Q4 2025 Tesla Inc Earnings Call

January 28, 2026

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Speaker #1: Good afternoon, everyone, and welcome to Tesla's fourth-quarter 2025 Q&A webcast. My name is Travis Axelrod, Head of Investor Relations, and I'm joined today by Elon Musk, Vaibhav Taneja, and a number of other executives.

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Speaker #1: Our Q4 results were announced at about 3:00 PM Central Time in the update deck we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements.

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Speaker #1: 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.

Speaker #1: 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.

Okay.

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Speaker #1: Please use the raise-hand button to join the question queue. Before we jump into Q&A, Elon has some opening remarks.

Okay.

Speaker #1: Elon? Thanks, Travis.

Okay.

Speaker #2: So we've updated the Tesla mission to amazing abundance. And this is intended to send a message of optimism about the future. I think we're most likely headed to an exciting amazing era of abundance.

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Thank you for your question.

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Speaker #2: And I think with the advent, or with the continued growth of AI and robotics, I think we actually are headed to a future of universal high income.

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Speaker #2: Not universal basic income, but universal high income. I mean, there's going to be a lot of change along the way, but that is what I see as the most likely outcome.

Speaker #2: So I think that makes sense to update Tesla's mission to reflect that goal. And obviously, along that way, we're going to keep improving safety, driving down the cost of goods, and getting people access to anything they need without compromise.

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Speaker #2: And still making sure that the environment is great, nature is great, and people can have whatever they want, which seems like probably the best future.

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Speaker #2: I'm open to other ideas, but that sounds like—if you could say, what is the best future you could possibly imagine? I guess it would be that everyone can have whatever they want, including amazing medical care.

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Yeah.

No.

Thank you.

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Yes.

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Speaker #2: And we still keep the beauty of nature and Earth. I think that's probably the best outcome. And we're seeing, obviously, the first steps along that way this year for Tesla.

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Speaker #2: First major steps. As we increase vehicle autonomy, and begin to produce Optimus robots at scale, we're making very big investments, so this is going to be a very big CapEx year.

Speaker #2: As Vaibhav will get into, that is deliberate, because we're making big investments for an epic future. So I think all these investments make a lot of sense.

Speaker #2: We'll continue to make sure that when we do spend, capital is spent very efficiently. But it's a lot of things. Major investments in batteries and the entire supply chain for batteries.

Speaker #2: So, we're also going to be significant manufacturers of solar cells, and we're making massive investments in AI chips. So, I think these all make a ton of strategic sense.

Good afternoon, everyone and welcome to Tesla's fourth quarter 2025, Q&A webcast. My name is Travis ask Rod head of Investor Relations and I'm joined today by Elon Musk opt in Asia and a number of other executives are.

Our Q4 results were announced at about three P. M Central time in the update deck, we published at the same link as this webcast.

Speaker #2: And then I guess I have one, not exactly bad news, but it's time to basically bring the Model S and X programs to an end with an honorable discharge.

This call, we will discuss our business outlook and make forward looking statements.

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.

Speaker #2: Because we're really moving into a future that is based on autonomy. And so if you're interested in buying a Model S and X, now would be the time to order it.

Please use the raise hand and to join the question queue.

Before we jump into Q&A Elon has some opening remarks Elon.

Speaker #2: Because we expect to wind down S and X production next quarter. And basically stop production of Model S and X next quarter. We'll obviously continue to support the Model S and X programs.

Thanks, Travis so.

We've updated the Tesla mission two amazing abundance.

And this is.

This is intense and tend to send a message of optimism about the future.

Most likely headed to an exciting.

Speaker #2: For as long as people have the vehicles, but we're going to take the Model S and X production space in our Fremont factory and convert that into an Optimus factory, which will—with the long-term goal of having a million units a year of Optimus robots in the current S/X space in Fremont.

Amazing era of a abundance.

And.

And then I think with the.

You haven't ordered with the continued growth of AI and robotics.

We actually are headed to a future of Universal high income not universal basic encumbered Universal high income.

I mean, there's going to be a lot of change along the way, but that is a that.

Speaker #2: So that is slightly sad, but it is time to bring the SX programs to an end. And shift really, it's part of our overall shift to an autonomous future.

That is what I see as the most likely outcome.

So I think that's.

It makes sense to update Tesla's mission to reflect that.

Nicole.

Yeah.

And in.

And obviously along that way, we're going to keep improving safety, you're driving down the cost of goods.

Speaker #2: And my profile picture on X said for a few months there, the future is autonomous. And so, let's see, with respect to Full Self-Driving and Robotaxi, people are obviously following with very close attention the progress of FSD, and you can experience it for yourself if you've got a Tesla.

And.

And Ken if you have access to anything they need without compromise.

So making sure that the environment is great nature is great and thank you all.

You can have whenever they want which seems like probably the best future.

Im open to other ideas, but that sounds like it sounds like the it sounds like if you can say what is the best future you could possibly imagine.

I guess it would be that everyone can have whatever they want including.

Speaker #2: You notice with every software update, the car gets better and better. Add autonomy, and we're able to do our first rides with no safety monitor in the car in Austin.

Using medical care.

And do we still keep.

The beauty of nature and Eric.

I think thats, probably the best outcome.

And and we're seeing obviously, the first step along that way.

This year for Tesla.

First major steps.

Speaker #2: These are paid rides, so these are just sort of randomly selected paid rides with no safety monitor. And I think maybe as of maybe yesterday or so, we actually don't even have a chase car or anything like that.

As we increase our vehicle autonomy and begin to produce Optimus robots at scale.

We're making very very big investments. So this is going to be a very big capex year.

As Bob overall, we'll get into that.

That is deliberate because we're making big investments for an epic future.

Speaker #2: So these are just cars with no people in them, and no one's following the car. In Austin. So, we obviously are being very cautious about this, because we want to have no injuries or serious accidents along the way.

So I think all these investments make lot of sense, we'll continue to make sure that when we do spend capital I just spent very efficiently.

But it's a lot of things.

We have made major investments.

Speaker #2: Cautious. But you'll see. So I think it makes sense to be very cautious. The amount of autonomy increases dramatically, I think, every month, essentially. So, and then there will also be an opportunity—something we've talked about for a long time—for existing owners of Teslas to add or subtract their cars to the fleet.

In batteries and the entire supply chain with batteries.

So.

We're also going to.

The significant manufacturers of solar cells.

And we're making massive investments in AI chips.

So.

But I think these are all make a ton of ton of strategic sense.

And.

And then I guess I have like one.

Speaker #2: Kind of like how Airbnb works, where you can add or subtract your house to the Airbnb inventory. And I think probably the value of the Tesla—sort of people adding or subtracting their cars to the Tesla autonomous fleet—is probably a little underrated by a lot of people, because we've got millions of cars with AI that can do this.

I guess.

Exactly exactly.

The bad news, but it's a.

Okay.

It's we're.

It's time to basically bring the model S and X programs.

<unk>.

To an end with an honorable discharge.

Because we're really moving into a future that is based on autonomy.

And so if you are interested in buying a model S. Next now would be the time to order it.

Speaker #2: So that it might, potentially, I think it will provide an opportunity for a lot of customers to earn more by lending their car to the fleet than their lease cost to Tesla.

Because we expect to wind down S and X production.

Yes next quarter and basically stopped production of model S. Next next quarter.

We will obviously continue to support the model S and X programs for as long as people have the vehicles.

Speaker #2: Yeah, which is kind of—it's kind of like, you get in that scenario, you basically get paid to own a Tesla. It's quite a good scenario.

But.

But we're going to take the model S and X production space, and our Fremont factory and convert that into an Optimus factory, which well.

Speaker #2: And we expect to have fully autonomous vehicles in, probably, I don't know, somewhere between a quarter and half of the United States by the end of the year.

With a long term goal of having.

1 million units a year.

Optimists robots, and the current FX basis and Fremont.

So that is.

Alright slightly sad.

But it's.

Speaker #2: Pending regulatory approval. A big factor would be if there's some kind of federal preemption for autonomous vehicles. In the absence of that, you kind of have to go on a city-by-city or state-by-state basis.

Yes.

But it is it is it is time to bring the sx programs to tune in.

Sure sure.

As far as part of our overall shift to an autonomous.

Future.

And my profile picture on.

Speaker #2: But nonetheless, even if it is city by city, state by state, we expect to be in—I don't know—dozens of cities, dozens of major cities, by the end of the year.

On et cetera.

A few months there the future is autonomous.

And.

So, let's let's say with respect to full self driving and robo taxi.

And people obviously following with you if I could.

Speaker #2: With respect to energy, the Tesla Energy team has done incredible work. And the growth rate on that is continuing to be very strong. We're building more manufacturing capacity and expect that energy will have very high growth for as far into the future as we can imagine.

Tension the progress of FSC and <unk>.

You can experience it for yourself as you approach you've got a Tesla you can notice with really with every.

Software update the car gets better and better at autonomy.

And and were.

We were able to do our first.

Brian with no safety monitor in the car and Austin. These are paid right. So these are.

Speaker #2: The solar opportunity is underestimated. We think the best way to add significant capability to the grid, or energy to the grid—let's say it's powering AI data centers—is solar and batteries on Earth.

Just sort of randomly selected paid rides with no safety monitor.

And.

Andrew.

<unk>.

I think maybe as of.

Speaker #2: And solar in space. So that's why we're going to work towards getting 100 gigawatts a year of solar cell production, integrating across the entire supply chain from raw materials all the way to finished solar panels.

Maybe yesterday, so we actually don't you don't even have <unk> car or anything like that so these are just.

Cars with no people in them and no one is following the car.

And in Austin, So, we obviously are being very cautious about this because we want to have.

We won't have no no no injuries or serious accidents, along the way. So I think it makes sense to be very cautious, but you'll see the amount of autonomy increase dramatically I think every every months essentially.

Speaker #2: Maybe a bit more about Optimus. We'll probably unveil Optimus 3 in a few months, and I think it's going to be quite surprising to people.

So.

And.

And then there will also be an opportunity something we've talked about for a long time for.

Speaker #2: It's an incredibly capable robot. And, as I mentioned, we are replacing the SX line in Fremont with a one-million-unit-per-year line of Optimus.

Existing owners of.

Hi.

Tesla is to add or subtract their cars to the fleet.

Like how Eric.

Airbnb works, where you can add or subtract your house to the Airbnb inventory.

Speaker #2: Now, because it is a completely new supply chain, there's really nothing from the existing supply chain that exists in Optimus. Everything is designed from physics-first principles.

And.

And I think probably the value of.

The Tesla.

Partially.

A few people, adding or subtracting the cost of test.

Thomas Fleet.

Well.

Under weighted under way to buy a lot of people because we've got millions of cars with AI for that can do this.

Speaker #2: So that means the normal S-curve of manufacturing ramp will be longer for Optimus than it is for products that have at least some portion of an existing supply chain.

So.

So it's my.

It might potentially.

It will.

Speaker #2: Like, when everything's new, the production rate will be proportionate to the least lucky, least confident part of the entire supply chain. And if there are 10,000 things that need to go right, it only takes one being slowed to lag the whole process.

Provide an opportunity for a lot of customers too.

Earn more by lending their car to the fleet than their lease cost to Tesla.

Yeah, which is kind of it's kind of like you get you get MSR, you basically get paid to own a tesla.

Speaker #2: But so it will be sort of a stretched-out S curve. But I'm confident that we'll get to a million units a year in Fremont of Optimus 3.

Quite a good scenario.

And.

And we expect to have.

Fully autonomous vehicles in.

Yes.

Speaker #2: And this Optimus 3 really will be a general-purpose robot that can learn by observing human behavior. So you can demonstrate a task, or literally verbally describe a task, or show it a task, even show it a video.

Probably.

I don't know.

Somewhere between a quarter and half of the United States by the end of the year.

Pending regulatory approval.

Yes, a big factor would be if there's some kind of federal preemption for autonomous vehicles.

Speaker #2: And it will be able to do that task, so it's going to be a very capable robot. I think, long-term, Optimus will have a very significant impact on the U.S. GDP.

In the absence of that you kind of have to go on a city by city or state by state basis.

But nonetheless.

Even if it is city by city state by state.

Expect to be in.

Speaker #2: Like, it will actually move the needle on US GDP significantly. So, in conclusion, there's still obviously many who doubt our ambitions for creating amazing abundance.

Yes.

I don't know.

<unk> of cities dozens of major cities by the end of the year.

With respect.

Back to energy the energy team has.

Done incredible work and.

Speaker #2: But we're confident it can be done, and that we're making the right moves, technologically, to ensure that it does. And Tesla has obviously never been a company to shy away from solving some of the hardest problems.

The growth rate on that is continuing to be very strong.

And we're building more manufacturing capacity and expect that.

And energy will have very high growth for.

Really it was as far into the future as we can imagine.

Speaker #2: I think that's kind of how you build value in a company: you solve hard problems. I don't know how you create value by solving easy problems.

The solar the solar opportunities underestimated.

We think.

The best way to add significant capability to the grid is ordinary so let's say, it's powering AI data centers is.

Speaker #2: So there's a lot of hard problems that the Tesla team is going to solve. But it's an incredibly talented, hardworking team, and I'd like to thank, actually, everyone at Tesla for their incredible hard work.

Solar and batteries on Earth and solar in space.

So that's why we're working on.

Work towards.

Speaker #2: And it's an honor to work with such a talented group. So thank you to everyone who is supporting this mission. The future is more exciting than you can imagine.

Getting 100 Gigawatts here.

Solar cell production.

Integrating across the entire supply chain from raw materials, all the way to finished.

Speaker #2: Fantastic. Thank you so much, Elon. And next, we have some remarks from Vaibhav. Go.

Solar panels.

Maybe a bit more about Optimus.

Speaker #3: Thanks, Travis. So, Q4 was an interesting quarter in a couple of respects. On the autos front, while in Q3 we saw a surge in US demand before the IRA consumer credit cliff, pulling in some demand from Q4.

We'll probably unveil Optimus.

Three and a few months.

And.

I think it's going to be quite a.

Surprising people.

Speaker #3: In other parts of the world, we saw an increase in demand, leading to record deliveries in smaller countries like Malaysia, Norway, Poland, Saudi Arabia, and Taiwan.

An incredibly capable robot.

And as I mentioned, we are replacing the Sx line and freemont with.

Millions of unit per year line of Artemis.

Speaker #3: While continued strength in the rest of APAC and EMEA, we therefore ended 2025 with a bigger backlog than in recent years. Note that none of these countries have the latest version of FSD Supervised available yet.

No because it is a.

It's a completely new supply chain.

Hi.

It's just it's.

There's really nothing.

From from the existing supply chain that exists.

Speaker #3: On the storage front, we hit yet another record in terms of deployments. I would like to thank our customers and Tesla for continuing this momentum.

And optimists everything is designed from physics first principles.

So that means.

The normal S curve of manufacturing ramp will be longer for optimists than it is for.

Speaker #3: On the automotive margins front, automotive margins excluding credits improved sequentially from 15.4% to 17.9%. The automotive gross profit was flat sequentially despite 16% lower deliveries, primarily due to regional mix, as we had proportionately more deliveries in APAC and EMEA.

Products that have.

That would be some portion of an existing supply chain like when everything is new.

The production rate will be proportionate to the at least lucky at least confident part of the entire supply chain.

And if there's 10000 things need to go right.

Speaker #3: As we look to 2026, with the progress that has been made with autonomy, our focus is on ramping production at all our factories. Our biggest constraint globally continues to be on the battery pack front.

It only takes one to be slowed to lag that.

<unk>.

So it will be sort of a stretched out S curve.

But.

I'm confident that we'll get to a million units here in.

Speaker #3: While our teams have been creative in trying to resolve the situation by now putting 4680 cells in non-structural packs, we continue to iterate, improving things from here on.

In Fremont.

Optimus III.

And at this office, we really will be a general purpose robot that can.

Speaker #3: FSD adoption continued to improve in the quarter, reaching nearly 1.1 million paid customers globally. Of these, nearly 70% were upfront purchases. It is important to note that, beginning this quarter, we are transitioning fully to a subscription-based model for FSD.

Learn by observing human human behavior. So you can like demonstrate a task or virtually.

Let me describe a task or show it to task.

Even showed a video and it will be able to do that task.

It's going to be very capable robot.

I think.

Long term optimists will have a very significant.

Speaker #3: Therefore, net additions to this figure will primarily be via the subscription model, and in the short term will impact automotive margins. On the energy front, we achieved yet another record in terms of gross profit for the quarter.

Impact on the U S GDP like it will actually move the needle on U S GDP significantly.

So.

In conclusion.

Yes.

There's still obviously, many who doubt our ambitions for creating amazing abundance, but.

Speaker #3: And ended the year with nearly $12.8 billion in revenue, a 26.6% year-over-year growth. This was the result of high deployments in all regions and continued strength in demand for both Megapack and Powerwall.

We're confident.

It can be done and that we're making the right moves technologically to ensure that it does.

And.

Tesla is obviously not never been a company to shy away from solving some of the hardest problems.

Speaker #3: As we look at 2026, our backlog remains strong, well-diversified globally, and we expect increasing deployments with the launch of Megapack 3 and Megablock. On airware, we expect margin compression from the increased low-cost competition's impacts to the market from policy uncertainty and the cost of tariffs.

I think that's kind of how you build value in the company as you solve hard problems.

So I don't know how you create value by solving easy problems.

So there's a lot of hard problems that the Tesla team is.

It is going to solve but it's incredibly talented hardworking team.

And now I'd like to thank actually ever want it.

Speaker #3: Services and others' margin declined from 10.5% to 8.8%, primarily from higher employee-related costs for service centers as we start preparing for the ramp in activity from the growth in the fleet size.

Tesla for their.

Incredible hard work.

And it's an honor to work with such such a talented group. So thank you to everyone who is supporting this mission the future is more exciting than you can imagine.

Yeah.

Speaker #3: We did see margin we did see an improvement in a momentum in margin from our supercharging business, which is included within services and other.

Fantastic. Thank you so much Elon and next we have asking remarks from <unk>.

Go ahead.

Thanks Thomas.

Speaker #3: Additionally, note that our robotaxi business-related costs, while not material, are also included within this. Given that we're still in the early phase of our fleet deployment and are still doing a lot of validation testing, the revenue and cost per mile metrics are not meaningful to discuss at the moment.

So Q4 25 was an interesting contrary in a couple of respects.

On the auto front, while in Q3, we saw a surge in U S demand before the ILEC consumer kind of cliff.

Pulling in some demand from Q4.

In other parts of the World, we saw increase in demand leading to record deliveries in smaller countries like Malaysia, Norway, Poland, Saudi Arabia in Taiwan, while continued strength in the rest of APAC and EMEA.

Speaker #3: Then on total gross margin front, we ended the quarter with over 20.1%, something which we haven't achieved for over the last two years. This improvement came despite the impact of lower fixed-cost sub absorption and the impact of tariffs, which were in excess of $500 million in Q4.

420 to 25 with a bigger backlog than in recent years.

Note that none of these countries have the latest version of FSD supervised available yet.

On the storage front, we had to yet another record in terms of deployments.

Speaker #3: Operating expenses increased sequentially, primarily from increased stock-based compensation for employees, and as we started recording charges for one operation milestone under our 2025 CO performance award.

I'd like to thank our customers and Tesla in continuing this momentum.

On the automotive margins front.

Automotive margins, excluding credits improved sequentially from $15 four to 17, 9%.

Speaker #3: That was deemed to be probable over the wartime. Additionally, our spend on AI-related initiatives and new products like Cybercab, Semi, Optimus, and Megapack, et cetera, continues to be at elevated levels for the full year.

Automotive gross profit was flat sequentially, despite 16% lower deliveries.

Primarily due to regional mix as we had.

Proportionately more deliveries in APAC and EMEA.

Speaker #3: And we expect this trend to continue into 2026. Net income was negatively impacted by mark-to-market charges on a Bitcoin holding, which depreciated 23% compared to the last quarter.

As we look to 2026 with the progress that has been management autonomy. Our focus is on ramping production at all our factories.

Biggest concern globally continues to be on the battery pack front.

Speaker #3: And the impact of unfavorable FX, primarily from our large intercompany borrowings. On the free cash flow front, we ended up at $1.4 billion.

Our teams have been creative in trying to resolve the situation by now putting 46 80 sales and non structural tax we continue to attract improving from here on.

SSD adoption continued to improve in the quarter, reaching nearly $1 1 million paid customers.

Speaker #3: We did end up CapEx being slightly below our previous guidance of $9 billion. But like Elon already mentioned, this year is going to be a huge investment year from a CapEx perspective.

Customers globally.

Nearly 70% of our upfront purchases.

It is important to note that beginning this quarter, we are transitioning fully to a subscription based model for FSD.

Speaker #3: And at the moment, we are expecting that CapEx would be in excess of $20 billion. We'll be paying for six factories, namely the refinery, LFP factory, Cybercab, Semi, a new megafactory, the Optimus factory. On top of that, we'll also be spending money for building our AI compute infrastructure.

Therefore, net additions to this figure will primarily be a subscription model and in the short term will impact automotive margins.

On the energy front, we achieved yet another.

In terms of gross profit for the quarter and ended the year with nearly $12 8 million in revenue or 26, 6% year over year growth.

Speaker #3: And we'll continue investing in our existing factories to build more capacity, and then also the related infrastructure along with it. And we'll also further expand our fleet of robotaxi and Optimus.

This was the result of high deployments in all regions and continued strength in demand for both Mega pack and power.

Speaker #3: While this may seem like a lot, we believe this is the right strategy to position the company for the next era. And we'll make such investments, as Elon mentioned, in a very capital-efficient manner.

As we look at 2020, our backlog remains strong and well diversified globally, and we expect increasing deployments with the launch of Mega Backseat and Mega block.

Speaker #3: Note that this does not include potential investments in solar cell manufacturing, or our tariff fab, as we're still in the early phase, and we plan to provide an update in future quarters.

However, we expect margin compression from the increased low cost competition impacts to market from policy uncertainty and the cost of tariffs.

Services and others margin declined from 10, 5% to eight 8% primarily from higher employee related costs or service centers as we start preparing for the ramp in activity from the growth in the fleet size we.

Speaker #3: We're starting not the next chapter, but a new book on the progression of this company. 2026 would be when all of this began.

Speaker #3: While, at times, it feels daunting, it is going to be the most exciting change in Tesla's history. And we could not have even dreamed of embarking on this journey without the support of our customers and our investors.

We did see a momentum and margin.

We did see an improvement in margin from our Supercharging. Brazilian features included within services and other.

Additionally, note that our robo taxi business related costs, while not material at all.

Speaker #3: Thanks for again showing the confidence in us. And let's get ready for a future of amazing abundance. Thanks.

Also included within this.

Given that we're still in the early phase of our fleet deployment and are still doing a lot of validation testing the revenue and cost per mined metrics are not meaningful to discuss at the moment.

Speaker #1: Great, thank you very much, Vaibhav. Now we're going to head over to investor questions. As always, we will start with questions from Say.com. The first question is: Today, there are approximately 90 million cars sold globally each year.

And then on total gross.

Gross margin front, we ended the quarter with over 21% something which we haven't achieved over the last two years. This improvement came despite the impact of lower fixed cost absorption and the impact of tariffs, which were in excess of $500 million in Q4.

Speaker #1: Does Tesla have a view, based on its robotaxi ambition, what this number will be in five or ten years? And how does this impact Tesla's EV strategy to have more?

Speaker #1: models? Yeah,

Speaker #2: Thanks, Travis. As Elon said, the future is autonomous. And obviously, autonomy in Cybercab is going to change the global market size and mix quite significantly.

Operating expenses increased sequentially, primarily from increased stock based compensation for employees.

Speaker #2: I think that's quite obvious. General transportation is going to be better served by autonomy, as it will be safer and cheaper. And over 90% of vehicle miles traveled are with two or fewer passengers now, which is why we designed Cybercab that way.

And as we started regarding charges on.

Well, one operational milestone under our 20 to 25 Seo performance award that was deemed to be probable or the walk down.

Speaker #2: In this new autonomous market, we at Tesla have the advantage of efficiency, cost, and manufacturing at scale that really no one else has. And we've built that over the last decades.

I'll spend on AI related initiatives and new products like cyber cab semi Optimus and Mega pack.

Speaker #2: And we believe that that segment that we are creating will grow by millions year over year.

Et cetera continues to be an elevated levels and we expect this trend to continue for the full year 2026.

Speaker #1: Just to add to what Lars said there, it's worth the point that Lars made, which is that 90% of miles driven are with one or two passengers, or one or two occupants, essentially.

Net income was negatively impacted from mark to market charges on our mid con holding is depreciated, 23% as compared to the last quarter and the impact of unfavorable impact of FX.

Speaker #1: It's a very important one, because that implies that Cybercab, which is a dedicated two-seater dedicated robotaxi—it's a little confusing with the terms 'robotaxi' and 'Cybercab.'

Primarily from large intercompany box.

On the free cash flow front, we ended up at $1 4 billion.

We did end up capex being slightly below our previous guidance of $9 billion.

Speaker #1: Sorry about the confusion. But in fact, in some states, we're not allowed to use the word 'cab' or 'taxi.' So it's going to get even more strange.

But like as Ilan are already mentioned this is going to be a huge in restaurant do you have from a capex perspective.

Speaker #1: It's going to be like Cyber Vehicle or something, Cyber Car. But the Cybercab, which is a specific vehicle model that we're making, does not have a steering wheel or pedals.

And at the moment, we are expecting that capex would be in excess of $20 billion.

We will be paying for sex factories.

Mainly the refinery LSP factory cyber cab semi new Mega factory.

Speaker #1: So, this is clearly—there’s no fallback mechanism here. This car either drives itself or it does not drive. And we expect to start production in April.

Optimists factory.

On top of it we want to be spending money for building, our AI compute infrastructure.

And we will continue investing in our existing factories to build more capacity.

Speaker #1: As always, it's an S curve—the production rate is an S curve. So it starts off very slowly, and then grows exponentially. Then you hit the linear.

And then.

Also the related infrastructure, along with it and we will also further expand our fleet of Robo taxi and Optimus.

Speaker #1: And then ultimately, it asymptotes at whatever your target volume is. So we would expect, over time, to make far more Cybercabs than all of our other vehicles combined.

While this may seem a lot. We believe this is the right strategy to position the company for the next era and.

And we'll make such investments as Ilan mentioned in a very capital efficient manner.

Note that this does not include potential investments in solar cell manufacturing on our tariff fab as we are still in early phase and we plan to provide an update in future quarters.

Speaker #1: Given that 90% of distance driven, or distance being traveled when exactly no longer driving, is one or two people. I think it's like 80% is just one.

We're starting the next chapter, but a new book on the progression of this company.

220, <unk> would be when all of this began.

Speaker #1: So it would mean that long-term, Cybercab would make several times more Cybercabs per year than all of our other vehicles.

At times it feels daunting it is going to be the most exciting change in teslas history, and we could not have even dream of embarking on this journey without the support of our customers and our investors.

Speaker #1: combined. Great.

Speaker #3: Thank you so much. The next question, a bit related: Are there still plans to launch new models to address different price segments and vehicle types, which could materially expand the TAM for Tesla?

We're again showing the confidence in us and let's get ready for a future of amazing abundance.

Thanks.

Great. Thank you very much Bob.

Now, we're going to head over to Investor questions as always we will start with questions from say dot com.

Speaker #2: Yeah. To further on what we were just talking about, we've launched our least expensive models ever over the last few months and are continuing to expand those models globally.

The first question is today today, there are approximately 90 million cars sold globally each year.

Speaker #2: And over the last decade, we have continually brought down the cost of our vehicles without sacrificing range, performance, or premiumness. And we'll continue to do that, as Vaibhav said, investing in our factories.

This test will have a view based on its robo taxi ambition. What this number will be in five or 10 years and how does this impact tesla's EV strategy to have more models.

Speaker #2: But these are all trade-offs of where we spend our time or money. And to Elon's point just now, with Cybercab coming, we are aiming to bring that Tesla premium ride experience to our largest market yet. That could be five or 10.

Yes, Thanks Travis.

So the future is autonomous and obviously autonomy and cyber camera going to change the global market size and next quite significantly.

Speaker #1: current levels of production Times our . This autonomous new as a to more than start , as a transportation total thinking about providing service us as service , have to more than the market , you total addressable market for the purchase vehicles alone .

It is quite obvious.

General transportation is going to be better served by autonomy as it will be safer and cheaper and over 90% of vehicle miles traveled are with two or less passengers now which is why we designed cyber cab that way and there's new autonomous market E. At Tesla have the advantage of efficiency cost and manufacturing at scale that really no one else has.

Speaker #1: And of course, we do have to plan various robotaxis in shapes and sizes, but have, obviously, Cyber be the Cab will be the grand majority of that volume.

We've built that over the last decades, and we believe that that segment that we are creating will grow millions year over year.

Speaker #1: Yeah , the vast majority of of miles traveled will be autonomous in the future . You know , I would say probably less than I'm just guessing , but probably less 5% of miles driven will than be where somebody actually driving the car themselves in the future .

Yes.

Yeah.

Just to add to what Lars said there.

<unk>.

It's worth it.

Speaker #1: Maybe as low as 1%. Great.

That loss.

Is that 90% of miles driven or with.

One or two passengers or one on one or two occupants essentially.

Speaker #2: next question is , historically , Tesla has spoken about gross margin per model there . standalone Are gross margin targets for the current models , excluding the benefits for FSD sales ?

As is very important one.

Because.

That implies that.

That cyber cyber cab, which is dedicated to theater.

Speaker #3: You know , we've talked about this with the two questions , but previous transportation , as we know , is changing . And I think we cannot keep applying the same framework from a car sales model to the future .

Dedicated robo taxis, all confusing with the terms of attacks and cyber cabinet, sorry about the confusion, but.

And in fact in some states were not allowed to use the word cab or taxi, so it's going to get even more.

Speaker #3: What we are trying to do . So , in holistically to be looked at in more autonomy it has software will be the for growth driver on from now .

This range can be like cyber vehicle or something <unk>.

But the <unk>.

Vic.

Speaker #3: And as we aim to maximize the global fleet, we have been laser focused on COGS from our side to make sure, because that is something which we manage.

Vehicle model that we're making does not have a steering wheel or pedals. So this is clearly.

There's no.

You know Theres no pullback mechanism here, it's karri to drive itself, where it does not drive.

Speaker #3: So, we will keep focusing on that, but I think we need to look at it from a different dimension.

And we expect to start production.

Speaker #1: Yeah. Like Cyber Cab. The whole design of Cyber Cab was, it was to optimize the fully considered cost per mile of autonomous driving.

April.

As always it is an S curve of.

Production rates is an S curve. So it's also a very slowly and then grows exponentially and you hit the linear and then ultimately.

Speaker #1: And it's a different design problem than if you're trying to design cars for people who will be driving versus being driven . And and so , so it is like like I said , super optimized for minimum cost per And mile .

Got it asymptote at Port or your target volume is so.

Right.

We would expect over time to make.

Far more cyber caps and all of our other vehicles combined.

Given that 90% of.

Speaker #1: Also, for a much higher duty cycle. So you would expect a Cyber Cab to be used, you probably know, 50 or 60 hours a week instead of the 10 or 11 hours a week that a driven vehicle is used.

Of distance driven or distance being.

Distance traveled exactly no longer driving.

<unk>.

Is one or two people I think it's like 80% or just one.

Speaker #1: So, typically, people might drive their car for an hour and a half a day on average. So it's like 10 hours per week out of 168.

So.

It would mean that long term.

Cyber cap would make several times more <unk> per year than all of our other vehicles combined.

Speaker #1: But I think an autonomous vehicle is likely to be used probably five times as often. Which means you need to design the vehicle for much more wear and tear per unit of time, and it needs to be much more resilient.

Great. Thank you so much.

The next question.

A bit related Ed are there still plans to launch new models to address different price segments and vehicle types, which could materially expand the Tam for Tesla.

Speaker #1: So it's more like a like a commercial truck that's in , you know , continuous operation or close to continuous operation . Is how you design a , an autonomous vehicle .

Yeah.

Further on what we were just talking about we've launched our least expensive models ever over the last few months and are continuing to expand that those models globally and over the last decade, we have continually brought down the cost of our vehicles without sacrificing range performance of premium in this and we'll continue to do that is by alongside investing in our factories, but these are all tradeoffs on where we spend our time and money and to <unk>.

Speaker #1: And we will have large vehicles in the Cybercap in the future that are designed for full FSD. And autonomy, we've actually shown pictures of this.

Speaker #1: And have shown in fact this is not prototypes . exactly a So secret . In fact , we've given people them . rides in So you know , we're we're not we're not keeping this hiding this light under a bushel here .

<unk> point, just now with cyber cap coming we are aiming to bring that test as a premium brand experience to our largest market yet that could be five or 10 times, our current levels of production.

Autonomous market you have to start thinking about us is moving to providing transportation as a service more than the total addressable market for the purchased vehicles alone of course, we do have plans to have broken taxis in various shapes and sizes, but obviously cyber Cabo Grand.

Speaker #1: You know, it's like we're literally saying what we're going to do, and have said what we're going to do for a while.

Speaker #1: So , you know , I think long term , we would only really the vehicles that will make will be autonomous vehicles , with the exception of the next generation Roadster , which we're to debut hoping in April .

Majority of that volume, yes, the vast majority of of miles traveled will be autonomous in the future.

Speaker #1: Hopefully, it's going to be something out of this world.

I would say probably restaurant lesson I'm, just guessing, but probably less than 5% of miles driven will be where somebody is actually driving the car themselves in the future maybe as low as 1%.

Speaker #2: Fantastic . The next question we unfortunately have to skip because it's not related to to Tesla , and we would like to remind folks who use the say to platform please focus these questions on on Tesla .

Great.

The next question is historically Tesla has spoken about gross margin per model.

Our their standalone gross margin targets for the current models, excluding the benefits through <unk> FSD sales.

Speaker #2: So with that in, we're going to move on to the next question, which is: currently, what is the bottleneck to increasing robotaxi deployment and personal use?

We've talked about this with the previous two questions, but transportation as we know is changing and I think we cannot keep applying the same framework from a car sales model to the future. What we are trying to do.

Speaker #2: Unsupervised FSD , the safety and performance of the most recent models . Is it the safety and performance of the most recent models , or is it people to monitor the robot robotaxis in car or remotely , or is there some other blocker ?

So it has to be looked at it more holistically in autonomy software will be the driver for growth from now.

Speaker #2: I don't know if you want to kick off on this one.

And as we aim to maximize the global feed we have been laser focused on Cogs.

Speaker #4: Yeah, we have scaled the robotaxi service that's available to customers over the last year in order to just learn the scaling problems without having to wait for unsupervised.

From our side to make sure because that is something which we manage so we will keep focusing on that but I think we need to look at it from a different dimension.

Speaker #4: Basically , two goals . One is like learn as much as possible from the fleet with the safety monitors . And secondly , be laser focused with the engineering team to solve the unsupervised FSD problem .

This cyber cap that is the whole design of sorry, Rick how was.

It was to optimize be fully considered.

Speaker #4: I think we did both, like by the end of last year, we, you know, we kind of had a long list of issues that we were able to churn through.

Cost per mile of autonomous driving.

And you're right, it's a different design problem than if you're trying to design.

Speaker #4: And then in the last couple of had weeks , we unsupervised our started robotaxi service to public customers Austin . in I think some customers took also week and rides last the

Cars for people, who will be driving versus being driven.

And.

So so sorry cameras like like I said have super optimized for.

Minimum cost per mile and also for a much higher duty cycle. So you would expect cyber cap to be used.

Probably 50 or 60 hours a week.

Instead of the.

10, or 11 hours a week.

Driven vehicles used.

So typically towards what might drive their car for an hour and a half a day on average so it's like 10 hours per week out of 168.

But I think an autonomous vehicle is likely to be.

Use probably five times, as often which which means that you need to design the vehicle for a much more wear and tear per unit of time.

And much more resilient, it's more like a <unk>.

Commercial truck.

That's in.

Continuous operational close continuous operation.

As far as how you design.

And autonomous vehicle.

And so.

We will have.

Larger vehicles and the cyber cap in the future that are designed before autonomy and we.

Refractories shown pictures of this and in fact have shown prototypes. So this is not exactly a secret.

In fact, we've given people writing them so.

We're not we're not keeping as a.

Hiding the slight under a bushel here you know it's like we're literally.

Saying, what we're going to do and have said or we can do for a while.

So.

I think long term we would.

Really the only vehicles that will make will be autonomous vehicles with the exception of the next generation roadster.

Which we're hoping to debut.

In April.

Hopefully.

It's going to be something.

Out of this world.

Fantastic.

The next question, we unfortunately have to skip because it is not related to Tesla.

I'd like Ted add remind at folks who use AD say platform and to please focus your questions on Tesla.

And with that in mind, we're going to move on to the next question, which is what is the current bottleneck to increase robo taxi deployment and personal use unsupervised FSD.

The safety and performance at the most recent models is it the safety performance at the most recent models or is it people to monitor the robot robo taxis in car or remotely or is there some other ad blocker.

Sure if you wanted to kick off on this one.

Yes, the app in the remote access service is available to customers over the last year and in order to just learn the scaling problems without adding.

<unk> provides.

Okay.

One is the loan as much as possible from the fleet with the safety Minders and secondly, we are laser focused with engineering deemed the unsupervised FSB problem.

We did both.

By the end of last year.

Yes, the long tail up issues that we are able to attend to and then.

The last couple of weeks, we have started our unsupervised.

Robot taxi service to public customers in Austin, I think some governments to speak in Opex and service companies today without any of their car or something like that.

Thirdly, we did scale the fleet size in the Bay area and in Austin and through that we learned in Asia the charging.

Other issues that we would've seen once these startup by Kandy answer provides fleet. So what is happening in parallel.

A variant of the software that's used for the robot taxi service was shipped to customers that we 14 and customers a huge jump in performance.

Arnaud.

Happy feedback from customers, so and since I'm getting toward the software significantly asset and customers will continue to see with their own software. It leases up that is so good that yes.

Screaming to remove the diode monitoring software.

Because our board inside the car too much.

Adding to that a little bit with what a show excited about learning about our chartering and service needs.

We're using our vast network of charging and service centers that really only Tesla has in this space to jumpstart our infrastructure buildout needs to get ahead of Robo taxi autonomous vehicle demand and we expect that because of this network. We are the only company capable of scaling up the rate.

That is needed for the.

Tsunami of autonomy that is coming.

Yes.

Great moving onto the next question.

After the unveiled the cyber truck Elon stated that if it didn't sell well at Tesla would build a more conventional looking pickup.

How practical would it be to create this new design on the cyber truck architecture and could it be conveniently built on the existing production lines.

Actually in its segment high protection continues to be a leader and are selling more than any of our electric electric truck out there while our competition continues to pull back.

But to the question itself from a line standpoint, we always design our lines to be Super flexible rebuilt <unk> why on the same line. We built <unk> on the same line still showing that we can do that the cyberattack line was designed in the same way and is one of our most fully ready for autonomy platforms.

Yeah.

Yes.

We will transition the cyber truck line to just a fully autonomous line.

And there's obviously a market therefore cargo delivery like you say like localized cogs delivery within.

Within a city within a few hundred miles something like that.

There's a pretty big.

There's been a lot of cargo that needs to move.

Locally within a city in an autonomous arbitrage could be very useful for that.

Yes.

Great.

Onto the next question regarding Optimists could you share the current number of units deployed in Tesla factories and actively performing production tasks what's the.

Some accruals our operations are they handling and how has their integration impacted factory efficiency our output.

Okay.

Yes, I mean, we're still very much at the early stages of.

<unk> is in R&D.

On the R&D phase.

So.

We have had the Artemis do some basic tasks in the factory.

But as we iterate on new versions of Artemis.

Deprecate the old versions.

And.

And so it's it's not.

I wouldn't say it's like.

And usage in our factories in a material way it's more.

So they can put the robot can learn.

We wouldn't expect to have.

Any kind of significant Optimus production volume until probably the end of this year.

Yeah.

Great.

Gen Z is an awesome robot that is awesome.

Yes, it's not a robot that may might have any instances.

It looks like a human even if it will be easy to confuse that with the human.

And this helps our strategy by NDA, because you can learn from how humans to these tests and as many of these repeat that operate on the same day.

Peter's remarks.

Yes, I mean, I guess, one thing I should say like.

There's a lot of news of like.

Various companies announcing layoffs and whatnot, but.

Yes.

Our Tesla factory.

Factoring Fremont, we actually expect to increase head count over time.

And to significantly increase.

Output from our factories.

So we don't have any layoff plans.

Spect to actually increase head count.

Okay.

Great.

Our next question Ed similar.

Similar to the other tiny questions, but slightly different at <unk>.

When is <unk> going to be 100% unsupervised.

Well it is 100% unsupervised in emphasis horizontal too.

I mean.

We obviously have cars operating with no one in them and no safety monitor and no follow car or anything like that in Austin right now.

For for customers.

We're being purchased very cautious with the rollout.

Sure.

With each successive version as we prove it out and we will make sure that there are no sort of unique issues and.

In particular cities because like sometimes you get like some.

Operator: Question. Elon, you've been spending significant personal time on Tesla's chip design?

Speaker #1: Session. Elon, you've been spending significant personal time on Tesla's chip design. What was the forcing function behind this?

Operator: Question. Elon, you've been spending significant personal time on Tesla's chip design?

Three.

Difficult intersection.

Speaker #2: Yeah.

Elon Musk: Yeah.

And it'll be an intersection where allow humans have accidents by the way just like some some pretty nutty intersections worked with a lot of humans make mistakes and have accidents and in various cities. So we want to make sure that.

Operator: What was the forcing function behind this increased involvement? And do you think external chip sales will represent a significant portion of Tesla's valuation by the end of the decade?

Speaker #1: In terms of increased involvement, do you think external chip sales will represent a significant portion of Tesla's valuation by the end of the decade?

Speaker #2: Well, I mean, the, the I, I tend to spend time on wherever, whatever the most critical issue is for the company, and, and, completing the AI5 chip design and having it be a great chip is, is arguably number the number one most critical thing to get done, which is why I'm spending more time on that than currently anything else at, at Tesla.

Elon Musk: Well, I mean, I tend to spend time on wherever, whatever the most critical issue is for the company. And completing the AI five chip design and having it be a great chip is arguably the number one most critical thing to get done, which is why I'm spending more time on that than currently anything else at Tesla. Spend pretty much every Saturday on this, and every Tuesday and a chunk of every Tuesday. So it's like a... You know, if I'm spending my Saturdays on something, it's gonna be something pretty important. I do think AI five will be a very good chip. And I feel quite confident about the design at this point.

Okay.

FSD can handle those.

Unusual intersections.

Like if you take <unk> for example, where we'll show in Santa Monica combine is like it was about.

I don't know 20 traffic lights.

And we will constantly.

Having accidents there so.

Do you want to make sure that FSD can handle.

Unique things in a particular city.

So.

And then we're also just being paranoid about safety.

and every, and, and a chunk of every Tuesday. So it's like a

But with each successful release of FSC, we will reduce the amount of driver monitoring that's needed proportionate to the safety of the <unk>.

You know, if I'm spending my Saturdays on something, it's

It's going to be something pretty important. Um, I do think AI will be, um,

Diebold.

A very good chip. Um, and I'm, I feel

Elon Musk: And then AI6, which will follow that, it'll be aspirationally would follow that in under a year, will be yet another big leap beyond AI5. So I feel pretty good about our chip strategy right now. But in terms of selling it outside of Tesla, we first need to make sure we have enough chips for all of our vehicle production and all of our Optimus production. Then we will actually use the AI5 chips in our data centers. We already use the AI4 chips in our data centers. So when we do training, it's a combination of the AI4 chips and NVIDIA hardware, primarily that we do training with.

And then AI6, which will follow that, it'll be aspirationally would follow that in under a year, will be yet another big leap beyond AI5. So I feel pretty good about our chip strategy right now. But in terms of selling it outside of Tesla, we first need to make sure we have enough chips for all of our vehicle production and all of our Optimus production. Then we will actually use the AI5 chips in our data centers. We already use the AI4 chips in our data centers. So when we do training, it's a combination of the AI4 chips and NVIDIA hardware, primarily that we do training with.

Great.

As it relates to robo taxi and what has surprised you about the rollout so far and we've talked about what's constrained at a fleet expansion to date, but and it appears there are 200 vehicles based on other tracking is that something that we can confirm.

Quite confident about the design at this point. Um, and then ai6, which will follow that. It'll be aspirationally would follow that in under a year, will will be yet another big leap, Beyond AI 5. So

I feel—I feel pretty good about our Chubb strategy right now. Um,

and um,

LLS ending that any surprises I think because we are largely at all the metrics that restaurants are sort of a surprise advisors continued work to grind down on the long tail of issues and that's what enabled us to large done separate way service.

But in terms of selling it outside of Tesla, we first need to make sure we have enough chips for all of our vehicle production and all of our Optimus production.

In Austin.

Yeah.

I mean.

In terms of.

Yeah.

Robotics vehicles carrying paid customers.

And, um, and then, and then we will actually use the A5 chips in our data centers. Um, we already use the AI4, uh, chips in our data centers. So when we do training, it's a combination of the, uh, AI4.

I think we're well over 500 at this point between the Bay area and Boston.

Elon Musk: So, but you say by the end of the decade, I mean, it's like things are changing so fast that it's hard to imagine, like, what happens at the end of the decade. I mean, when I look ahead at, say, what's the limiting factor for Tesla growth, if you go, say, 3 or 4 years out, I think it actually is chip production. Is there enough AI logic and enough memory, enough RAM for our volume?

So, but you say by the end of the decade, I mean, it's like things are changing so fast that it's hard to imagine, like, what happens at the end of the decade. I mean, when I look ahead at, say, what's the limiting factor for Tesla growth, if you go, say, 3 or 4 years out, I think it actually is chip production. Is there enough AI logic and enough memory, enough RAM for our volume?

Chips and, uh, Nvidia hardware, um, primarily that we do training with.

so,

um,

Yes, yes, yes, I'm on soft like vehicles, depending on the load, but yes, you can have like more of a car is doing at peak times in the next year to make us now powers.

But you say by the end of the decade, I mean, that's like—

Things are changing so fast that it's hard to imagine, like, what happens at the end of the decade. Um,

Yeah.

This will probably double every months type of thing its going to its on an exponential curve.

I mean, we, we might—I mean, we, the—

I mean, one other thing people forget that we have.

When I when I look ahead at at say, what what's the limiting factor for Tesla growth? Um if you go say

Been deliberate on all of this in the sense that we have the supporting infrastructure already been in place whether it's other centers charging yes, we will have to augment as the fleet grows depending upon the density of where the demand is and whatnot.

Three or four years out, I think it actually is chip production.

Um, is there enough?

Uh, AI enough, AI logic.

Enough AI.

Elon Musk: And right now, I see that as being the thing that probably limits our growth in three or four years, which probably would imply that we're not selling chips outside of Tesla, because we need them. And in fact, I think it's gonna make sense, and this is definitely gonna be a sort of a controversial thing, but I think Tesla needs to build a Terafab. You know, I mentioned this at the shareholder meeting. But even when we look at the best case output of all of our key suppliers, and I'd say even beyond suppliers, they're like strategic partners like Samsung, TSMC, and Micron. The...

It's not something like we just among the Barnett and we're starting to we've been added for years.

enough memory, enough RAM for, um, for our volume, and, um,

And right now, I see that as being the thing that probably limits our growth in three or four years, which probably would imply that we're not selling chips outside of Tesla, because we need them. And in fact, I think it's gonna make sense, and this is definitely gonna be a sort of a controversial thing, but I think Tesla needs to build a Terafab. You know, I mentioned this at the shareholder meeting. But even when we look at the best case output of all of our key suppliers, and I'd say even beyond suppliers, they're like strategic partners like Samsung, TSMC, and Micron. The...

And, and, and right now, I see that as being the, the thing that probably limits our...

Not every city is designed the same way same thing our infrastructure is also not the same in every city, but.

um, our growth in

In 3 or 4 years.

You have to give them credit that it's been a journey.

Uh, which employment imply that we're not telling trips outside of Tesla.

We need them. Um,

And like last set if theres some company, which can do it we've only been at it so we should be able to deliver much better.

and um,

and in fact, I think

um,

Great and the next question is about chase cars, which we already covered.

I I I think it's going to make sense and and this this is definitely going to be a sort of a controversial.

So moving on to the last question.

Elon you've been spending significant personal time on Tesla chip design.

What was the forcing function behind this increased involvement and do you think external chip sales will represent a significant portion of Tesla valuation by the end of the decade.

Thing, but, uh, I think Tesla needs to build a tariff fab. Um, you know, I mentioned this at the Q4 meeting. Um,

Well I mean, I tend to spend time on wherever whatever the most critical issues for the company in.

but but but when when when even when we look at the output of the best case output of all of our key suppliers and I would say, even the Beyond suppliers are like strategic Partners, uh, like Samsung tsmc and

Uh, Micron. Um

Elon Musk: We say, like, "What's the most you could possibly make?" Then it's not enough. I think in order to remove the constraint, the probable constraint in three or four years, we're gonna have to build a Tesla Terafab, a very big fab that includes logic, memory, and packaging, domestically. And that's actually also gonna be very important to ensure that we are protected against any geopolitical risks. I think people may be underweighting some of the geopolitical risks that are gonna be a major factor in a few years. So, now, you know, a lot of people are like, "That's," will say, like, "That's crazy. Fabs are really hard." I'm like, "Yes, I know fabs are really hard.

The.

We say, like, "What's the most you could possibly make?" Then it's not enough. I think in order to remove the constraint, the probable constraint in three or four years, we're gonna have to build a Tesla Terafab, a very big fab that includes logic, memory, and packaging, domestically. And that's actually also gonna be very important to ensure that we are protected against any geopolitical risks. I think people may be underweighting some of the geopolitical risks that are gonna be a major factor in a few years. So, now, you know, a lot of people are like, "That's," will say, like, "That's crazy. Fabs are really hard." I'm like, "Yes, I know fabs are really hard.

<unk>.

Completing the AI five chip design and having it would be a great job with us.

So arguably the number one most critical thing to get done which is why I am spending more time on that than currently anything else at Tesla.

And, and, and we say, like, what's the most you could possibly make? Um, then it's—it's not enough. So,

So we, I think, in order to

Remove the constraint—then, the probable constraint in three or four years.

Spend pretty much every Saturday on on this end.

Uh, we were going to have to

And a chunk of every Tuesday, so its like a.

Build a Tesla Terrafab, a very big.

That.

Includes logic memory and packaging.

So anyway Saturdays on something.

Um,

It's going to be something pretty important.

Domestically. Um,

Five O b.

A very good shape.

And, uh, and that's actually also going to be very important to ensure that, um,

And I feel.

Quite confident about the design at this point.

We are protected against any geopolitical risks.

And then Asics, which will follow that there'll be.

Aspirational would follow that.

Travis Axelrod: Good afternoon, everyone, and welcome to Tesla's fourth quarter of 2025 Q&A webcast. My name is Travis Axelrod, Head of Investor Relations, and I'm joined today by Elon Musk, Vaibhav Taneja, and a number of other executives. Our Q4 results were announced at about 3 PM Central Time in the update deck we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please use the Raise Hand button to join the question queue.

Um, I think people may be underweighting some of the geopolitical risks that are, are—

Going to be.

Under a year.

Will be yet another big leap beyond AI five so I feel I feel pretty good about our <unk> strategy right now.

Uh, major factor in the, in a, in a few years.

so,

um,

<unk>.

And.

Elon Musk: I don't think they're easy." But we do a lot of hard things, you know? We didn't used to have car factories, so we didn't use to have battery cell factories or lithium refineries or, you know, Megapack factories or, you know, all these other things. We figured it out. So I think it's, I think we... If we don't do the Tesla Terafab, we're gonna be limited by supplier output of chips. And I think maybe memory is an even bigger limiter than AI logic.

I don't think they're easy." But we do a lot of hard things, you know? We didn't used to have car factories, so we didn't use to have battery cell factories or lithium refineries or, you know, Megapack factories or, you know, all these other things. We figured it out. So I think it's, I think we... If we don't do the Tesla Terafab, we're gonna be limited by supplier output of chips. And I think maybe memory is an even bigger limiter than AI logic.

But in terms of selling it outside of Tesla. It requesting you to make sure we have enough chips for the Boulevard vehicle production and all of our Optimus production.

Now, you know, a lot of people are like, they'll say, like, that's crazy—fabs are really hard. I'm like, yes, uh, I know fabs are really hard; I don't think they're easy.

Um, but

uh,

And then and then we will actually use the <unk> chips in our data centers.

We do, we do a lot of hard things. You know, we didn't used to have car factories that we didn't used to have.

These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please use the Raise Hand button to join the question queue. Before we jump into Q&A, Elon has some opening remarks. Elon?

Already use the AI for chips in our data centers. So when we do training, it's a combination of the <unk>.

We figured it out.

Chips and Nvidia hardware.

So, so, I think it's, uh,

Primarily that we do training with.

So.

But he said by the end of the decade.

That's like.

Uh, I think—I think if we don't do the test Tesla app, we're—we're going to be limited by, uh, supplier output of, um—

Travis Axelrod: Before we jump into Q&A, Elon has some opening remarks. Elon?

Things are changing so fast that it's hard to imagine what happens at the end of the decade.

Elon Musk: Thanks, Travis. So, we've updated the Tesla mission to amazing abundance, and this is intended to send a message of optimism about the future. I think we're most likely headed to an exciting, amazing era of abundance. And I think with the advent or with the continued growth of AI and robotics, I think we actually are headed to a future of universal high income. Not universal basic income, but universal high income. I mean, there's gonna be a lot of change along the way, but that is what I see as the most likely outcome. So I think that it makes sense to update Tesla's mission to reflect that goal.

Elon Musk: So, you know, for example, we have, we have, chip supply deals with TSMC in Arizona and Samsung in Texas, but currently there are no, advanced memory fabs at scale in the United States. There are zero, literally zero. Hopefully, you know, Micron will have something going in a few years, because they're all headquartered in Idaho, you know, where they make a lot of potato chips, and we need to make, computer chips, too. So, anyway, we're working, we're working with our strategic partners on the chip front, memory and logic. But I, I think, I think we, we, we gotta also try, try our hand at building, a, a large scale fab that integrates logic memory and, and, packaging.

So, you know, for example, we have, we have, chip supply deals with TSMC in Arizona and Samsung in Texas, but currently there are no, advanced memory fabs at scale in the United States. There are zero, literally zero. Hopefully, you know, Micron will have something going in a few years, because they're all headquartered in Idaho, you know, where they make a lot of potato chips, and we need to make, computer chips, too. So, anyway, we're working, we're working with our strategic partners on the chip front, memory and logic. But I, I think, I think we, we, we gotta also try, try our hand at building, a, a large scale fab that integrates logic memory and, and, packaging.

Of chips, and I think maybe memory is an even bigger, um, limit than AI logic.

I mean, we might.

so, um,

When I look ahead at let's say, what what's the limiting factor for Tesla growth.

You know, for example, we have, we have, uh,

If you go say.

Three or four years out I think it actually is chip production.

Is there enough.

Okay.

Okay enough air logic and enough.

Uh, chips supply deals with TSMC in Arizona and Samsung in Texas, but currently there are no, uh, advanced memory fabs at scale in the United States. There are zero, literally zero.

um, hopefully

Memory Ram tour.

You know, Micron will have something.

For our volume.

Going in a few years, because they all headquartered in Idaho, you know?

And.

And right now.

um, whether they make

I see that as being the thing that probably limits are.

A lot of potato chips, when we need to make computer chips, too. Um,

Our growth in.

so, um,

And three or four years.

Which would imply that we're not selling trips outside of Tesla.

As we need them.

Um, anyway, we're working with our strategic partners on the chip front—memory and logic. Uh, but I think, uh,

<unk>.

And.

Elon Musk: Obviously along that way, we're going to keep improving safety, driving down the cost of goods, and getting people access to anything they need, without compromise. So making sure that the environment is great, nature is great, and people can have whatever they want, which seems like probably the best future. So I'm open to other ideas, but that sounds like it sounds like if you could say, what is the best future you could possibly imagine? I guess it would be that everyone can have whatever they want, including amazing medical care. And but we still keep, you know, the beauty of nature and Earth. I think that's probably the best outcome.

And in fact I think.

Obviously along that way, we're going to keep improving safety, driving down the cost of goods, and getting people access to anything they need, without compromise. So making sure that the environment is great, nature is great, and people can have whatever they want, which seems like probably the best future.

I think we, we, we got to also try, try our hand at building. Um,

A a large scale.

I think it's going to make sense and this is definitely going to be a.

Elon Musk: And if we don't do that, we're just gonna be fundamentally limited by supply chain, especially if there's some geo- if, in a worst case geopolitical situation, it would be quite a severe situation. So I think we quite frankly, it'd be crazy not to try the Terafab. So, yeah.

Sort of a controversial.

And if we don't do that, we're just gonna be fundamentally limited by supply chain, especially if there's some geo- if, in a worst case geopolitical situation, it would be quite a severe situation. So I think we quite frankly, it'd be crazy not to try the Terafab. So, yeah.

Thing, but I think tesla needs to pull the tariff fab.

Fab that integrates logic, memory, and, uh, packaging. Uh, and if we don't do that, we're just going to be fundamentally limited by supply chain.

And I mentioned this at the shoulder.

Childhood meeting.

So I'm open to other ideas, but that sounds like it sounds like if you could say, what is the best future you could possibly imagine? I guess it would be that everyone can have whatever they want, including amazing medical care. And but we still keep, you know, the beauty of nature and Earth. I think that's probably the best outcome.

But.

Even when you look at the output of the best case output of all of our key suppliers and I'd say even.

Especially if there's some gap, if in a worst-case geopolitical situation, it would be quite, quite a severe situation. So I think we'd quite frankly be crazy not to try the Fab.

so, um,

Beyond suppliers are like strategic partners like Samsung and TSMC.

yeah.

Operator: Great.

Elon Musk: We'll have a bigger announcement on this in the future.

Micron.

The.

Operator: Awesome. With that, we're gonna move on to analyst questions. The first analyst is Emmanuel from Wolfe Research. Emmanuel, please feel free to unmute yourself.

Right, we'll have—we'll have a, we'll have a bigger announcement on this in the future.

Awesome.

And we say like what's the most you could possibly make.

Elon Musk: And we're seeing obviously the first steps along that way this year for Tesla, first major steps, as we increase vehicle autonomy and begin to produce Optimus robots at scale. We're making very, very big investments, so this is gonna be a very big CapEx year, as Baiba will get into. That is deliberate, because we're making big investments for an epic future. So I think all these investments make a lot of sense. We'll continue to make sure that when we do spend capital, it is spent very efficiently. But it's a lot of things. You know, major investments in batteries and the entire supply chain with batteries.

It's not enough.

And we're seeing obviously the first steps along that way this year for Tesla, first major steps, as we increase vehicle autonomy and begin to produce Optimus robots at scale. We're making very, very big investments, so this is gonna be a very big CapEx year, as Baiba will get into. That is deliberate, because we're making big investments for an epic future. So I think all these investments make a lot of sense. We'll continue to make sure that when we do spend capital, it is spent very efficiently. But it's a lot of things. You know, major investments in batteries and the entire supply chain with batteries.

So.

I think in order to.

And with that, uh, we're going to move on to analyst questions. Uh, the first analyst is Emmanuel from Wolfe Research. Uh, Emmanuel, please feel free to unmute yourself.

Remove the constraints the probable constraint in three or four years.

Emmanuel Rosner: Great. Thank you so much. It's Emmanuel Rosner from Wolfe Research. My first question is on the CapEx. You signal a pretty large increase to over $20 billion for this year. Was hoping to better understand where the investments are going. Any way to dimension for us which of the product line or technologies account for the bulk of the increase? And also, do you view this as, like, one time in nature, 2026? Or I guess, how much of this is an ongoing level of high spending for a number of years? And then just finally, still on that, with that level of spending, you're going to be burning cash. How should we think about your cash balance or any other way to finance this?

We're going to have to.

Bold at Tesla tariff Rab are very big.

That's.

That includes logic memory and packaging.

<unk>.

And.

That's actually also going to be very important to ensure that.

We are protected against any geopolitical risks.

I think people may be underwriting for some of the geopolitical risks that are.

Can it be.

A major factor in a few years.

So.

Elon Musk: So, we're also gonna be significant manufacturers of solar cells, and we're making massive investments in AI chips. But I think these all make a ton of strategic sense. And then I guess I have, like, one, I guess, not exactly- it's not exactly bad news, but it's... it's time to basically bring the Model S and X programs to an end with an honorable discharge. Because we're really moving into a future that is based on autonomy.

Now a lot of people like that.

So, we're also gonna be significant manufacturers of solar cells, and we're making massive investments in AI chips. But I think these all make a ton of strategic sense. And then I guess I have, like, one, I guess, not exactly- it's not exactly bad news, but it's... it's time to basically bring the Model S and X programs to an end with an honorable discharge. Because we're really moving into a future that is based on autonomy.

Great. Thank you so much. It's Emmanuel Rosner from Wolfe research. Uh, my first question is on the on the capex, uh you signal a pretty large increase to over a 20 billion dollars uh for this year. Um I was hoping to better understand where the Investments are going anyways to dimensions for us uh which of the product line or Technologies accounts for the bulk of the increase. And also, uh, you view this as like 1 time in nature of 2026 or I guess how much of this is an ongoing level of high spending for for a number of years and then just finally still on that. Um with that level of spending, you're going to be burning cash. How?

We'll say like that's crazy Fabs are really hard I'm like yes.

Vaibhav Taneja: Yeah. So, yeah, Emmanuel, I tried to put this in my opening remarks, too, but I'll try and go a little bit deeper. There's about six factories which we are starting production in this year, so there's a lot of cash CapEx which is going into that. Then, as we are trying to scale Optimus, we need a lot more compute, so we're putting more money towards compute as well. And then-

How should we think about cash balance, or any other way to finance this?

If I was really hard I don't think that easy.

But.

Uh huh.

Yeah, so, yeah, I mean, I tried to put this in my opening remarks too, but I'll try and go a little bit deeper.

We do we.

uh,

We do a lot of hard things, we didn't used to have car factories that we didnt used to have.

There's about 6 factorial, which we are.

Yourself factories or lithium refineries or.

Starting production in this year.

So, there’s a lot of cash.

Mega pack factories or.

Capex, which is going into that.

There's other things.

We figured it out.

So so I think it's.

Okay.

But I think if we don't do the test to the tariff App, we're going to be limited by <unk>.

Then, as we are trying to scale Optimus, we need a lot more compute, so we're putting more money towards compute as well.

Elon Musk: For training.

Vaibhav Taneja: For training.

Elon Musk: Yeah.

Vaibhav Taneja: Then we're also gonna be spending money to expand the capacity at, you know, at existing factories. On top of it, you know, we're not none of these numbers, which I shared of $20 billion, factor in anything to do with the solar fab or the semiconductor chip fab. Those would be, as Elon mentioned, would come later on. You think your second part of your question was, is this one-off or would we expect more? I think we're getting into this investment phase because we have big aspirations. When you look at it, some of these aspirations are, I call them as infrastructure play, especially if you have to do a chip fab and we have to do a solar manufacturing fab, those are infrastructure plays.

Supplier output.

Oh.

Chips and I think maybe memory is an even bigger.

And then for training, for training. Yeah. And then we're also going to be spending money to expand the capacity at, you know, at existing factories.

Limited then then AI logic.

Elon Musk: So if you're interested in buying a Model S and X, now would be the time to order it, because we expect to wind down S and X production in next quarter, and basically stop production of Model S and X next quarter. We'll obviously continue to support the Model S and X programs for as long as people have the vehicles, but we're gonna take the Model S and X production space in our Fremont factory and convert that into an Optimus factory, which will... with the long-term goal of having 1 million units a year of Optimus robots in the current SX space in Fremont.

On top of it, you know?

So if you're interested in buying a Model S and X, now would be the time to order it, because we expect to wind down S and X production in next quarter, and basically stop production of Model S and X next quarter. We'll obviously continue to support the Model S and X programs for as long as people have the vehicles, but we're gonna take the Model S and X production space in our Fremont factory and convert that into an Optimus factory, which will... with the long-term goal of having 1 million units a year of Optimus robots in the current SX space in Fremont.

So.

For example, we have we have.

Chip supply deals with TSMC, and Arizona, and Samsung in Texas, but but currently there are no.

We're just—keep in mind that we're not—none of these numbers, which I shared, of $20 billion, factors in anything to do with the solar fab or the semiconductor chip fab.

Advanced memory Fabs at scale in the United States, There are zero literally zero.

Those would be, as Elon mentioned, would come later on.

Hopefully.

Micron will have something.

Going in a few years.

Because they are headquartered in Idaho.

And you, you think, uh, your second part of your question was, is this one-off or would we, uh, expect more?

When they make.

A lot of potato chips, where we need to make computer chips too.

Yeah.

So.

And we're working we're working with our strategic partners on the chip front memory and logic.

Elon Musk: So that is slightly sad, but it's time to bring the SX programs to an end and shift really. It's part of our overall shift to an autonomous future. And my profile picture on X said for a few months there, "The future is autonomous." And so let's say with respect to Full Self-Driving and Robotaxi, and people are obviously following with very close attention the progress of FSD, and you can experience it for yourself. If you've got a Tesla, you can. You notice, really with every software update, the car gets better and better at autonomy.

So that is slightly sad, but it's time to bring the SX programs to an end and shift really. It's part of our overall shift to an autonomous future. And my profile picture on X said for a few months there, "The future is autonomous." And so let's say with respect to Full Self-Driving and Robotaxi, and people are obviously following with very close attention the progress of FSD, and you can experience it for yourself. If you've got a Tesla, you can. You notice, really with every software update, the car gets better and better at autonomy.

I think we're getting into this investment phase because we have big aspirations, and when you look at it, some of these aspirations are—I call them infrastructure play, especially if you have to do a chip fab.

But I think.

I think we got to also try to try our hand at building.

Vaibhav Taneja: That funding takes a little bit longer, and you would be in an investment cycle for a little bit longer. Initially, third part of your question was, how are we gonna fund it? Initially, obviously, we have over $44 billion of cash and investments on the books, so we'll use our internal resources. But there are ways where we can fund it, especially when we look at the Robotaxi fleet, because, you know, anytime you have a consistent stream of cash flow, you can go and get money from the banks. And we have had conversations with banks about it, and that is something how we're gonna do it.

And we have to do a solo settlement faction Fab; those are infrastructure plays.

That funding takes a little bit longer, and you would be in an investment cycle for a little bit longer. Initially, third part of your question was, how are we gonna fund it? Initially, obviously, we have over $44 billion of cash and investments on the books, so we'll use our internal resources. But there are ways where we can fund it, especially when we look at the Robotaxi fleet, because, you know, anytime you have a consistent stream of cash flow, you can go and get money from the banks. And we have had conversations with banks about it, and that is something how we're gonna do it.

A large scale.

Fab that integrates logic.

Logic memory and packaging.

And that, that funding takes a little bit longer, and you would be in an investment cycle for a little bit longer.

And if we don't do that we're just going to be fundamentally limited by supply chain.

Especially if there's some geo geopolitically.

Initially, uh, the third part of your question was, how are we going to fund that?

And in a worst case geopolitical situation would be quite quite a severe situation. So I think we.

Yeah.

Quite frankly, we'd be crazy not to try out the tariff tariff ads.

So.

Yeah.

Great.

We'll have a bigger announcement on this in the future.

Have a consistent stream of cash flow.

Awesome.

And with that we're going to move on to analyst questions.

You can go and get money from the banks.

The first analyst is Emmanuel from Wolfe Research Emmanuel please feel free to yourself.

Vaibhav Taneja: And then on the infrastructure play side, yeah, like I said, we don't have a number yet, but given that it's an infrastructure play, it's a longer tail. We will have to look at a little bit more in terms of how we fund it, whether it's through more debt or other means.

And then on the infrastructure play side, yeah, like I said, we don't have a number yet, but given that it's an infrastructure play, it's a longer tail. We will have to look at a little bit more in terms of how we fund it, whether it's through more debt or other means.

Elon Musk: And we're, you know, we're able to do our first rides with no safety monitor in the car in Austin. These are paid rides, so these were just sort of randomly selected paid rides with no safety monitor. I think maybe as of yesterday or so, we actually don't even have a chase car or anything like that. So these are just cars with no people in them, and no one's following the car in Austin. So we're obviously being very cautious about this 'cause we wanna have no injuries or serious accidents along the way.

And we have had conversations with banks about it, and that is something—how we're going to do it. And then on the infrastructure play side,

And we're, you know, we're able to do our first rides with no safety monitor in the car in Austin. These are paid rides, so these were just sort of randomly selected paid rides with no safety monitor. I think maybe as of yesterday or so, we actually don't even have a chase car or anything like that. So these are just cars with no people in them, and no one's following the car in Austin. So we're obviously being very cautious about this 'cause we wanna have no injuries or serious accidents along the way.

Yes.

Great. Thank you so much it's Emmanuel Rosner from Wolfe research.

Yeah, like I said, we don't have a number yet, but—

First question is on the on the Capex you signal a pretty large increase to over $20 billion for this year.

Given that, it's an infrastructure play. It's a longer tail. We will have to look at a little bit more in terms of how we fund it.

Whether it's through.

Was hoping to better understand where the investments are going any way to dimension for us which of the product line of technologies accounts for the bulk of the increase and also Oh do you view. This as like one time in nature of 2026 or I guess, how much of this is an ongoing level of high spending for for a number of years and then.

More debt or other means.

Operator: Great. Our next question comes from Andrew, from Morgan Stanley. Andrew, please feel free to unmute yourself.

Great. Uh, our next question comes from, uh, Andrew from Morgan Stanley. Andrew, please feel free to unmute yourself.

[Analyst] (Morgan Stanley): Great. Thanks so much for taking the question. I just wanna start on the xAI investment that you guys announced today. You know, you talked about there being some collaboration, you know, between the companies. So I'm just hoping to get more information or if you're hoping that you could shed more light on what that looks like and maybe how the work xAI is doing can be leveraged at Tesla and vice versa.

Just finally still on that with.

With that level of spending you are going to be burning cash.

How should we think about cash balance or any other way to finance this.

Elon Musk: So I think it makes sense to be very cautious, but you'll see the amount of autonomy increase dramatically, I think, every month, essentially. So, and then there will also be an opportunity, something we've talked about for a long time, for existing owners of Teslas to add or subtract their cars to the fleet. Kind of like how Airbnb works, where you can add or subtract your house to the Airbnb inventory. And I think probably the value of the Tesla, the sort of partial few people adding or subtracting the cost to Tesla autonomous fleet is probably a little underweighted by a lot of people because we've got millions of cars with AI4 that can do this.

So I think it makes sense to be very cautious, but you'll see the amount of autonomy increase dramatically, I think, every month, essentially. So, and then there will also be an opportunity, something we've talked about for a long time, for existing owners of Teslas to add or subtract their cars to the fleet.

Yeah. So.

And I'll, let time too.

This in my opening remarks, so, but I'll try and go a little bit deeper.

Vaibhav Taneja: Yeah, I mean, if you, if you've looked at the disclosure, which we also put in there, we do talk about this is literally a furtherance of our Master Plan 4. And even today, if you look at Tesla vehicles, we are using Grok in there. And as we look at things, whether we can do it ourselves, yes, there are a lot of things which we can do ourselves, but if there are things which xAI can help accelerate our progress, then why should we not do that? And that is the reason why we've gone ahead with such an investment, because this, this is part of the strategic initiative. Because as it is, if you remember, I talked about how many things which we are doing ourselves.

Great. Thanks so much for for taking the question. Um I I just want to start on the the xai investment that you guys announced today, you know, you talked about there, being some collaboration, you know, between the companies. So I'm just hoping to get more more information or or if you hoping you could shed more light on on what that looks like and and maybe how the work xai is doing uh can be leveraged at at Tesla and and vice versa.

Theres about six factories, which we are.

<unk> production. This year. So there is a lot of cash.

Yeah, I mean, if you—if you've looked at the disclosure, which we also put in there, we do talk about this is literally, uh, furtherance of our master plan for—

Capex, which is going into that.

And then as we are trying to scale.

And even today, if you look at Tesla vehicles,

Optimus, we need a lot more compute so we're putting more money towards compute as well.

We are using grow in there.

Kind of like how Airbnb works, where you can add or subtract your house to the Airbnb inventory. And I think probably the value of the Tesla, the sort of partial few people adding or subtracting the cost to Tesla autonomous fleet is probably a little underweighted by a lot of people because we've got millions of cars with AI4 that can do this.

and,

as we look at,

We're training for training.

And then we're also going to be spending money to expand the capacity at <unk>.

Things—whether we can do it ourselves. Yes, there are a lot of things which we can do ourselves, but if there are things which XI can help accelerate our progress,

Existing factories.

On top of it.

<unk>.

We're just.

Just keep in mind that we're not none of these numbers, which I shared of 20 million factor than anything to do it.

Then why should we not do that? And that is the reason why we've gone ahead with such an investment, because this is part of the strategic initiative.

because,

Solar fab or the.

Elon Musk: So, it's that it might potentially – I think it will provide an opportunity for a lot of customers to earn more by lending their car to the fleet than their lease cost to Tesla, which is kind of like, in that scenario, you basically get paid to own a Tesla. It's quite a good scenario. And we expect to have fully autonomous vehicles in, you know, probably, I don't know, somewhere between a quarter and half of the United States by the end of the year, pending regulatory approval. A big factor would be if there's some kind of federal preemption for autonomous vehicles.

So, it's that it might potentially – I think it will provide an opportunity for a lot of customers to earn more by lending their car to the fleet than their lease cost to Tesla, which is kind of like, in that scenario, you basically get paid to own a Tesla. It's quite a good scenario. And we expect to have fully autonomous vehicles in, you know, probably, I don't know, somewhere between a quarter and half of the United States by the end of the year, pending regulatory approval. A big factor would be if there's some kind of federal preemption for autonomous vehicles.

Vaibhav Taneja: If there are ways and means we can find efficient ways for others to help us, and xAI literally fits into that mold, so that's why we went ahead with it.

If there are ways and means we can find efficient ways for others to help us, and xAI literally fits into that mold, so that's why we went ahead with it.

As it is, if you remember, I talked about how many things which we are doing ourselves,

The semiconductor chip fab.

Those would be adding unmentioned would come later on.

If there are ways and means, we can find efficient ways.

For others to help us.

And you you think your second part of your question was is this one off would.

Elon Musk: And we just had, like, a lot of investors ask us to do this. There was, like, a lot of, you know, investor, the Tesla shareholders said, like, we should invest in xAI, so that's like, we're just doing what shareholders, like, asked us to do, pretty much. But Grok will be, you know, very helpful in, say, maximizing the efficiency of the management of a large autonomous fleet. So I mean, if you've got an autonomous fleet that's, you know, in the future, 10 million vehicles or tens of millions of vehicles, then optimizing the efficient use of that fleet, Grok will be, I think, way, way better than any heuristic solution, or sort of manually managed solution.

And actually, I literally fit into that mold, so that's why we went ahead with it.

It would be.

Expect more.

I think we're getting into this investment phase because we have big aspirations.

And we just had, like, a lot of investors ask us to do this, as there was, like, a lot of...

You know, investor.

And when you look at some of these aspirations are I'll call them as infrastructure in place, especially if you have to do to fab and.

And we have to do a solar cell manufacturing fab infrastructure plays.

And that net fund debt funding takes a little bit longer.

Uh, let's say the shareholders, say, like, we should, we should invest in xai so that's like, we're just doing what shoulders like, ask us to do pretty much. Um, but, but but will be, you know, it's very helpful in say maximizing, the efficiency of the management of the of a large autonomous Fleet. So,

And you would be net investment cycle for a little bit longer.

Initially bought third part of your question was how are we going to fund that.

Initially obviously, we have over 44 billion of cash and investments on our books. So we'll use our internal resources, but there are ways, where we can fund that.

If you’ve got an autonomous fleet that’s, you know, in the future—10 million vehicles or tens of millions of vehicles—then optimizing the efficient use of that fleet, uh, growth will be, uh, I think...

Elon Musk: In the absence of that, you kind of have to go on a city-by-city or state-by-state basis. But nonetheless, even if it is city-by-city, state-by-state, we expect to be in, you know, I don't know, dozens of cities, dozens of major cities by the end of the year. With respect to energy, the Tesla energy team has done incredible work, and the growth rate on that work is continuing to be very strong. And we're building more manufacturing capacity and expect that, yeah, and energy will have very high growth for really as far into the future as we can imagine. The solar opportunity is underestimated.

In the absence of that, you kind of have to go on a city-by-city or state-by-state basis. But nonetheless, even if it is city-by-city, state-by-state, we expect to be in, you know, I don't know, dozens of cities, dozens of major cities by the end of the year. With respect to energy, the Tesla energy team has done incredible work, and the growth rate on that work is continuing to be very strong. And we're building more manufacturing capacity and expect that, yeah, and energy will have very high growth for really as far into the future as we can imagine. The solar opportunity is underestimated.

Elon Musk: And if you say you're managing, say, a large team of Optimus robots to build a factory or build a refinery, you know, and, say, a hypothetical, like a. This is a hypothetical example, a rare earth ore refinery, which we do desperately need in America. Then, you'd say, well, who—like, what's gonna organize the Optimus robots to build that ore refinery? That would. You know, you kind of need an orchestra conductor. And so then Grok would be kind of the orchestra conductor for the Optimus robots to build the, hypothetically, and where it might, it might not be hypothetical in the future. I'm just saying it's not currently in our plans.

And if you say you're managing, say, a large team of Optimus robots to build a factory or build a refinery, you know, and, say, a hypothetical, like a. This is a hypothetical example, a rare earth ore refinery, which we do desperately need in America. Then, you'd say, well, who—like, what's gonna organize the Optimus robots to build that ore refinery? That would. You know, you kind of need an orchestra conductor. And so then Grok would be kind of the orchestra conductor for the Optimus robots to build the, hypothetically, and where it might, it might not be hypothetical in the future. I'm just saying it's not currently in our plans.

<unk> when we look at the Robo taxi fleet because.

Anytime anytime you have.

Consistent stream of cash flow.

Glenn get money from the banks and we have had conversations with banks about it.

And that is something how we are going to do it and then on the infrastructure side, yes.

Way, way better than any heuristic solution, um, or, or sort of manually managed solution. Um, and if you say you're managing, um, say, a large team of Optimus robots to build a factory or build a refinery, you know, and, and say a rare hypothetical like a—this is a hypothetical example—a rare earth, uh, or a refinery, um, which we do desperately need in, in, in America. Um,

Uh, then you, you say, well, who, who like, what's going to?

Like I said, we don't have a number yet but given that it's in some infrastructure plant longer tail. We will have to look at a little bit more in terms of how we fund it.

Organize, uh, the Optimist robots to build that or refinery. Um, that would, you know, you kind of need an orchestra conductor.

And so then Grok would be, uh, kind of the orchestra conductor for the Artemis robots to build the—

Whether it's through.

More debt.

Other meats.

Elon Musk: But, you know, we do, we do need a lot more ore refining capacity in the US. So then, what's gonna manage, let's say, 1,000 Optimus robots to do?

But, you know, we do, we do need a lot more ore refining capacity in the US. So then, what's gonna manage, let's say, 1,000 Optimus robots to do?

Okay.

Elon Musk: We think the best way to add significant capability to the grid is, or enormous to the grid, let's say it's powering AI data centers, is solar and batteries on Earth and solar in space. So that's why we're gonna work towards getting 100 gigawatts a year of solar cell production, integrating across the entire supply chain, from raw materials all the way to finished solar panels. Maybe a bit more about Optimus. We'll probably unveil Optimus 3 in a few months. And I think it's gonna be quite surprising to people. It's an incredibly capable robot. And as I mentioned, we are replacing the SX line in Fremont with a 1 million unit per year line of Optimus.

Hypothetically and rarely, it might—or it might not—be hypothetical in the future. I'm just saying it's not currently in our plans. But, um,

Right.

We think the best way to add significant capability to the grid is, or enormous to the grid, let's say it's powering AI data centers, is solar and batteries on Earth and solar in space. So that's why we're gonna work towards getting 100 gigawatts a year of solar cell production, integrating across the entire supply chain, from raw materials all the way to finished solar panels.

Our next question comes from Andrew from Morgan Stanley.

Please feel free to one years.

You know, we do need a lot more, um, oil refining capacity in the U.S. So,

Great. Thanks, so much for taking my question.

I just wanted to start on the Dx AI investment that you guys announced today, you're talking about there being some collaboration between the company. So I'm, just hoping to get more more information or if you're hoping that you could shed more light on what that looks like and maybe how the work <unk> doing can.

Then what's going to manage, they say, let's say a thousand Optimus robots, to do.

Operator: You're on mute right now, so I'm not sure if you're trying to ask a follow-up question. Ready?

You're on mute right now, so I'm not sure if you're trying to ask a follow-up question.

Can be leveraged at Tesla and vice versa, yes.

Maybe a bit more about Optimus. We'll probably unveil Optimus 3 in a few months. And I think it's gonna be quite surprising to people. It's an incredibly capable robot. And as I mentioned, we are replacing the SX line in Fremont with a 1 million unit per year line of Optimus.

Yes.

Operator: We're gonna move on to the next question, which is coming from Dan Levy at Barclays. Dan, please feel free.

We're gonna move on to the next question, which is coming from Dan Levy at Barclays. Dan, please feel free.

If you looked at the disclosure, which we also put in there. We do talk about this is literally furtherance of our master plan for.

Ready. We're gonna move on to the next question, which is coming from Dan Levy at Barclays.

And even today, if you look at Tesla vehicles.

Dan Levy: Great. Great, thank you. Elon, you talked about some of the constraints on memory. Given the very tight supply, are there any near-term constraints on procuring memory? And if there are, to what extent could you look at modifying the functionality in the vehicles, similar to what you did in 2021 when we saw shortages on MCUs? And maybe how are you thinking about bridging in the next few years?

And please feel free great.

We are using crock in there.

Great. Thank you. Um,

And.

As we look at.

Whether we can do it ourselves, we yesterday or last thing. So as we can do ourselves, but if there are things, which <unk> can help accelerate our progress.

Elon Musk: Now, because it is a completely new supply chain, it's just... There's really nothing from the existing supply chain that exists in Optimus. Everything is designed from physics first principles. So that means, the normal S-Curve of manufacturing ramp will be longer for Optimus than it is for products that have at least some portion of an existing supply chain. Like, when everything's new, the production rate will be proportionate to the least lucky, least confident part of the entire supply chain. And if there's 10,000 things that need to go right, it's, you know, it only takes one to be slow, to lag that.

Now, because it is a completely new supply chain, it's just... There's really nothing from the existing supply chain that exists in Optimus. Everything is designed from physics first principles. So that means, the normal S-Curve of manufacturing ramp will be longer for Optimus than it is for products that have at least some portion of an existing supply chain. Like, when everything's new, the production rate will be proportionate to the least lucky, least confident part of the entire supply chain. And if there's 10,000 things that need to go right, it's, you know, it only takes one to be slow, to lag that.

And why should we not do that and that is the reason why we've gone ahead with such an investment because this.

…in the vehicle, similar to what you did in '21, when we saw…

This is one of the strategic initiative.

Shortages on infused, and maybe how are you thinking about bridging in the next few years?

Elon Musk: Well, the Tesla AI is very compute efficient and very memory efficient. You know, so I think one of the metrics one should consider for any given AI model is the intelligence per gigabyte. Especially when you're constrained on RAM, having an AI that has very high intelligence density per gigabyte. So you can say, like, for a given number of gigabytes, how much functionality can you get out of it? I actually think Tesla is ahead of the rest of the world in intelligence density of AI by an order of magnitude or more. Like, this is gonna sound like a pretty bold statement, but I'm...

Cause.

As it is if you remember I talked about how many things, which we're doing ourselves.

Well, the Tesla AI is very computer efficient, and very memory efficient.

If there are ways and means we can find efficient ways for us.

Others to help us.

And <unk> fits into that old. So that's why we went headwind.

No.

Um, you know, so I think one of the metrics once you consider for, for any given, uh, AI model is, um, the intelligence per gigabyte. Um, especially when you're constrained on RAM, having, um, a

We just had like a lot of investors ask.

Ask us to do this.

There was like a lot of.

Investor.

But to the shareholders.

We should invest in <unk>. So that's why we're just doing what shareholders would like us to do pretty much.

An AI that has very high intelligence density per gigabyte. So, you can say, like, what, like, for a given number of gigabytes, how much functionality can you get out of it? Um, I actually think Tesla is ahead of the rest of the world in intelligence density of AI by—

But.

We'll be.

Elon Musk: But so it will be sort of a stretched out S-Curve, but I'm confident that we'll get to 1 million units a year in Fremont of Optimus 3. And this Optimus really will be a general purpose robot that can learn by observing human behavior. So you can, like, demonstrate a task or literally verbally describe a task or show it a task, even show it a video, and it will be able to do that task. So it's gonna be a very capable robot. I think long-term, Optimus will have a very significant impact on the US GDP. Like, it will actually move the needle on US GDP significantly.

Elon Musk: I kind of know what the, you know, what the intelligence efficiency of the big models are like Grok and you know a bunch of the other models, and Tesla's AI is like, in terms of its memory efficiency, I think, more than an order of magnitude better. So that puts us in a pretty good position, actually, for scaling. And we don't-- we actually do think that there's-- we do have a solution for logic and memory, for let's say the next roughly three years.

I kind of know what the, you know, what the intelligence efficiency of the big models are like Grok and you know a bunch of the other models, and Tesla's AI is like, in terms of its memory efficiency, I think, more than an order of magnitude better. So that puts us in a pretty good position, actually, for scaling. And we don't-- we actually do think that there's-- we do have a solution for logic and memory, for let's say the next roughly three years.

But so it will be sort of a stretched out S-Curve, but I'm confident that we'll get to 1 million units a year in Fremont of Optimus 3. And this Optimus really will be a general purpose robot that can learn by observing human behavior. So you can, like, demonstrate a task or literally verbally describe a task or show it a task, even show it a video, and it will be able to do that task. So it's gonna be a very capable robot. I think long-term, Optimus will have a very significant impact on the US GDP. Like, it will actually move the needle on US GDP significantly.

An order of magnitude or more. Like, this is going to sound like a pretty bold statement, but I'm—

Very helpful and.

I kind of know.

Maximizing the efficiency of the management of a large autonomous fleet. So I mean, if you got a autonomous fleet.

What the, you know?

And the future 10 million vehicles or tens of millions of vehicles, then optimizing the efficient use of that fleet.

We will be.

What the intelligence sufficiency of the of the big models are, like, grock and, and like the honest and and and, you know, bunch of the other models. And I, I I tell those AI is like, in terms of this, me, memory efficiency of I more than an order of magnitude better. Um,

Thanks.

Way way better than any heuristics solution.

so,

um,

Or sort of manually managed solution.

And if you said it.

Managing.

Yeah.

Large team of autonomous robots to both a factory or build a refinery.

So, so that puts us in a pretty good position, actually, for scaling. And we, we don't, we don't—actually, do we? We, we do think that there's...

And Sam <unk>.

We do have a solution for.

Types of hypothetical I suppose.

Hypothetical example.

Logic and memory. Um,

Our rare Earth.

For, let's say.

Refinery.

Elon Musk: But if you start going beyond three years, and we look at the scaling plans, and how many fabs are getting built, and especially if you factor in geopolitical uncertainty, you know, there's always, there's always risk that, maybe the, those chips don't arrive, that people were expecting to arrive. So that's, that's why I think we, we need to have more fab capacity in the US, just in case, you know, chips don't stop arriving for any reason. But, you know, this is, this is really existential for, for Tesla, because, if... You know, Optimus is completely useless without an AI chip. It's not like, you know, at least the cars, we can put steering wheels and pedals in, or retrofit them if need, if need be.

Which we do desperately need.

The next, uh, roughly three years.

But if you start going beyond three years, and we look at the scaling plans, and how many fabs are getting built, and especially if you factor in geopolitical uncertainty, you know, there's always, there's always risk that, maybe the, those chips don't arrive, that people were expecting to arrive. So that's, that's why I think we, we need to have more fab capacity in the US, just in case, you know, chips don't stop arriving for any reason. But, you know, this is, this is really existential for, for Tesla, because, if... You know, Optimus is completely useless without an AI chip. It's not like, you know, at least the cars, we can put steering wheels and pedals in, or retrofit them if need, if need be.

um,

In America.

Then.

You said.

Like what's going on.

Elon Musk: So, in conclusion, you know, there's still obviously many who doubt our ambitions for creating amazing abundance, but we're, we're confident, it can be done and that we're making the right moves technologically to ensure that it does. Tesla's obviously never been a company to shy away from solving some of the hardest problems. You know, it's, I think that's kind of how you build value in a company, is you solve hard problems. Like, I don't know how you create value by solving easy problems. So there's, there's a lot of hard problems that the Tesla team is gonna solve, but it's an incredibly talented, hardworking team. And I'd, I'd like to thank, actually, everyone at Tesla for their, their incredible hard work.

So, in conclusion, you know, there's still obviously many who doubt our ambitions for creating amazing abundance, but we're, we're confident, it can be done and that we're making the right moves technologically to ensure that it does. Tesla's obviously never been a company to shy away from solving some of the hardest problems.

Organize.

If you start going beyond 3 years and we look at the scaling plans, um, and how many factories are getting built, and especially if you factor in—

The Artemis robust build out or refinery.

Geopolitical uncertainty. Um,

That would you need Canada and orchestra conductor.

And so then the clock would be.

The orchestra conductor afford the occupants robots to bolt.

You know, there's always—there's always risk that maybe those chips don't arrive, uh, that people were expecting to arrive.

Um,

Hypothetically.

Wherever it might it might not be hypothetical in future I'm, just saying, it's not a <unk> on our plans.

So that's, uh, that's why I think we—we need to have more fab capacity in the US, just in case, uh,

But.

You know that.

You know, chips don't stop arriving before any reason.

We do we do need a lot more.

You know, it's, I think that's kind of how you build value in a company, is you solve hard problems. Like, I don't know how you create value by solving easy problems. So there's, there's a lot of hard problems that the Tesla team is gonna solve, but it's an incredibly talented, hardworking team. And I'd, I'd like to thank, actually, everyone at Tesla for their, their incredible hard work. It's an honor to work with such a talented group. Thank you to everyone who is supporting this mission. The future is more exciting than you can imagine.

um,

Or refining capacity in the U S. So.

Then what is going to manage they say at let's say 1000 Optimus robots.

But, you know, this is really existential for Tesla because, uh, if

Two.

Elon Musk: But, but, Optimus is just a mannequin without, you know, it's like the Tin Man or whatever, from The Wizard of Oz, but even worse, at least the Tin Man could walk. Optimus won't even be able to, will just sit there, without an AI chip. So we've got a good solution for a significant scale through, you know, for the next, roughly three years. Beyond that, we will be supplier limited, and so we've got to figure out some game plan to not be supplier limited.

But, but, Optimus is just a mannequin without, you know, it's like the Tin Man or whatever, from The Wizard of Oz, but even worse, at least the Tin Man could walk. Optimus won't even be able to, will just sit there, without an AI chip. So we've got a good solution for a significant scale through, you know, for the next, roughly three years. Beyond that, we will be supplier limited, and so we've got to figure out some game plan to not be supplier limited.

You know, Optimus is completely useless without an AI chip. It's not like, you know, at least with the cars, we can put steering wheels and pedals in, or retrofit them if need be, but—

Okay.

Uh, but Optimus is just a mannequin, you know? It's like the Tin Man or whatever. Um,

Youre on mute right now so I'm not sure if youre trying to ask a follow up question.

Elon Musk: It's an honor to work with such a talented group. Thank you to everyone who is supporting this mission. The future is more exciting than you can imagine.

From The Wizard of Oz. But, but even worse. These are 10, man, could walk. Um,

And we're going to move on to the next question is coming from Dan Levi at Barclays.

Optimus won't even be able to just sit there, um, without an AHF. So we—we've got a good solution for—

Travis Axelrod: Fantastic. Thank you so much, Elon. And next, we have some remarks from Vaibhav. Go ahead.

A significant scale-through, you know, for the next, uh, roughly three years.

Beyond that. Uh,

Vaibhav Taneja: Thanks, Travis. So Q4 2025 was an interesting quarter in a couple of respects. On the autos front, while in Q3, we saw a surge in US demand before the IRA consumer credit cliff, pulling in some demand from Q4. In other parts of the world, we saw an increase in demand, leading to record deliveries in smaller countries like Malaysia, Norway, Poland, Saudi Arabia, and Taiwan, while continued strength in the rest of APAC and EMEA. We therefore ended 2025 with a bigger backlog than in recent years. Note that none of these countries have the latest version of FSD supervised available yet. On the storage front, we had yet another record in terms of deployments. I would like to thank our customers and Tesla in continuing this momentum.

And now please feel free up great.

Great.

We will be supply limited. Um, and so we've got to figure out some game plan to not be supplier limited.

Operator: Great. Our next question is gonna come from George at Canaccord. George, please feel free to unmute yourself.

The constraint.

Sorry.

Very tight supply.

Are there any near term constraints on procuring Emory and if there are.

Great. Um, our next question is going to come from George at Canaccord. George, please feel free to unmute yourself.

[Analyst] (Canaccord): Hi, everyone. Thank you for taking my question. So, yeah, there's been a surge of startups, particularly from China, entering the humanoid market, and just wondering what the long-term competitive advantages that keep Tesla ahead are, and how, based on what you've seen, will Optimus fundamentally differ from these competitors? Thank you.

Hi everyone. Thank you for joining.

To what extent.

Question.

You look at the bottom line.

<unk> similar to what.

Alright, Thanks, Alan maybe.

So yeah, there's been a surge of startups, particularly from China, entering the humanoid market, and

How are you thinking about bridging in the next two years.

We therefore ended 2025 with a bigger backlog than in recent years. Note that none of these countries have the latest version of FSD supervised available yet. On the storage front, we had yet another record in terms of deployments. I would like to thank our customers and Tesla in continuing this momentum. On the automotive margins front, automotive margins, excluding credits, improved sequentially from 15.4% to 17.9%. The automotive gross profit was flat sequentially, despite 16% lower deliveries, primarily due to regional mix, as we had proportionately more deliveries in APAC and EMEA.

Well with.

The test the AI is very computer.

Memory discussion.

Wondering what the long-term competitive advantages are that keep Tesla ahead, and how, based on what you've seen, will Optimus fundamentally differ from these competitors. Thank you.

So I think one of the metrics one for.

Elon Musk: ... Well, I do think that by far the biggest competition for humanoid robots will be from China. China is incredibly good at scaling manufacturing, actually quite good at AI, as you can see from, you know, the open source or not the open source, but the sort of-- I guess some of them are open, actually. But basically, the models that China is distributing for free are actually quite good, and they keep getting better. So China is very good at AI, very good at manufacturing, and will definitely be the toughest competition for Tesla. To the best of our knowledge, we don't see any significant competitors outside of China. But China will definitely be tough competition.

For AI.

AI model is.

Well, I do think that the—

The intelligence per gigabyte.

Especially when you're constrained around having.

Or, by far the biggest competition for humanoid robots will be from China. Um, China is incredibly good at scaling manufacturing.

um,

And AI that has very high intelligence density per gigabyte, so actually I like what like for given under gigabytes, how much functionality can you get out of it.

Vaibhav Taneja: On the automotive margins front, automotive margins, excluding credits, improved sequentially from 15.4% to 17.9%. The automotive gross profit was flat sequentially, despite 16% lower deliveries, primarily due to regional mix, as we had proportionately more deliveries in APAC and EMEA. As we look to 2026, with the progress that has been made with autonomy, our focus is on ramping production at all our factories. Our biggest constraint globally continues to be on the battery pack front. While our teams have been creative in trying to resolve the situation by now putting 4680 cells in non-structural packs, we continue to iterate improving things from here on. FSD adoption continued to improve in the quarter, reaching nearly 1.1 million paid customers globally. Of these, nearly 70% were upfront purchases.

Actually, quite good at AI, as you can see from—

I actually think Tesla is ahead of the rest of the world.

Intelligence density of AI by it.

And order of magnitude or more like it's this is going to sound like a pretty bold statement, but I'm.

I kind of know.

What the.

As we look to 2026, with the progress that has been made with autonomy, our focus is on ramping production at all our factories. Our biggest constraint globally continues to be on the battery pack front. While our teams have been creative in trying to resolve the situation by now putting 4680 cells in non-structural packs, we continue to iterate improving things from here on. FSD adoption continued to improve in the quarter, reaching nearly 1.1 million paid customers globally. Of these, nearly 70% were upfront purchases.

What the intelligence sufficiency of the Big models are like rock and honestly and a bunch of the other malls.

You know, the the open source or not, the open source, but the, the sort of, I guess some of them are open actually. Um, but but basically the, the, the the models that China is Distributing for free, um, are actually quite good and they keep getting better. So, China is very good at AI, very good at manufacturing. Um, and and will definitely be the the toughest competition for Tesla. We to the best of our knowledge. We, we don't see any

Significant competitors.

And I totally.

Outside of China. Um,

Okay.

Elon Musk: There's no two ways about it. So, I always think, like, people sort of outside of China kind of underestimate China. China is an ass kicker next level. So, you know, I guess, you know, we're gonna build... We think Optimus will be much more capable than any robot that we are aware of under development in China. So we think we'll be ahead in terms of the real-world intelligence, the electromechanical dexterity, especially the hand design, which is by far the hardest thing in the robot. And in fact, I'd say there's really three hard things about humanoid robots.

Okay.

Uh, but China will definitely be tough competition. There's

There's no two ways about it. So, I always think, like, people sort of outside of China kind of underestimate China. China is an ass kicker next level. So, you know, I guess, you know, we're gonna build... We think Optimus will be much more capable than any robot that we are aware of under development in China. So we think we'll be ahead in terms of the real-world intelligence, the electromechanical dexterity, especially the hand design, which is by far the hardest thing in the robot. And in fact, I'd say there's really three hard things about humanoid robots.

Better.

There's no two ways about it.

So.

Um,

Okay.

so, um,

Okay.

Got it.

I I always think like people, uh, sort of outside of China, kind of kind of underestimate China. Um,

Yeah.

Do you think.

We're trying to just ask, like, our next level, so

Okay.

um,

Logic and memory.

You know, I guess—you know.

Yes.

For let's say.

Vaibhav Taneja: It is important to note that beginning this quarter, we are transitioning fully to a subscription-based model for FSD. Therefore, net additions to this figure will primarily be via subscription model and, in the short term, will impact automotive margins. On the energy front, we achieved yet another record in terms of gross profit for the quarter and ended the year with nearly $12.8 billion in revenue at 26.6% year-over-year growth. This was the result of high deployments in all regions and continued strength and demand for both Megapack and Powerwall. As we look at 2026, our backlog remains strong, well-diversified globally, and we expect increasing deployments with the launch of Megapack 3 and Megablock. However, we expect margin compression from the increased low-cost competition, impacts to market from policy uncertainty, and the cost of tariffs.

It is important to note that beginning this quarter, we are transitioning fully to a subscription-based model for FSD. Therefore, net additions to this figure will primarily be via subscription model and, in the short term, will impact automotive margins. On the energy front, we achieved yet another record in terms of gross profit for the quarter and ended the year with nearly $12.8 billion in revenue at 26.6% year-over-year growth.

Thanks, Don.

Three years.

But if you start going beyond three years, and we look at the scaling plans.

We, we’re going to build. We, we think, we think Optimist will be much more capable than any robot that we are aware of under development, uh, in China.

um,

Perhaps you're getting and has very few factor in <unk>.

Geopolitical uncertainty.

Uh, real world intelligence.

There's always there's always risk that.

But those chips don't arrive that people were starting to arrive.

Uh, the electromechanical dexterity, especially the hand design, which is—

So that's a that's why I think we need to have more capacity in the U S.

A by far the hottest thing in the robot. And in fact, I tell this, there's—there's really...

Just in case.

Elon Musk: The building an incredible hand that has those same degrees of freedom and dexterity as a human hand is an incredibly difficult engineering challenge. Then there's the real-world AI and scaling production. Those are the three hardest problems by far for humanoid robots. And I think we're Tesla has is the only company with that actually has all three of those components. So yeah.

No chips don't stop rising for any reason.

Uh, three hard things about, uh, humanoid robots. The

The building an incredible hand that has those same degrees of freedom and dexterity as a human hand is an incredibly difficult engineering challenge. Then there's the real-world AI and scaling production. Those are the three hardest problems by far for humanoid robots. And I think we're Tesla has is the only company with that actually has all three of those components. So yeah.

building a

This was the result of high deployments in all regions and continued strength and demand for both Megapack and Powerwall. As we look at 2026, our backlog remains strong, well-diversified globally, and we expect increasing deployments with the launch of Megapack 3 and Megablock. However, we expect margin compression from the increased low-cost competition, impacts to market from policy uncertainty, and the cost of tariffs.

But this is this is really ex essential fourth for Tesla because of if.

Optimists as completely useless without an AI chip, it's not like.

Products with commercial metals.

Littleton.

Correct me if need be but.

An incredible hand that has those same degrees of freedom and dexterity as a human hand is an incredibly difficult engineering challenge. Um, then there's the, uh, real world AI, uh, and scaling production. Those are the three—

But this.

And this is just a mechanic and without.

Artist problems, by far, for humanoid robots.

Like the tinman or whatever.

Okay.

Yeah.

Um, I think, where Tesla has—it's the only company that actually has all three of those components.

Martin I was wondering sort of split there.

Um,

Vaibhav Taneja: Services and others margin declined from 10.5% to 8.8%, primarily from higher employee-related costs for service centers as we start preparing for the ramp in activity from the growth in the fleet size. We did see an improvement in margin from our Supercharging business, which is included within services and other. Additionally, note that our Robotaxi business-related costs, while not material, are also included within this. Given that this, we're still in the early phase of our fleet deployment and are still doing a lot of validation testing, the revenue and cost per mile metrics are not meaningful to discuss at the moment. Then on total gross margin front, you know, we ended the quarter with over 20.1%, something which we haven't achieved for over the last two years.

Services and others margin declined from 10.5% to 8.8%, primarily from higher employee-related costs for service centers as we start preparing for the ramp in activity from the growth in the fleet size. We did see an improvement in margin from our Supercharging business, which is included within services and other.

Operator: Great. And our last question is gonna come from Colin at Oppenheimer. Colin, please feel free to unmute yourself.

Thank you.

We've got a good solution for them.

Our significant scale through for the next phase.

So, yeah, great. And our last question is going to come from Colin at Oppenheimer.

Yes.

Colin, please feel free to unmute yourself.

[Analyst] (Oppenheimer): Thanks so much. Guys, you know, you talked a lot about the CapEx spend, but, you know, this is an incredibly ambitious technology development program that you're talking about. Can you talk a little bit about the R&D spend and how you're thinking about the synergies of the different components, you know, particularly on the hardware side? You know, if you think about, you know, batteries into chips, into memory, and the efficiency of the system, and what sort of advantages you think you'll end up getting out of, you know, some of these purpose-built devices that you'll end up integrating into multiple end markets?

Beyond that.

<unk>.

We will be supplier limited.

And so we've got to figure out some game plan to not be supplier limited.

Great. Our next question is going to come from Georgia, Canaccord, Georgia, Please feel free to Hanmi yourself.

Additionally, note that our Robotaxi business-related costs, while not material, are also included within this. Given that this, we're still in the early phase of our fleet deployment and are still doing a lot of validation testing, the revenue and cost per mile metrics are not meaningful to discuss at the moment. Then on total gross margin front, you know, we ended the quarter with over 20.1%, something which we haven't achieved for over the last two years.

Everyone. Thank you for taking my my question so.

Third startups, particularly from China entering the humanoid market.

Thanks so much. Um, because, you know, you talked a lot about the capex then, but, um, you know, this is an incredibly ambitious technology development program that you're talking about. Can you talk a little bit about the R&D spend, and how you're thinking about the synergies of the different components? You know, particularly on the hardware side? Um, you know, if you think about, you know, batteries into chips in the, in the memory, and the efficiency of those systems, and what sort of advantages you think you'll end up getting out of, um, you know, some of these purpose-built, uh,

Just wondering what the long term competitive advantages.

Devices that you'll end up integrating into multiple end markets.

Tesla ahead are and how based on what you've seen will optimists fundamentally differ from these competitors. Thank you.

Elon Musk: Well, really, all we're trying to do is make sure that we can scale to very high volume with autonomous vehicles, with humanoid robots, and that we address geopolitical risk, which I think, you know, there's so many companies out there that are asleep with the switch with regard to geopolitical risk. They're like... Or they just have their head in the sand and hope nothing bad will happen. I'm way more paranoid than that. I always think of Andy Grove's famous statement, "Only the paranoid survive." And why did he come up with that statement at Intel? Let's think. So I'm, I think, there's a lot of wisdom in that statement.

Well, really, what we're trying to do is make sure that

We, we can, uh, scale to very high volume.

Well I do think that the.

Vaibhav Taneja: This improvement came despite the impact of lower fixed cost absorption and the impact of tariffs, which were in excess of $500 million in Q4. Operating expenses increased sequentially, primarily from increased Stock-Based Compensation for employees, and as we started recording charges on, for one operational milestone under our 2025 CEO Performance Award, that was deemed to be probable over the long term. Additionally, our spend on AI-related initiatives and new products like Cybercab, Semi, Optimus, and Megapack, et cetera, continues to be at elevated levels, and we expect this trend to continue for the full year 2026. Net income was negatively impacted from mark-to-market charges on a Bitcoin holding, which depreciated 23% as compared to the last quarter, and the unfavorable impact of FX effects, primarily from our large Intercompany Borrowings.

This improvement came despite the impact of lower fixed cost absorption and the impact of tariffs, which were in excess of $500 million in Q4. Operating expenses increased sequentially, primarily from increased Stock-Based Compensation for employees, and as we started recording charges on, for one operational milestone under our 2025 CEO Performance Award, that was deemed to be probable over the long term.

By both by far the biggest competition for humanoid robots will be from China.

With autonomous vehicles, with humanoid robots.

And, uh, and, and that we—

China is incredibly good at scaling manufacturing.

Uh, address. Um

Actually quite good at AI as you can see from that.

Geopolitical risk, um, which I think?

The open source or not they are absorbed but the sort of I guess some of them are open actually.

You know.

But basically the the models that China's distributing for free.

There are so many companies out there that are asleep at the switch with regard to geopolitical risk.

Are actually quite good and they keep getting better so China is very good at AI very good at manufacturing.

Uh, they're like, or just have their head in the sand and hope nothing bad will happen.

Um,

Additionally, our spend on AI-related initiatives and new products like Cybercab, Semi, Optimus, and Megapack, et cetera, continues to be at elevated levels, and we expect this trend to continue for the full year 2026. Net income was negatively impacted from mark-to-market charges on a Bitcoin holding, which depreciated 23% as compared to the last quarter, and the unfavorable impact of FX effects, primarily from our large Intercompany Borrowings.

And we'll definitely be the toughest competition for Tesla.

I'm wearing more paranoid than that. Um, I always think of Andy Grove's famous, 'Only the paranoid survive.'

So to the best of our knowledge, we don't see any <unk>.

Significant competitors.

Outside of China.

But China will definitely be b retail competition is.

Elon Musk: So we're gonna be paranoid, and make sure that we can continue to build batteries, robots, and AI chips, no matter what happens. Companies that don't do that, a bunch of them will cease to exist.

You know, why did he come up with that statement at Intel? Let's think. Um, so I think there's a lot of wisdom in that statement.

So we're gonna be paranoid, and make sure that we can continue to build batteries, robots, and AI chips, no matter what happens. Companies that don't do that, a bunch of them will cease to exist.

There's no two ways about it.

Um, so we're going to be paranoid.

So.

Uh, and make sure that, uh, we can continue to build.

I was thinking like two people.

Sort of outside of China can honors to underestimate China.

Uh, batteries and robots and AI chips, no matter what happens.

Um,

China's NASCAR next level so.

And companies that don't do that.

Vaibhav Taneja: On the free cash flow front, we ended up at $1.4 billion. You know, we did end up CapEx being slightly below our previous guidance of $9 billion. But like, as Elon already mentioned, this year is gonna be a huge investment year from a CapEx perspective. And at the moment, we are expecting that CapEx will be in excess of $20 billion. You know, we'll be paying for six factories, namely the refinery, LFP factory, Cybercab, Semi, a new mega factory, and the Optimus factory. On top of it, we will also be spending money for building our AI compute infrastructure, and we will continue investing in our existing factories to build more capacity. And then, you know, also the related infrastructure along with it. And we'll also further expand our fleet of Robotaxi and Optimus.

On the free cash flow front, we ended up at $1.4 billion. You know, we did end up CapEx being slightly below our previous guidance of $9 billion. But like, as Elon already mentioned, this year is gonna be a huge investment year from a CapEx perspective. And at the moment, we are expecting that CapEx will be in excess of $20 billion.

A bunch of them will cease to exist.

Vaibhav Taneja: Yeah, I mean, remember, all this comes out of necessity. It's not that we want to do it-

I guess it.

We were going to build what we think are optimists will be much more capable than any robot that we're aware of under development.

Elon Musk: Yeah.

Vaibhav Taneja: - It's just we have, we have no choice.

Elon Musk: Yeah. I mean, we built the most advanced lithium refinery in the world, by the way. So it's not just... Like, our lithium refinery in Corpus Christi is not just a copy of what others have done. It's an entirely new process that is fundamentally more efficient and more advanced than anything else in the world. The same is true of our cathode refinery here in Austin. We wish others would build this. Can other people please, for the love of God, -

In China.

So we think we will be ahead in terms of the.

Real World Intelligence.

The electromechanical dexterity, especially the hand design, which is a.

You know, we'll be paying for six factories, namely the refinery, LFP factory, Cybercab, Semi, a new mega factory, and the Optimus factory. On top of it, we will also be spending money for building our AI compute infrastructure, and we will continue investing in our existing factories to build more capacity. And then, you know, also the related infrastructure along with it. And we'll also further expand our fleet of Robotaxi and Optimus.

Yeah, I mean remember all this comes out of necessity. It's not that we want to do it. It's just we are we have no choice. Yeah. I mean, we both the most advanced lithium refinery in the world, by the way. It's not just like I wrote lithium refinery in Corpus. Christi is not just a a copy of what others have done. It's it's an entirely new process that is fundamentally more efficient and more advanced than anything else in the world.

The same is true of our cathode refinery here in Austin.

Um,

By far the hardest thing in the robot.

and um,

Okay.

And we wish others would. Well, this can help other people, please.

The hard things about.

Vaibhav Taneja: Help?

Elon Musk: In the name of all that is holy, can others please build this, build this stuff?

Humanoid robots for.

But building a.

Vaibhav Taneja: It's not the first time, guys. Exactly. I mean, this is not the first time we've said something like this.

An incredible hand that it has the same degrees of freedom and dexterity to Manhattan.

Elon Musk: Like, why do we have to build these things? Why can others not also... Please, can some others build these things? Well, I mean, this is. It's very hard to build these things. And we build them out of desperation, not for, not because nobody else is building lithium refineries and cathode refineries. You know, we're, we're pretty much the, not just the largest, but also the only, lithium refinery and cathode refinery in America. So, yeah. So we're, we're making moves to make sure that no matter what happens, Tesla will prosper.

And incredibly difficult engineering challenge.

Then there's the <unk>.

World AI and and scaling production those are the three.

For the love of God, help—in the name of all that is holy and others. Please build this, build this stuff. It's not the first time you go. Exactly. I mean, this is not the first time you've said something like this. Like, why do we have to put these things? Why can't others not? Also, please consider us—all these things. Well, I mean, this is very hard to build, these things.

Vaibhav Taneja: While this may seem a lot, we believe this is the right strategy to position the company for the next era, and we'll make such investments, as Elon mentioned, in a very capital-efficient manner. Note that this does not include potential investments in solar cell manufacturing or our Terafab, as we are still in early phase, and we plan to provide an update in future quarters. We're starting not the next chapter, but a new book on the progression of this company. 2026 year will be when all of this began. While at times it feels daunting, it is going to be the most exciting change in Tesla's history, and we could not have even dreamed of embarking on this journey without the support of our customers and our investors. Thanks for again showing the confidence in us, and let's get ready for a future of amazing abundance. Thanks.

While this may seem a lot, we believe this is the right strategy to position the company for the next era, and we'll make such investments, as Elon mentioned, in a very capital-efficient manner. Note that this does not include potential investments in solar cell manufacturing or our Terafab, as we are still in early phase, and we plan to provide an update in future quarters. We're starting not the next chapter, but a new book on the progression of this company.

um,

Hardest problems by far for humanoid robots.

I think we're the only company that actually has all three of those components.

And we will, out of desperation. Not for— not because— no, nobody else is building lithium refineries and cathode refineries. Um,

You know.

Yeah.

We're pretty much the—not just the largest, but also the only, um, lithium refinery in California, refinery in America.

And our last question is going to come from calling at Oppenheimer.

um, so

um,

Colin please feel free to Hanmi yourself.

yeah. So

Thanks, so much.

You talked a lot about the capex spend.

We're making moves to make sure that, no matter what happens, Tesla will prosper.

It's incredibly ambitious technology development program Youre talking about is that okay.

Operator: Great. Unfortunately, that's all the time we have for Q&A today. We really appreciate everyone's questions, and we look forward to talking to you next quarter. Thank you very much, and goodbye.

2026 year will be when all of this began. While at times it feels daunting, it is going to be the most exciting change in Tesla's history, and we could not have even dreamed of embarking on this journey without the support of our customers and our investors. Thanks for again showing the confidence in us, and let's get ready for a future of amazing abundance. Thanks.

Spend and how you're thinking about the synergies.

Opponents.

Great. Unfortunately, that's all the time we have for Q&A today. We really appreciate everyone's questions and we look forward to talking to you next quarter. Thank you very much, and goodbye.

Elon Musk: All right, cool.

Okay.

Yeah.

All right, cool.

Into the chips in the memory.

Alright. Thanks.

Some of these purpose built devices.

Okay.

Yes.

Travis Axelrod: ... Great. Thank you very much, Vaibhav. Now we're gonna head over to investor questions. As always, we will start with questions from say.com. The first question is: Today, there are approximately 90 million cars sold globally each year. Does Tesla have a view based on its Robotaxi ambition, what this number will be in 5 or 10 years? And how does this impact Tesla's EV strategy to have more models?

Yeah.

Well.

We're trying to do is make sure that we can.

Scale too.

With autonomous vehicles with a humanoid robots.

And.

And that we.

My address.

Geopolitical risk.

Okay.

I think.

Great.

Lars Moravy: Yeah, thanks, Travis. As Elon said, the future is autonomous, and obviously, autonomy and Cybercab are going to change the global market size and mix quite significantly. I think that's quite obvious. You know, general transportation is gonna be better served by autonomy, as it will be safer and cheaper, and over 90% of vehicle miles traveled are with two or less passengers now, which is why we designed Cybercab that way. In this new autonomous market, we at Tesla have the advantage of efficiency, cost, and manufacturing at scale that really no one else has, and we've built that over the last decades. We believe that that segment that we are creating will grow 1 million year-over-year.

[Video Narrator 1]: Yeah, thanks, Travis. As Elon said, the future is autonomous, and obviously, autonomy and Cybercab are going to change the global market size and mix quite significantly. I think that's quite obvious. You know, general transportation is gonna be better served by autonomy, as it will be safer and cheaper, and over 90% of vehicle miles traveled are with two or less passengers now, which is why we designed Cybercab that way.

There's so many companies out there that are.

Geopolitical risk geopolitical risk.

Or are you just have.

Okay.

We're more paranoid than that.

Randy.

MS statement only the paranoid survive.

And why did it come up with that statement.

In this new autonomous market, we at Tesla have the advantage of efficiency, cost, and manufacturing at scale that really no one else has, and we've built that over the last decades. We believe that that segment that we are creating will grow 1 million year-over-year.

[laughter] Hum.

Thanks.

So I think.

There's a lot of wisdom in that statement.

So we're going to be.

Elon Musk: Yeah. Just to add to what Lars said there, the point that Lars made, which is that 90% of miles driven are with one or two passengers or one or two occupants, essentially, is a very important one. Because that implies that the Cybercab, which is a dedicated, you know, two-seater or dedicated Robotaxi. It's a little confusing with the terms Robotaxi and Cybercab. Sorry about the confusion, but in fact, in some states, we're not allowed to use the word cab or taxi, so it's gonna get even more strange. It's gonna be like Cyber vehicle or something, Cybercar.

We continue to bolt.

Batteries and robots and AI chips, no matter what happens.

And companies that don't do that.

A bunch of them will cease to exist.

Yes, I mean remember all this comes out of necessity, it's not that we want to do it.

We have no choice yeah, I mean, we bought the most advanced lithium refinery in the world by the way. So it's not just like lithium refinery in Corpus Christi is not just a copy of what others have done it. It's an entirely new process that is fundamentally more efficient and more advanced than anything else in the world.

Sorry about the confusion, but in fact, in some states, we're not allowed to use the word cab or taxi, so it's gonna get even more strange. It's gonna be like Cyber vehicle or something, Cybercar. But the Cybercab, which is a specific vehicle model that we're making, does not have a steering wheel or pedals. So this is clearly, you know, there's no fallback mechanism here.

The same is true of our of our cathode refinery here in Austin.

And.

Elon Musk: But the Cybercab, which is a specific vehicle model that we're making, does not have a steering wheel or pedals. So this is clearly, you know, there's no fallback mechanism here. It's like this car either drives itself or it does not drive. And we expect to start production in April. As always, it's an S-Curve of the production rate, so starts off very slowly and then grows exponentially, then you hit the linear, and then ultimately, you know, it asymptotes at whatever your target volume is. So, but we would expect over time to make far more Cybercabs than all of our other vehicles combined, given that 90% of distance driven or distance being-

And we wish others would publish.

Other people please.

The love of God.

The name of all that is Holy and others. Please bulbous bow boldest soccer first time.

I mean this is not the first time, you've said something like this.

It's like this car either drives itself or it does not drive. And we expect to start production in April. As always, it's an S-Curve of the production rate, so starts off very slowly and then grows exponentially, then you hit the linear, and then ultimately, you know, it asymptotes at whatever your target volume is. So, but we would expect over time to make far more Cybercabs than all of our other vehicles combined, given that 90% of distance driven or distance being-

Why do we have to book these days.

And others not also please consult allows for these things well I mean this is very hard to build these things.

And we bought them out of desperation, not wondering if he goes no nobody else's clothing lithium refineries in cathode refineries.

You know we are pretty much the not just the largest but also the only one.

If you have a refinery in catheter refinery in America.

So.

Yeah. So.

We're making moves to make sure that no matter what happens Tesla will prosper.

Lars Moravy: Traveled.

[Video Narrator 1]: Traveled.

Elon Musk: Distance traveled, exactly, no longer driving, is one or two people. I think it's like 80% is just one. So it would mean that long-term, Cybercab, we would make several times more Cybercabs per year than all of our other vehicles combined.

Great and unfortunately that is all the time, we have for Q&A today, we really appreciate everyone's questions and we look forward to talking to you next quarter. Thank you very much and goodbye.

Okay cool.

Okay.

[music].

Travis Axelrod: Great. Thank you so much. The next question, a bit related, are there still plans to launch new models to address different price segments and vehicle types, which could materially expand the TAM for Tesla?

Lars Moravy: Yeah. To further on what we were just talking about, we've launched our least expensive models ever over the last few months and are continuing to expand those models globally. And over the last decade, we have continually brought down the cost of our vehicles without sacrificing range, performance, or premiumness. And we'll continue to do that, as Vaibhav said, investing in our factories, but these are all trade-offs of where we spend our time or money. And to Elon's point, just now, with Cybercab coming, we are aiming to bring that Tesla premium ride experience to our largest market yet. That could be five or 10 times our current levels of production. This new autonomous market, you have to start thinking about us as moving to providing transportation as a service more than the total-

[Video Narrator 1]: Yeah. To further on what we were just talking about, we've launched our least expensive models ever over the last few months and are continuing to expand those models globally. And over the last decade, we have continually brought down the cost of our vehicles without sacrificing range, performance, or premiumness. And we'll continue to do that, as Vaibhav said, investing in our factories, but these are all trade-offs of where we spend our time or money.

This isn't just any chat it's click up cap sure you can tag team asked questions and even dropping emerge.

But the real magic is how it connects to the rest of my work.

I can tell a.

And to Elon's point, just now, with Cybercab coming, we are aiming to bring that Tesla premium ride experience to our largest market yet. That could be five or 10 times our current levels of production. This new autonomous market, you have to start thinking about us as moving to providing transportation as a service more than the total-

A dog.

Or a whiteboard everything they need in one place.

Bye bye.

<unk> can also be referenced inside tasks to let people join in on the fun.

At Chubb might be connected to a project. So I can see now with dash.

Dash Board and bye.

Elon Musk: Yes

Lars Moravy: ... addressable market, for the purchased vehicles alone. Of course, we do have plans to have Robotaxis in various shapes and sizes, but obviously, Cybercab will be the grand majority of that volume.

[Video Narrator 1]: ... addressable market, for the purchased vehicles alone. Of course, we do have plans to have Robotaxis in various shapes and sizes, but obviously, Cybercab will be the grand majority of that volume.

Side by side, making it effortless to reference.

If my boss has an app I can turn this message into task instantly. This will automatically include full contact and link.

Elon Musk: Yeah, the vast majority of miles traveled will be autonomous in the future. You know, I would say probably less than 5% of miles driven will be where somebody's actually driving the car themselves in the future. Maybe as low as 1%.

Why.

Yes.

I don't even have to do it myself my AI agent.

Pardon me if it happened to be away.

When it's connected to the rest of your work.

Okay.

Travis Axelrod: Great. The next question is, historically, Tesla has spoken about gross margin per model. Are there standalone gross margin targets for the current models, excluding the benefits for FSD sales?

Can you. Please just hear me out no no all work management platforms are the same.

Dot com is the one you're actually love to use it lets you set up your workflows yourself no admin no long approval process hearings orange if its any type of work marketing sales HR.

Vaibhav Taneja: You know, we've talked about this with the previous two questions, but transportation, as we know, is changing, and I think we cannot keep applying the same framework from a car sales model to the future, what we are trying to do. So it has to be looked at more holistically. You know, autonomy software will be the driver for growth from now on. And as we aim to maximize the global fleet, we have been laser-focused on COGS from our side to make sure, because that is something which we manage. So we will keep focusing on that, but I think we need to look at it from a different dimension.

And as a free trial, so what's the harm.

I'm ready to fall in love again thanks.

Monday.

The first word platform you'll love.

Thanks, Steve.

Okay.

Yeah.

Okay.

[music].

Elon Musk: Yeah, like, this Cybercab, the whole design of Cybercab was to optimize the fully considered cost per mile of autonomous driving. And you... It's a different design problem than if you're trying to design cars for people who will be driving versus being driven. And so Cybercab is, like, like I said, super optimized for minimum cost per mile and also for a much higher duty cycle. So we would expect Cybercab to be used, you know, probably 50 or 60 hours a week instead of the 10 or 11 hours a week that a driven vehicle is used.

Hi, I'm, Ian and I worked for the Federal reserve the Central Bank of the United States. The Federal Reserve system consists of three main entities.

To perform key functions that serve the public and promote the health of our economy and the stability of our financial system. These key edge GSR. The Federal Reserve Board of Governors 12 barrel reserve banks operating around our nation and the Federal open market Committee based in Washington D. C. The board of Governors is the governing body of the federal reserve system.

Elon Musk: So, you know, typically, people might drive their car for 1.5 hours a day on average, so that's like 10 hours per week out of 168. But I think an autonomous vehicle is likely to be used probably 5 times as often, which means that you need to design the vehicle for much more wear and tear per unit of time, and much more resilience. It's more like a commercial truck that's in continuous operation or close continuous operation, is how you design an autonomous vehicle. So we will have larger vehicles in the Cybercab in the future that are designed for full autonomy.

So, you know, typically, people might drive their car for 1.5 hours a day on average, so that's like 10 hours per week out of 168. But I think an autonomous vehicle is likely to be used probably 5 times as often, which means that you need to design the vehicle for much more wear and tear per unit of time, and much more resilience. It's more like a commercial truck that's in continuous operation or close continuous operation, is how you design an autonomous vehicle. So we will have larger vehicles in the Cybercab in the future that are designed for full autonomy.

As an agency of the federal government that reports to you and is directly accountable to Congress. The board consists of seven numbers or governors, who are nominated by the president of the United States and confirmed by the Senate.

Revenues are appointed for 14 year terms the board of Governors oversees and sets policy direction for the system, including 12 barrel reserve banks located around the country, which take the pulse of the nation's economic help from a regional perspective.

I'll reserve banks represent different geographic regions or districts and were set up based on regional economic considerations. Other supervised by the Federal Reserve Board the reserve banks operate independently in many respects.

Elon Musk: And we've actually shown pictures of this, and in fact, have shown prototypes, so this is not exactly a secret. In fact, we've given people rides in them, so, you know, we're not keeping this, hiding this light under a bushel here, you know? It's like, we're literally saying what we're gonna do and have said what we're gonna do for a while. So, you know, I really, I think long term, we would. Really, the only vehicles that we'll make will be autonomous vehicles, with the exception of the next generation Roadster, which we're hoping to debut in April, hopefully. It's gonna be something out of this world.

And we've actually shown pictures of this, and in fact, have shown prototypes, so this is not exactly a secret. In fact, we've given people rides in them, so, you know, we're not keeping this, hiding this light under a bushel here, you know? It's like, we're literally saying what we're gonna do and have said what we're gonna do for a while. So, you know, I really, I think long term, we would. Really, the only vehicles that we'll make will be autonomous vehicles, with the exception of the next generation Roadster, which we're hoping to debut in April, hopefully. It's gonna be something out of this world.

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Supervising and examining commercial banks and other financial institutions enforcing compliance with federal consumer protection and fair lending law, while promoting local community development and lending to depository institutions.

Travis Axelrod: Fantastic. The next question we unfortunately have to skip because it's not related to Tesla. We would like to remind folks who use the SAY platform to please focus these questions on Tesla. So, with that in mind, we're gonna move on to the next question, which is: What is the current bottleneck to increased robotaxi deployment and personal use unsupervised FSD? The safety and performance of the most recent models... Is it the safety and performance of the most recent models, or is it people to monitor the robotaxis in-car or remotely, or is there some other blocker? I don't know, Ashok, if you want to kick off on this one.

What is the current bottleneck to increased robotaxi deployment and personal use unsupervised FSD? The safety and performance of the most recent models... Is it the safety and performance of the most recent models, or is it people to monitor the robotaxis in-car or remotely, or is there some other blocker? I don't know, Ashok, if you want to kick off on this one.

Ashok Elluswamy: Yeah. We have scaled the Robotaxi service that's available to customers over the last year in order to just learn the scaling problems without having to like wait for the unsupervised. Let's say like two, two goals. One is to learn as much as possible from the fleet with the safety monitors, and secondly, be laser-focused with engineering team to solve the unsupervised FSD problem. I think we did both. Like, by the end of last year, we, you know, we had a long tail of issues that we were able to churn through. And then, in the last couple of weeks, we have started our unsupervised Robotaxi service to public customers in Austin. I think some customers took rides last week, and also service continues today without any rear car or something like that.

I think we did both. Like, by the end of last year, we, you know, we had a long tail of issues that we were able to churn through. And then, in the last couple of weeks, we have started our unsupervised Robotaxi service to public customers in Austin. I think some customers took rides last week, and also service continues today without any rear car or something like that.

Ashok Elluswamy: Separately, we did scale the fleet size in the Bay Area and in Austin, and through that, we learned, you know, issues with charging and other issues that we would have seen once we sort of like scaled the unsupervised fleet. So both are happening in parallel. A variant of the software that's used for the Robotaxi service was shipped to customers with V14, and customers saw a huge jump in performance, like a lot of, you know, happy feedback from customers. So, and since then, we have improved the software significantly as well. And customers will continue to see with their own software releases that the software is so good that, you know, they're like screaming to remove the driver monitoring software because they're bored inside the car too much.

Separately, we did scale the fleet size in the Bay Area and in Austin, and through that, we learned, you know, issues with charging and other issues that we would have seen once we sort of like scaled the unsupervised fleet. So both are happening in parallel. A variant of the software that's used for the Robotaxi service was shipped to customers with V14, and customers saw a huge jump in performance, like a lot of, you know, happy feedback from customers.

So, and since then, we have improved the software significantly as well. And customers will continue to see with their own software releases that the software is so good that, you know, they're like screaming to remove the driver monitoring software because they're bored inside the car too much.

Elon Musk: Adding to that a little bit with what Ashok said about learning about our charging and service needs. You know, we're using our vast network of charging and service centers that really only Tesla has in this space to jumpstart our infrastructure build-out needs to get ahead of Robotaxi and autonomous vehicle demand. And we expect that because of this network, we are the only company capable of scaling at the rate that is needed for the tsunami of autonomy that is coming.

Travis Axelrod: Yeah. Great. Moving on to the next question: After the unveil of the Cybertruck, Elon stated that if it didn't sell well, Tesla would build a more conventional-looking pickup. How practical would it be to create this new design on the Cybertruck architecture, and could it be conveniently built on the existing production lines?

Elon Musk: Actually, in this segment, Cybertruck continues to be a leader and is selling more than any other electric truck out there, while our competition continues to pull back. But to the question itself, from a line standpoint, we always design our lines to be super flexible. We built three and Y on the same line. We built S and X on the same line, still, showing that we can do that. The Cybertruck line was designed in the same way and is one of our most fully ready-for-autonomy platforms.

Travis Axelrod: Yeah. But yeah, we will transition the Cybertruck line to just a fully autonomous line. And there's obviously a market there for cargo delivery, like you say, like localized cargo delivery within a city, within a few hundred miles, something like that. There's a lot of cargo that needs to move locally within a city, and an autonomous Cybertruck could be very useful for that. Great. Moving on to the next question. Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?

Moving on to the next question. Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?

Elon Musk: Yeah, we're still very much at the early stages of Optimus. It's an R&D. It's still in the R&D phase. We have had Optimus do some basic tasks in the factory. But as we iterate on new versions of Optimus, we deprecate the old versions. And so it's not... I wouldn't say it's like, it's not in usage in our factories in a material way. It's more so that the robot can learn. We wouldn't expect to have, you know, any kind of significant Optimus production volume until probably the end of this year.

Travis Axelrod: Great. And-

Ashok Elluswamy: Like Optimus 3 is an awesome robot that-

Elon Musk: It is awesome.

Ashok Elluswamy: Yeah, it's an awesome robot that minimizes any differences, but it's basically it looks like a human. People could be easily confused that it's a human. This helps our strategy for the AI, too, because you can learn from how humans do these tasks, and it's very easy to teach the robot to do in the same way as opposed to previous robots.

Elon Musk: Yeah, I mean, I guess one thing I should say like is, you know, there's a lot of news of like, you know, various companies announcing layoffs and whatnot, but you know, at Tesla, in our factory in Fremont, we actually expect to increase headcount over time, and to significantly increase output from our factories. So yeah, we don't have any layoff plans. We expect to actually increase headcount.

Travis Axelrod: Great. The next question, similar to the other autonomy questions, but slightly different. When is FSD going to be 100% unsupervised?

Elon Musk: Well, it is, it is 100% unsupervised in FSD. It's 100% unsupervised. I mean, we obviously have cars operating with no one in them and no safety monitor and no follow car or anything like that in Austin right now. For customers, you know, we're being just very cautious with the rollout. I mean, with each successive version, as we prove it out and we make sure that there are no sort of unique issues in, you know, in particular cities, 'cause like sometimes you get like some very strange, you know, difficult intersection, and it'll be an intersection where a lot of humans have accidents, by the way.

Elon Musk: There's like some pretty nutty intersections, where there are a lot of humans make mistakes and have accidents in various cities. So we wanna make sure that, what, you know, FSD can handle those unusual intersections. Like if you take LA, for example, where Wilshire and Santa Monica combine is like there's about, I don't know, 20 traffic lights. And people are constantly having accidents there. So you wanna make sure that FSD can handle unique things in a particular city. So and then we're also just being paranoid about safety. But with each successful release of FSD, we'll we will reduce the amount of driver monitoring that's needed, proportionate to the safety of the FSD build.

There's like some pretty nutty intersections, where there are a lot of humans make mistakes and have accidents in various cities. So we wanna make sure that, what, you know, FSD can handle those unusual intersections. Like if you take LA, for example, where Wilshire and Santa Monica combine is like there's about, I don't know, 20 traffic lights.

And people are constantly having accidents there. So you wanna make sure that FSD can handle unique things in a particular city. So and then we're also just being paranoid about safety. But with each successful release of FSD, we'll we will reduce the amount of driver monitoring that's needed, proportionate to the safety of the FSD build.

Travis Axelrod: Great. As it relates to Robotaxi, what has surprised you about the rollout so far? We've talked about what's constrained the fleet expansion to date, but it appears there are 200 vehicles based on public tracking. Is that something that we can confirm?

Ashok Elluswamy: I wouldn't say there's anything that's like really surprised us, because we are a large fleet, we had all the metrics, so there was not sort of a surprise. It was just continued work to grind down on the long tail of issues, and that's what enabled us to launch the unsupervised service in Austin.

Elon Musk: Yeah. And I mean, in terms of Robotaxi vehicles carrying paid customers, I think we're well over 500 at this point between the Bay Area and Austin.

Ashok Elluswamy: Yeah, there's, yeah, varying amounts of like vehicles, depending on the load, but yeah, you can have like more vehicles during like peak times and then like fewer vehicles in the off hours.

Elon Musk: Yeah. This will probably, you know, double every month type of thing. It's gonna... It's on an exponential curve.

Vaibhav Taneja: I mean, one other thing, people forget that, you know, we've been deliberate on all this, in the sense that we have the supporting infrastructure already being in place, whether it's service centers, charging. Yes, we'll have to augment as the fleet grows, depending upon the density of where the demand is and whatnot. But it's not something like we just stumbled upon it, and we're starting to. We've been at it for years. Yes, not every city is designed the same way. Same thing, our infrastructure is also not same in every city, but you have to give us credit that it's been a journey. And like Lars said, if there is some company which can do it, we've already been at it, so we should be able to deliver much better.

But it's not something like we just stumbled upon it, and we're starting to. We've been at it for years. Yes, not every city is designed the same way. Same thing, our infrastructure is also not same in every city, but you have to give us credit that it's been a journey. And like Lars said, if there is some company which can do it, we've already been at it, so we should be able to deliver much better.

Travis Axelrod: Great. The next question is about chase cars, which we already covered. So moving on to the last question. Elon, you've been spending significant personal time on Tesla's chip design.

Elon Musk: Yeah.

Travis Axelrod: What was the forcing function behind this increased involvement? And do you think external chip sales will represent a significant portion of Tesla's valuation by the end of the decade?

Elon Musk: Well, I mean, I tend to spend time on wherever, whatever the most critical issue is for the company, and completing the AI five chip design and having it be a great chip is, it's arguably number, the number one most critical thing to get done, which is why I'm spending more time on that than currently anything else at Tesla. I spend pretty much every Saturday on this, and a chunk of every Tuesday. So it's like, you know, if I'm spending my Saturdays on something, it's gonna be something pretty important. I do think AI five will be a very good chip, and I feel quite confident about the design at this point.

Elon Musk: And then AI6, which will follow that, it'll be aspirationally would follow that in under a year, will be yet another big leap beyond AI5. So I feel, I feel pretty good about our chip strategy right now. But in terms of selling it outside of Tesla, we first need to make sure we have enough chips for all of our vehicle production and all of our Optimus production. And then we will actually use the AI5 chips in our data centers. We already use the AI4 chips in our data centers, so when we do training, it's a combination of the AI4 chips and NVIDIA hardware, primarily, that we do training with.

And then AI6, which will follow that, it'll be aspirationally would follow that in under a year, will be yet another big leap beyond AI5. So I feel, I feel pretty good about our chip strategy right now. But in terms of selling it outside of Tesla, we first need to make sure we have enough chips for all of our vehicle production and all of our Optimus production. And then we will actually use the AI5 chips in our data centers. We already use the AI4 chips in our data centers, so when we do training, it's a combination of the AI4 chips and NVIDIA hardware, primarily, that we do training with.

Elon Musk: So, but you say by the end of the decade, I mean, it's like things are changing so fast that it's hard to imagine, like, what happens at the end of the decade. I mean, we might... I mean, when I look ahead at, say, what's the limiting factor for Tesla growth, if you go, say, three or four years out, I think it actually is chip production. Is there enough AI, okay, enough AI logic and enough AI, and enough memory, enough RAM for our volume?

So, but you say by the end of the decade, I mean, it's like things are changing so fast that it's hard to imagine, like, what happens at the end of the decade. I mean, we might... I mean, when I look ahead at, say, what's the limiting factor for Tesla growth, if you go, say, three or four years out, I think it actually is chip production. Is there enough AI, okay, enough AI logic and enough AI, and enough memory, enough RAM for our volume?

Elon Musk: And right now, I see that as being the thing that probably limits our growth in three or four years, which probably would imply that we're not selling chips outside of Tesla, because we need them. And in fact, I think it's gonna make sense, and this is definitely gonna be a sort of a controversial thing, but I think Tesla needs to build a Terafab. And I mentioned this at the shareholder meeting, but even when we look at the best-case output of all of our key suppliers, and I'd say even beyond suppliers, they're like strategic partners, like Samsung, TSMC, and Micron, the...

And right now, I see that as being the thing that probably limits our growth in three or four years, which probably would imply that we're not selling chips outside of Tesla, because we need them. And in fact, I think it's gonna make sense, and this is definitely gonna be a sort of a controversial thing, but I think Tesla needs to build a Terafab. And I mentioned this at the shareholder meeting, but even when we look at the best-case output of all of our key suppliers, and I'd say even beyond suppliers, they're like strategic partners, like Samsung, TSMC, and Micron, the...

Elon Musk: We say, like: "What's the most you could possibly make?" Then it's not enough. So we—I think in order to remove the constraint, the probable constraint in three or four years, we're gonna have to build a Tesla Terafab, a very big fab that includes logic, memory, and packaging, domestically. And that that's actually also gonna be very important to ensure that we are protected against any geopolitical risks. I think people may be underweighting some of the geopolitical risks that are gonna be a major factor in a few years. So now, you know, a lot of people are like, "That's-" will say like, "That's crazy. Fabs are really hard." I'm like: "Yes, I know fabs are really hard.

We say, like: "What's the most you could possibly make?" Then it's not enough. So we—I think in order to remove the constraint, the probable constraint in three or four years, we're gonna have to build a Tesla Terafab, a very big fab that includes logic, memory, and packaging, domestically. And that that's actually also gonna be very important to ensure that we are protected against any geopolitical risks.

I think people may be underweighting some of the geopolitical risks that are gonna be a major factor in a few years. So now, you know, a lot of people are like, "That's-" will say like, "That's crazy. Fabs are really hard." I'm like: "Yes, I know fabs are really hard. don't think they're easy." But we do a lot of hard things, you know?

Elon Musk: I don't think they're easy." But we do a lot of hard things, you know? We didn't use to have car factories, we didn't use to have battery cell factories or lithium refineries or, you know, Megapack factories or, you know, all these other things. We figured it out. So I think it's, I think we-- if we don't do the Tesla Terafab, we're gonna be limited by supplier output of chips. And I think maybe memory is an even bigger limiter than AI logic.

We didn't use to have car factories, we didn't use to have battery cell factories or lithium refineries or, you know, Megapack factories or, you know, all these other things. We figured it out. So I think it's, I think we-- if we don't do the Tesla Terafab, we're gonna be limited by supplier output of chips. And I think maybe memory is an even bigger limiter than AI logic.

Elon Musk: So, you know, for example, we have chip supply deals with TSMC in Arizona and Samsung in Texas, but currently there are no advanced memory fabs at scale in the United States. There are zero, literally zero. Hopefully, you know, Micron will have something going in a few years, because they're all headquartered in Idaho, you know, where they make a lot of potato chips, and we need to make computer chips, too. So, anyway, we're working with our strategic partners on the chip front, memory and logic, but I think we, we've got to also try our hand at building a large scale fab that integrates logic, memory, and packaging.

So, you know, for example, we have chip supply deals with TSMC in Arizona and Samsung in Texas, but currently there are no advanced memory fabs at scale in the United States. There are zero, literally zero. Hopefully, you know, Micron will have something going in a few years, because they're all headquartered in Idaho, you know, where they make a lot of potato chips, and we need to make computer chips, too. So, anyway, we're working with our strategic partners on the chip front, memory and logic, but I think we, we've got to also try our hand at building a large scale fab that integrates logic, memory, and packaging.

Elon Musk: And if we don't do that, we're just gonna be fundamentally limited by supply chain, especially. If in a worst-case geopolitical situation, it would be quite a severe situation. So I think, quite frankly, it'd be crazy not to try the Terafab. So, yeah. Great. We'll have a bigger announcement on this in the future.

And if we don't do that, we're just gonna be fundamentally limited by supply chain, especially. If in a worst-case geopolitical situation, it would be quite a severe situation. So I think, quite frankly, it'd be crazy not to try the Terafab. So, yeah. Great. We'll have a bigger announcement on this in the future.

Travis Axelrod: Awesome. With that, we're gonna move on to analyst questions. The first analyst is Emmanuel from Wolfe Research. Emmanuel, please feel free to unmute yourself.

Emmanuel Rosner: Great. Thank you so much. It's Emmanuel Rosner from Wolfe Research. My first question is on the, on the CapEx. You signal a pretty large increase to over $20 billion for this year. Was hoping to better understand where the investments are going. Any way to dimension for us, which of the product line or technologies accounts for the bulk of the increase? And also, do you view this as, like, one time in nature, 2026? Or I guess, how much of this is an ongoing level of high spending for, for a number of years? And then just finally, still on that, with that level of spending, you're going to be burning cash. How much should we think about in cash balance or any other way to, to finance this?

And also, do you view this as, like, one time in nature, 2026? Or I guess, how much of this is an ongoing level of high spending for, for a number of years? And then just finally, still on that, with that level of spending, you're going to be burning cash. How much should we think about in cash balance or any other way to, to finance this?

Vaibhav Taneja: Yeah. So, yeah, Emmanuel, I tried to put this in my opening remarks too, but I'll try and go a little bit deeper. There's about six factories which we are starting production in this year, so there's a lot of cash CapEx which is going into that. Then, as we are trying to scale Optimus, we need a lot more compute, so we're putting more money towards compute as well. And then-

Elon Musk: For training.

Vaibhav Taneja: For training.

Elon Musk: Yeah.

Vaibhav Taneja: And then we're also gonna be spending money to expand the capacity at, you know, at existing factories. On top of it, you know, we're just keep in mind that we're not none of these numbers, which I shared, of $20 billion factor in anything to do with the solar fab or the semiconductor chip fab. Those would be, as Elon mentioned, would come later on. And you think your second part of your question was, is this one-off or would we expect more? I think we're getting into this investment phase because we have big aspirations, and when you look at it, some of these aspirations are, I call them as infrastructure play, especially if you have to do a chip fab and we have to do a solar cell manufacturing fab.

And you think your second part of your question was, is this one-off or would we expect more? I think we're getting into this investment phase because we have big aspirations, and when you look at it, some of these aspirations are, I call them as infrastructure play, especially if you have to do a chip fab and we have to do a solar cell manufacturing fab.

Vaibhav Taneja: Those are infrastructure plays, and that funding takes a little bit longer, and you would be in an investment cycle for a little bit longer. Initially, third part of your question was, how are we gonna fund it? Initially, obviously, we have over $44 billion of cash and investments on the books, so we'll use our internal resources. But there are ways where we can fund it, especially when we look at the robotaxi fleet, because, you know, anytime you have a consistent stream of cash flow, you can go and get money from the banks. And we have had conversations with banks about it, and that is something, how we're gonna do it.

Those are infrastructure plays, and that funding takes a little bit longer, and you would be in an investment cycle for a little bit longer. Initially, third part of your question was, how are we gonna fund it? Initially, obviously, we have over $44 billion of cash and investments on the books, so we'll use our internal resources.

But there are ways where we can fund it, especially when we look at the robotaxi fleet, because, you know, anytime you have a consistent stream of cash flow, you can go and get money from the banks. And we have had conversations with banks about it, and that is something, how we're gonna do it. Then on the infrastructure play side, yeah, like I said, we don't have a number yet, but given that it's an infrastructure play, it's a longer tail, we will have to look at a little bit more in terms of how we fund it, whether it's through more debt or other means.

Vaibhav Taneja: Then on the infrastructure play side, yeah, like I said, we don't have a number yet, but given that it's an infrastructure play, it's a longer tail, we will have to look at a little bit more in terms of how we fund it, whether it's through more debt or other means.

Travis Axelrod: Great. Our next question comes from Andrew, from Morgan Stanley. Andrew, please feel free to unmute yourself.

[Analyst] (Morgan Stanley): Great. Thanks so much for taking the question. I just wanna start on the xAI investment that you guys announced today. You know, you talked about there being some collaboration, you know, between the companies, so I'm just hoping to get more information or if you're hoping that you could shed more light on what that looks like and maybe how the work xAI is doing can be leveraged at Tesla and vice versa.

Vaibhav Taneja: Yeah. I mean, if you, if you've looked at the disclosure, which we also put in there, we do talk about this is literally a furtherance of our Master Plan Four. And even today, if you look at Tesla vehicles, we are using Grok in there. And as we look at things, whether we can do it ourselves, yes, there are a lot of things which we can do ourselves, but if there are things which xAI can help accelerate our progress, then why should we not do that? And that is the reason why we've gone ahead with such an investment, because this, this is part of the strategic initiative.

Vaibhav Taneja: And that is the reason why we've gone ahead with such an investment, because this, this is part of the strategic initiative. 'Cause as it is, if you remember, I talked about how many things which we are doing ourselves. If there are ways and means we can find efficient ways for others to help us, and xAI literally fits into that mold, so that's why we went ahead with it.

Vaibhav Taneja: 'Cause as it is, if you remember, I talked about how many things which we are doing ourselves. If there are ways and means we can find efficient ways for others to help us, and xAI literally fits into that mold, so that's why we went ahead with it.

Elon Musk: And we just had, like, a lot of investors ask us to do this. There was, like, a lot of, you know, investor Tesla shareholders said, like, "We, we should invest in xAI." So that's like, we're just doing what shareholders, like, asked us to do, pretty much. But Grok will be, you know, very helpful in, say, maximizing the efficiency of the management of a large autonomous fleet. So, I mean, if you've got an autonomous fleet that's, you know, in the future, 10 million vehicles or tens of millions of vehicles, then optimizing the efficient use of that fleet, Grok will be way, way better than any heuristic solution, or sort of manually managed solution.

So, I mean, if you've got an autonomous fleet that's, you know, in the future, 10 million vehicles or tens of millions of vehicles, then optimizing the efficient use of that fleet, Grok will be way, way better than any heuristic solution, or sort of manually managed solution. And if you say you're managing, say, a large team of Optimus robots to build a factory or build a refinery, you know, and, say, a hypothetical, like a, this is a hypothetical example, a rare earth ore refinery, which we do desperately need in America.

Elon Musk: And if you say you're managing, say, a large team of Optimus robots to build a factory or build a refinery, you know, and, say, a hypothetical, like a, this is a hypothetical example, a rare earth ore refinery, which we do desperately need in America. Then, you'd say, well, who, like, what's gonna organize the Optimus robots to build that ore refinery? That would, you know, you need, kind of, need an orchestra conductor. And so then Grok would be, kind of, the orchestra conductor for the Optimus robots to build the, hypothetically, and, where it might not be hypothetical in the future. I'm just saying it's not currently in our plans.

Then, you'd say, well, who, like, what's gonna organize the Optimus robots to build that ore refinery? That would, you know, you need, kind of, need an orchestra conductor. And so then Grok would be, kind of, the orchestra conductor for the Optimus robots to build the, hypothetically, and, where it might not be hypothetical in the future. I'm just saying it's not currently in our plans. But, you know, we do, we do need a lot more ore refining capacity in the US. So then, then what's gonna manage, let's say, let's say, 1,000 Optimus robots, to do...?

Elon Musk: But, you know, we do, we do need a lot more ore refining capacity in the US. So then, then what's gonna manage, let's say, let's say, 1,000 Optimus robots, to, to do...?

Travis Axelrod: You're on mute right now, so I'm not sure if you're trying to ask a follow-up question. We're gonna move on to the next question, which is coming from Dan Levy at Barclays. Dan, please feel free.

Dan Levy: Great. Great, thank you. Elon, you talked about some of the constraints on memory. Given the very tight supply, are there any near-term constraints on procuring memory? And if there are, to what extent could you look at modifying the functionality in the vehicle, similar to what you did in 2021, when we saw shortages on MCUs, and maybe how are you thinking about bridging in the next few years?

Elon Musk: Well, the Tesla AI is very compute efficient and very memory efficient. You know, so I think one of the metrics one should consider for any given AI model is the intelligence per gigabyte. Especially when you're constrained on RAM, having an AI that has very high intelligence density per gigabyte. So you can say, like, what, like, for a given number of gigabytes, how much functionality can you get out of it? I actually think Tesla is ahead of the rest of the world in intelligence density of AI by an order of magnitude or more.

Elon Musk: Like, this is gonna sound like a pretty bold statement, but I kind of know what the, you know, what the intelligence efficiency of the, of the big models are like Grok and like honest and, you know, a bunch of the other models, and I, Tesla's AI is like, in terms of just memory, memory efficiency, more than an order of magnitude better. So I put this in a pretty good position, actually, for scaling. And we actually do think that there's. We have a solution for logic and memory, for, let's say, the next roughly three years.

Like, this is gonna sound like a pretty bold statement, but I kind of know what the, you know, what the intelligence efficiency of the, of the big models are like Grok and like honest and, you know, a bunch of the other models, and I, Tesla's AI is like, in terms of just memory, memory efficiency, more than an order of magnitude better. So I put this in a pretty good position, actually, for scaling. And we actually do think that there's. We have a solution for logic and memory, for, let's say, the next roughly three years.

But, you know, this is, this is really existential for, for Tesla, because, if... You know, Optimus is completely useless without an AI chip. It's not like, you know, at least the cars, we can put steering wheels and pedals in, or retrofit them, if need, if need be. But, but Optimus is just a mannequin without a...

Elon Musk: You know, it's like the Tin Man or whatever from the Wizard of Oz, but even at least the Tin Man could walk. Optimus won't even be able to. It will just sit there without an AI chip. So we've got a good solution for a significant scale through, you know, for the next roughly three years. Beyond that, we will be supplier limited, and so we've got to figure out some game plan to not be supplier limited.

You know, it's like the Tin Man or whatever from the Wizard of Oz, but even at least the Tin Man could walk. Optimus won't even be able to. It will just sit there without an AI chip. So we've got a good solution for a significant scale through, you know, for the next roughly three years. Beyond that, we will be supplier limited, and so we've got to figure out some game plan to not be supplier limited.

Travis Axelrod: Great. Our next question is gonna come from George at Canaccord. George, please feel free to unmute yourself.

George: Hi, everyone. Thank you for taking my, my question. So, yeah, there's been a surge of startups, particularly from China, entering the humanoid market. And just wondering what the long-term competitive advantages that keep Tesla ahead are, and, and how, based on what you've seen, will Optimus fundamentally differ from these competitors? Thank you.

George Gianarikas: Hi, everyone. Thank you for taking my, my question. So, yeah, there's been a surge of startups, particularly from China, entering the humanoid market. And just wondering what the long-term competitive advantages that keep Tesla ahead are, and, and how, based on what you've seen, will Optimus fundamentally differ from these competitors? Thank you.

Elon Musk: Well, I do think that by far the biggest competition for humanoid robots will be from China. China is incredibly good at scaling manufacturing, actually quite good at AI, as you can see from, you know, the open source, or not the open source, but the sort of... I guess some of them are open, actually. But basically, the models that China is distributing for free are actually quite good, and they keep getting better. So China is very good at AI, very good at manufacturing, and will definitely be the toughest competition for Tesla. To the best of our knowledge, we don't see any significant competitors outside of China. But China will definitely be tough competition.

But basically, the models that China is distributing for free are actually quite good, and they keep getting better. So China is very good at AI, very good at manufacturing, and will definitely be the toughest competition for Tesla. To the best of our knowledge, we don't see any significant competitors outside of China. But China will definitely be tough competition.

Elon Musk: Building an incredible hand that has the same degrees of freedom and dexterity as a human hand is an incredibly difficult engineering challenge. Then there's the real-world AI and scaling production. Those are the three hardest problems by far for humanoid robots. I think Tesla has. It's the only company that actually has all three of those components. So, yeah.

Building an incredible hand that has the same degrees of freedom and dexterity as a human hand is an incredibly difficult engineering challenge. Then there's the real-world AI and scaling production. Those are the three hardest problems by far for humanoid robots. I think Tesla has. It's the only company that actually has all three of those components. So, yeah.

Travis Axelrod: Great. And our last question is gonna come from Colin, at Oppenheimer. Colin, please feel free to unmute yourself.

Colin: Thanks so much. Guys, you know, you talked a lot about the CapEx spend, but, you know, this is an incredibly ambitious technology development program that you're talking about. Can you talk a little bit about the R&D spend and how you're thinking about the synergies of the different components, you know, particularly on the hardware side? You know, if you think about, you know, batteries into, into chips, in the, into memory, and the efficiency of the system, and what sort of you think end up getting out of, you know, some of these purpose-built devices that integrating into multiple end markets?

Colin Rusch: Thanks so much. Guys, you know, you talked a lot about the CapEx spend, but, you know, this is an incredibly ambitious technology development program that you're talking about. Can you talk a little bit about the R&D spend and how you're thinking about the synergies of the different components, you know, particularly on the hardware side? You know, if you think about, you know, batteries into, into chips, in the, into memory, and the efficiency of the system, and what sort of you think end up getting out of, you know, some of these purpose-built devices that integrating into multiple end markets?

Elon Musk: Well, really, what we're trying to do is make sure that we can scale to very high volume with autonomous vehicles, with humanoid robots, and that we address geopolitical risk, which I think, you know, there's so many companies out there that are asleep with the switch with regard to geopolitical risk. They're like or they just have that'll happen. I'm way more paranoid than that. I always think of Andy Grove's famous statement, "Only the paranoid survive." Now, why did he come up with that statement? I don't know. Let's think. So, I think there's a lot of wisdom in that statement.

Vaibhav Taneja: Well, really, what we're trying to do is make sure that we can scale to very high volume with autonomous vehicles, with humanoid robots, and that we address geopolitical risk, which I think, you know, there's so many companies out there that are asleep with the switch with regard to geopolitical risk. They're like or they just have that'll happen.

I'm way more paranoid than that. I always think of Andy Grove's famous statement, "Only the paranoid survive." Now, why did he come up with that statement? I don't know. Let's think. So, I think there's a lot of wisdom in that statement. So we're gonna be paranoid, and make sure that we can continue to build batteries and robots and AI chips, no matter what happens. And companies that don't do that, a bunch of them will cease to exist.

Elon Musk: So we're gonna be paranoid, and make sure that we can continue to build batteries and robots and AI chips, no matter what happens. And companies that don't do that, a bunch of them will cease to exist.

Vaibhav Taneja: Yeah, I mean, remember, all this comes out of necessity. It's not that we want to do it-

Elon Musk: Yeah.

Vaibhav Taneja: It's. We have no choice.

Elon Musk: Yeah, I mean, we built the most advanced lithium refinery in the world, by the way. So it's not just like our lithium refinery in Corpus Christi is not just a copy of what others have done. It's an entirely new process that is fundamentally more efficient and more advanced than anything else in the world. The same is true of our cathode refinery here in Austin. We wish others would build this. Can other people please, for the love of God,

Vaibhav Taneja: Help?

Elon Musk: In the name of all that is holy, can others please build this, build this stuff? It's not the first time we asked.

Vaibhav Taneja: Exactly. I mean, this is not the first time we've said something like this.

Elon Musk: Like, why do we have to build these things? Why can others not also... Please, can some others build these things? Well, I mean, this is, it's very hard to build these things. And we build them out of desperation, not for any, not because nobody else is building lithium refineries and cathode refineries. You know, we're, we're pretty much the largest, not just the largest, but also the only, lithium refinery and cathode refinery in America. So, yeah, so we're making moves to make sure that no matter what happens, Tesla will prosper.

Travis Axelrod: Great. Unfortunately, that's all the time we have for Q&A today. We really appreciate everyone's questions, and we look forward to talking to you next quarter. Thank you very much, and goodbye.

Elon Musk: Yeah, cool.

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[Company Representative] (Federal Reserve): Hi, I'm Ian, and I work for the Federal Reserve, the Central Bank of the United States. The Federal Reserve System consists of three main entities that perform key functions that serve the public and promote the health of our economy and the stability of our financial system. These key entities are the Federal Reserve Board of Governors, twelve Federal Reserve Banks operating around our nation, and the Federal Open Market Committee. Based in Washington, DC, the Board of Governors is the governing body of the Federal Reserve System. It's an agency of the federal government that reports to and is directly accountable to Congress. The board consists of seven members or governors, who are nominated by the President of the United States and confirmed by the Senate. Governors are appointed for fourteen-year terms.

[Video Narrator 3]: Hi, I'm Ian, and I work for the Federal Reserve, the Central Bank of the United States. The Federal Reserve System consists of three main entities that perform key functions that serve the public and promote the health of our economy and the stability of our financial system. These key entities are the Federal Reserve Board of Governors, twelve Federal Reserve Banks operating around our nation, and the Federal Open Market Committee. Based in Washington, DC, the Board of Governors is the governing body of the Federal Reserve System.

It's an agency of the federal government that reports to and is directly accountable to Congress. The board consists of seven members or governors, who are nominated by the President of the United States and confirmed by the Senate. Governors are appointed for fourteen-year terms.

[Company Representative] (Federal Reserve): The Board of Governors oversees and sets policy direction for the system, including 12 Federal Reserve Banks located around the country, which take the pulse of the nation's economic health from a regional perspective. The 12 Reserve Banks represent different geographic regions or districts, and were set up based on regional economic considerations. Although supervised by the Federal Reserve Board, the Reserve Banks operate independently in many respects. The Reserve Banks carry out a number of core system functions, such as supervising and examining commercial banks and other financial institutions, enforcing compliance with federal consumer protection and fair lending laws, while promoting local community development and lending to depository institutions to-

The Board of Governors oversees and sets policy direction for the system, including 12 Federal Reserve Banks located around the country, which take the pulse of the nation's economic health from a regional perspective. The 12 Reserve Banks represent different geographic regions or districts, and were set up based on regional economic considerations. Although supervised by the Federal Reserve Board, the Reserve Banks operate independently in many respects.

The Reserve Banks carry out a number of core system functions, such as supervising and examining commercial banks and other financial institutions, enforcing compliance with federal consumer protection and fair lending laws, while promoting local community development and lending to depository institutions to-

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Q4 2025 Tesla Inc Earnings Call

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