottest day, which means that for the rest of the time, the rest of the year, it's got massive excess power generation capability, but it has no way to store that energy.
So.
The actual.
Speaker Change #201: Energy total energy output of say the U S grid is if the power plants to operate at.
Speaker Change #201: Eddie State is at least.
Speaker Change #201: Two to three times.
Speaker Change #201: The amount of energy currently produces.
Speaker Change #201: Because there are a huge gap, there's a huge difference in the.
Speaker Change #201: From peak to trough in terms of energy or power generation.
Speaker Change #201: In order for a grid to not have blackouts, it must be able to support the load at the worst minute of the worst third year the coldest four hottest day.
Which means that for the rest of the time the rest of the year it's massive.
Speaker Change #201: Massive excess.
Elon R. Musk: Once you add battery packs, you can now run the power plants at steady state. Steady state means that, you know, basically any given grid anywhere in the world can produce, in terms of cumulative energy in the course of the year, at least twice what it is currently producing. Okay, so maybe three times that. Thank you. The next is a very profound thing. Thank you, Elon. The next question comes from Colin Langan from Wells Fargo. Colin, please unmute yourself.
Power generation capability, but it has no way to store that energy.
Speaker Change #201: Once you add battery packs you can now run the power plants.
Speaker Change #201: That steady stayed steady.
Speaker Change #202: Steady state means vessels.
Speaker Change #202: Basically any given grid anywhere in the world.
Speaker Change #202: Produced in terms of cumulative energy and of course of the year at least twice what it is currently producing.
In some cases, maybe three.
Speaker Change #203: Alright. Thank you the next a.
Very profound thing.
Speaker Change #203: Okay.
Speaker Change #203: Okay. Thank you. The next question comes from Colin Langan from Wells Fargo, Colin Please on mute yourself.
Colin: Oh great.
Operator: Oh, great. Thanks for taking my questions. Do you hear me?
Speaker Change #205: Excellent. Thanks.
Colin M. Langan: Thanks for taking my questions.
Colin M. Langan: Jeremy.
Operator: I guess I'm going to ask, if Trump wins, there's a higher chance that IRA could get cut. I think, Elon, you had commented online that Tesla doesn't survive on EV subsidies. But wouldn't Tesla lose a lot of support if IRA goes away? I think Model Y, 3, and Y get IRA help for customers, and I think your batteries get production tax credits. So just one question, can you clarify if the IRA ends? Would it be a negative for your profitability in the near term? Why might it not be a negative? And then any framing of the current support you get is IRA related?
Yes.
Colin M. Langan: Sorry.
Speaker Change #206: I guess I would ask.
If trump wins, there's a higher chance that IRA could get caught I think Elon you had commented online that Tesla does not survive on EV subsidies.
Elon: One Tesla lose a lot of support in Fireeye goes away I think not a lot three and Y get IRI help for customers and I think your batteries get production tax credits. So so just what can you clarify if Iran would it be a negative for your profitability in the near term.
Speaker Change #207: Might it not be a negative.
Speaker Change #208: Adding framing up the car.
Speaker Change #209: <unk> got IRA or later.
Speaker Change #208: Yeah.
Speaker Change #210: And then.
Elon R. Musk: I guess that there would be some impact, but it would be devastating for our competitors, but, in the long term, it probably actually helps Tesla, would be my guess. But I don't support these goals. The value of Tesla is overwhelmingly autonomy. These other things are in the noise relative to autonomy. So I recommend anyone who doesn't believe that Tesla will solve vehicle autonomy should keep, not called Tesla stock. They should sell their Tesla stock. If you believe Tesla will solve autonomy, you should buy Tesla stock. And all these other questions are in the noise.
Speaker Change #210: I guess, if there would be like some impact but.
Speaker Change #210: I think it would be devastating for our competitors.
Speaker Change #210: Slight.
Speaker Change #210: Slightly.
Speaker Change #210: But.
Speaker Change #210: Long term, probably actually helps us.
Speaker Change #210: It would be my guess.
Speaker Change #210: Yeah.
Speaker Change #210: Sure.
Speaker Change #210: But out of service for earnings calls.
Speaker Change #210: Okay.
Speaker Change #210: The value of Tesla overwhelmingly this autonomy.
Speaker Change #210: Okay.
Speaker Change #210: There's always things are and the noise relative to autonomy.
So I recommend anyone who does believe that those are also big autonomy should peak.
Speaker Change #211: <unk> coal tons of soft tissue solar Telcel stock.
Speaker Change #211: If you believe the world Silver autonomy, if you buy the stock.
Speaker Change #211: Always other questions are.
Speaker Change #211: And the noise.
Elon R. Musk: Yeah, I mean, I'll ask this, just to clarify a few things that, at the end of the day, when we are looking at our business, We've always been looking at it, whether or not AI is there. And we want our business to grow healthy without having any, you know, subsidies coming in, whichever way you look at it. And that's the way we have always modeled everything. And that is the way internally also, even when we're looking at battery costs.
Speaker Change #211: Yes.
Speaker Change #212: Just to clarify a few things that at the end of the day when we are looking at our business.
Speaker Change #212: Always been looking at that whether there are multiple areas there.
Speaker Change #212: And we want our business to grow healthy without having any.
Speaker Change #212: The subsidies coming in.
Speaker Change #212: In general when you look at that.
Speaker Change #212: That's the way all this model that we think and that is the way internally also even when we're looking at battery costs.
Elon R. Musk: Yes, there are manufacturing credits which we get, but we always challenge ourselves to say, okay, what if there is no added benefit? And how do we operate in that kind of an environment? And like Elon said, we definitely have a big advantage as compared to our competition on that front. We've delivered it, and we can see it in the numbers over the years, but, So there is, you cannot ignore the fundamental size of the business. And then on top of it, once you add autonomy to it, like Elon said, it becomes meaningless to even think about the shot that. Okay, I think that's, unfortunately, all the time we have for today.
Speaker Change #213: Yes I.
Speaker Change #213: Excellent candidates, which we get but we always drive ourselves to say, okay. What if there is no either benefit and how does the.
Operator: We appreciate all of your questions. We look forward to talking to you next quarter. Thank you very much, and goodbye.
Speaker Change #213: Oh, great and that kind of a viable like Elon said, we definitely have a mega Atlantis as compared to our competition on that front.
Speaker Change #213: We can see it in the numbers over the year as well.
Speaker Change #213: So that there is.
Speaker Change #216: You cannot import the fundamental size of the business.
Speaker Change #216: And on top of it once you have autonomy to it.
Speaker Change #217: Well I can answer it.
Speaker Change #216: Meaning that they.
Speaker Change #216: Think about.
Speaker Change #216: In the short term.
Unknown Executive: Okay, I think that's unfortunately all the time we have for today. We appreciate all of your questions. We look forward to talking to you next quarter. Thank you very much.
Speaker Change #213: Okay.
Speaker Change #215: I think thats. Unfortunately, all the time, we have for today and we appreciate all of your questions. We look forward to talking to you next quarter. Thank you very much and goodbye.
Unknown Attendee: Goodbye.
Unknown Attendee: That's excellent. Thank you very much.
Speaker Change #214: That's excellent.
Dan Meir Levy: Hi, Dan.