Everything Elon Musk Said At Tesla's Q1 2024 Earnings Call

Summary

The transcript discusses Tesla's Q1 performance amidst challenges, including the ramp-up for the updated Model 3 and Fremont's production pressures. Despite global EV adoption rates being under pressure and other manufacturers shifting to plug-in hybrids, Tesla remains committed to electric vehicles, expecting them to dominate the market. The company achieved record profitability in the energy business, largely due to the MEAP pack's all-time high deployments. Tesla is also expanding its AI training capacity, with plans to accelerate the launch of new vehicle models, including more affordable ones using a blend of current and next-generation platforms. The company's Full Self-Driving (FSD) V12 has been rolled out to over 1.8 million vehicles in North America, with a significant portion of users adopting it. Tesla's AI infrastructure is growing, with 35,000 h100 computers commissioned and plans to increase to 85,000 by year's end. Regulatory approval for unsupervised FSD in the US is anticipated, with Tesla positioning itself as an AI robotics company. The company is also developing Optimus, a humanoid robot, aiming for limited production by the end of the year. Tesla continues to focus on growth, profitability, and preparing for an autonomous and electric vehicle future.

Takeaways

• 🚗 Despite challenges, Tesla remains committed to electric vehicles (EVs) and believes they will dominate the market over plug-in hybrids.
• 📈 The Tesla team achieved record profitability for the energy business in Q1 and anticipates continued growth in the future.
• 🚀 Energy storage deployments, particularly the MEAP pack, reached an all-time high in Q1.
• 🔧 Tesla has more than doubled its AI training capacity sequentially, indicating a significant expansion in AI capabilities.
• 🚀 New vehicle models are in the pipeline, with an accelerated launch expected in early 2025, including more affordable options using aspects of both next-generation and current platforms.
• 🤖 Tesla's AI-based self-driving, FSD version 12, is being rolled out to all cars with Hardware 3 in North America, with a rapid improvement rate.
• 📉 Tesla has reduced the Full Self-Driving (FSD) subscription price to $99 a month to encourage more users to try it out.
• 🤖 Tesla is actively working on expanding its core AI infrastructure, with plans to significantly increase the number of active h100 computers by the end of the year.
• 🚖 The company envisions a future where autonomous electric vehicles are as common as elevators, with a fleet operated by Tesla, combining elements of Airbnb and Uber.
• 🔋 Tesla is considering the potential for distributed inference, similar to AWS, utilizing the idle compute power of its large fleet of cars for additional revenue streams.
• ⚙️ The company is making progress with its 4680 cell production and sees it as a hedge against rising battery costs from other suppliers.

Q & A

What challenges did the company face in Q1?

The company navigated several unforeseen challenges, including the ramp for the updated Model 3 and Fremont, and a decrease in the global EV adoption rate which led to other manufacturers pulling back on EVs in favor of plug-in hybrids.

What is the company's stance on the shift of other manufacturers to plug-in hybrids?

The company believes that the shift to plug-in hybrids is not the right strategy and maintains its belief that electric vehicles will ultimately dominate the market.

What was the performance of the energy storage deployments in Q1?

Energy storage deployments, particularly the MEAP pack, reached an all-time high in Q1, leading to record profitability for the energy business.

What is the expected timeline for the launch of new vehicle models?

The company has updated its future vehicle lineup to accelerate the launch of new models, with production expected to begin in the second half of 2025 or possibly late 2024.

How will the new vehicle models be produced?

The new vehicles will use aspects of the Next Generation platform as well as aspects of the current platforms and will be produced on the same manufacturing lines as the current vehicle lineup without the need for a new factory or massive new production line.

What is the current status of FSD version 12?

FSD version 12, which is a pure AI-based self-driving system, has been rolled out to all cars with the cameras and inference computer from Hardware 3 on in North America, and is being used by around half a million vehicles with increasing adoption rates.

How has the company addressed the subscription price for FSD?

The company has reduced the subscription price to $99 a month to make it more accessible for users to try out.

What is the company's vision for its robot taxi, CyberCap?

The company plans to showcase its purpose-built robot taxi, CyberCap, in August, indicating a move towards autonomous vehicle services.

What advancements have been made in AI training capacity in Q1?

The company more than doubled its training compute sequentially in Q1, indicating significant expansion in its AI training capacity.

What is the current status of the Optimus humanoid robot?

The company is working on bringing Optimus to limited production in the actual factory by the end of the year and may be able to sell it externally by the end of the next year.

What is the company's perspective on regulatory approval for unsupervised FSD in the US?

The company believes that as long as there is conclusive data showing that autonomous cars are safer than human-driven cars, there should not be significant regulatory barriers to approval.

How does the company view its role in the future of transportation?

The company envisions a future where gasoline cars that are not autonomous will be as obsolete as riding a horse and using a flip phone, and it sees itself as an AI robotics company at its core.

Outlines

00:00

🚗 Q1 Recap and EV Market Outlook

The first paragraph recaps the challenges faced in Q1, including the ramp-up for the updated Model 3 and Fremont's production pressures. Despite global EV adoption rates being under strain and other manufacturers shifting to plug-in hybrids, the company maintains confidence in the future dominance of electric vehicles. The Tesla team is praised for their performance, especially in energy storage deployments, which reached an all-time high in Q1, leading to record profitability for the energy business. The new vehicle lineup is updated to accelerate the launch of more affordable models, which will utilize aspects of both the Next-Generation and current platforms. The production of these new models is not contingent on new factories or production lines, aiming to efficiently increase capacity to over 3 million vehicles. FSD version 12, a pure AI-based self-driving system, is highlighted for its rapid improvement and adoption rates, with over 300 billion miles driven since its launch. The vision-based approach using end-to-end neural networks is touted as the correct solution for scalable autonomy. The subscription price for FSD is reduced to $99 a month, and a purpose-built robot taxi, Cyber Cap, is announced for an August showcase. The company's AI infrastructure expansion is discussed, with 35,000 h100 computers (presumably a misstatement for GPUs) installed and operational, expected to increase to 85,000 by year's end.

05:01

🤖 Optimus and Autonomous Future

The second paragraph discusses the development of Optimus, a humanoid robot, and its potential for limited production within the year. The speaker anticipates selling Optimus externally by the end of the next year, suggesting its potential economic value could surpass all other products combined. The capabilities of Tesla's inference efficiency are emphasized, highlighting the company's significant lead over competitors. Regulatory approval for unsupervised FSD in the US is touched upon, with the expectation that conclusive safety data will overcome barriers. The analogy of elevators is used to illustrate the future of autonomous vehicles, where human intervention will no longer be necessary. Tesla's plans for operating a fleet of autonomous cars are outlined, comparing it to a combination of Airbnb and Uber, with options for car owners to add their vehicles to the fleet and set usage parameters. The potential for Tesla to offer a distributed inference service, akin to Amazon Web Services (AWS), is also mentioned, leveraging the idle computing power of their large fleet of cars.

10:01

📈 Tesla's Growth and Autonomous Solutions

The third paragraph focuses on the speaker's commitment to Tesla's prosperity, emphasizing the company's success and future growth. The speaker expresses confidence in higher sales this year compared to the previous one. The competitive landscape is discussed, with Tesla's performance in China being compared favorably to its competitors. Tesla is redefined as an AI robotics company rather than just an auto manufacturer. The importance of solving autonomy is stressed, as it is considered a key factor for investment in Tesla. The potential for a 25% voting control of the company and the risks associated with advanced AI, particularly sentient humanoid robots, are mentioned. The speaker assures that Tesla will continue to work on autonomy even if he were to disappear. The need for the company to reorganize for different phases of growth is highlighted, drawing parallels to the growth of a human organism.

15:02

🚘 Affordability and Global Expansion

The fourth paragraph delves into the importance of affordability and value for Tesla's products. The speaker acknowledges the need to continuously improve the product and reduce production costs to make Tesla vehicles more accessible. The commitment to improving affordability and product quality is emphasized. The potential for licensing Tesla's FSD technology is discussed, with the speaker expressing optimism about signing deals with other manufacturers. The timeline for launching FSD in additional geographies is addressed, with plans to release a supervised autonomy system in any market where regulatory approval is granted, including China. The impact of supply constraints on Q4 2023 results is acknowledged, and recent changes to simplify the sales process are highlighted. The concept of distributed inference using Tesla's vehicle fleet is further explored, comparing it to Amazon Web Services (AWS) and the potential for monetizing unused computing power.

20:04

🔌 Battery Production and Cost Management

The fifth paragraph discusses the progress of Tesla's 4680 battery cell production, suggesting that internal cell production serves as a hedge against rising battery costs from suppliers. The speaker anticipates that Tesla's cell production will become more competitive by the end of the year. The fluctuating nature of battery cell production and the impact of government incentives, such as the Inflation Reduction Act (IRA), on demand and supply are acknowledged. The speaker also recommends that potential investors in Tesla should experience FSD 12.3 to fully understand the company's direction and capabilities.

Keywords

💡Unforeseen Challenges

Refers to unexpected difficulties or obstacles that arose during the first quarter of the year, which impacted the company's operations. This is a central theme in the video as it sets the context for the company's performance amidst adversity.

💡Model 3 and Fremont Ramp

This refers to the production and manufacturing scale-up for the updated Model 3 vehicle at the Fremont factory. It is a significant part of the company's strategy to meet demand and improve production efficiency.

💡EV Adoption Rate

The EV (Electric Vehicle) adoption rate indicates the pace at which electric vehicles are being accepted and purchased by consumers globally. It is a key metric for the company as it reflects market trends and potential for their product line.

💡Plug-in Hybrids

A type of vehicle that combines an internal combustion engine with an electric propulsion system. The company mentions that some manufacturers are shifting focus to plug-in hybrids instead of fully electric vehicles, a strategy the company disagrees with.

💡Energy Storage Deployments

This refers to the installation and utilization of energy storage solutions, such as the MEAP pack mentioned in the script. It is a growing aspect of the company's business and contributes to their profitability.

💡AI Training Capacity

The ability to train artificial intelligence models is expanded upon in the script. This is crucial for the development of autonomous driving capabilities and other AI-driven technologies within the company.

💡Next Generation Platform

This refers to the company's upcoming vehicle technology platform that will underpin new models. It is designed to be more efficient and cost-effective, allowing for the production of more affordable vehicles.

💡FSD (Full Self-Driving)

FSD is a feature that enables a vehicle to drive autonomously. The script discusses the advancements in FSD version 12, emphasizing its rapid improvement and the shift towards a vision-based approach using neural networks.

💡Optimus

Optimus refers to the company's humanoid robot project. The script outlines the potential timeline for its production and the belief that it could have a significant impact on the economy and the company's future.

💡Regulatory Approval

The process by which the company seeks permission from authorities to deploy its unsupervised FSD technology. The script discusses the progress and potential timeline for achieving this approval in the U.S.

💡Distributed Inference

This concept involves using the computational power of Tesla's fleet of cars for AI-related tasks when they are not in use. It is compared to Amazon Web Services (AWS) and is seen as a potential new revenue stream and a way to utilize idle computing resources.

Highlights

The company faced unforeseen challenges in Q1, including the ramp for the updated Model 3 and Fremont, but still achieved record profitability for the energy business.

Despite global EV adoption rate pressures and other manufacturers shifting to plug-in hybrids, the company maintains its commitment to electric vehicles.

Energy storage deployments, particularly the MEAP pack, reached an all-time high in Q1.

The company is expanding its AI training capacity, more than doubling it sequentially in Q1.

The new vehicle lineup will accelerate the launch of more affordable models, integrating aspects of both next-gen and current platforms.

Production of new vehicles will occur on current manufacturing lines, aiming for over 3 million vehicles of capacity.

FSD version 12, a pure AI-based self-driving system, has been rolled out to all cars with Hardware 3 in North America.

Over 300 billion miles have been driven with FSD V12, reinforcing the vision-based approach with end-to-end neural networks as the scalable autonomy solution.

The subscription price for FSD has been reduced to $99 a month to encourage more users to try it out.

Tesla is planning to showcase its purpose-built robotaxi, CyberCap, in August.

The company has installed and commissioned 35,000 h100 computers, aiming for 85,000 by the end of the year.

Tesla's inference efficiency is significantly better than any other company, a key advantage for the future of autonomous vehicles.

Regulatory approval for unsupervised FSD in the US is anticipated, with the potential for rapid advancements in deployment.

Tesla envisions operating a fleet of autonomous cars, blending elements of Airbnb and Uber business models.

The company anticipates a training data flywheel effect, similar to Google Search, as the fleet grows and provides constant feedback.

Tesla is considering the potential of distributed inference, where idle cars could offer computational power akin to AWS on a global scale.

The company is in talks with a major automaker regarding the licensing of FSD technology.

Tesla is focused on improving the affordability and value of its vehicles, aiming to make them accessible to a wider audience.

The company is simplifying its sales process to make purchasing a Tesla as easy as possible.

Tesla is progressing with the 4680 cell ramp, aiming to achieve target yields and mitigate supply chain risks.

Transcripts

to recap in q1 we navigated several

unforeseen challenges as well as the

ramp for the updated model 3 and Fremont

there was as as people have seen the EV

adoption rate globally is under pressure

and and a lot of other water

manufacturers are pulling back on EVs

and pursuing plug-in hybrids instead we

believe this is not the right strategy

and electric vehicles will ultimately

dominate the market despite these

challenges the tales team did a great

job executing in a tough environment and

energy storage deployments the MEAP pack

in particular reach an alltime High q1

leading to record profitability for the

energy business and that looks likely to

continue to increase in the quarters and

years ahead it will increase we actually

know that it will it's significantly

faster than the car business as we

expected we also continue to expand our

AI training capacity in q1 more than

doubling our training compute uh

sequentially in terms of the new product

road map there's been a lot of talk

about our upcoming vehicle line in the

next in the past several weeks we've

updated our future vehicle lineup to

accelerate the launch of new models

ahead of previously mentioned stter

production in the second half of of so

we expect it to be more like the early

2025 if not late this year these new

vehicles including more affordable

models we'll use aspects of the Next

Generation platform as well as aspects

of our current platforms and will be

able to be produced on the same

manufacturing lines as a current vehicle

lineup it's not contingent on any new

Factory or massive new production line

it'll be made on our current production

lines much more efficiently and and we

think this should allow us to get to

over 3 million vehicles of capacity when

realiz to the full extent regarding FSD

version 12 which is the pure AI based

self-driving people that if you haven't

experienced this I strongly urge you to

try it out it's profound and the rate of

improvement is rapid we and we've now

turned that on for all cars with the

cameras and inference computer and

everything from Hardware 3 on in North

America so it's been pushed out to I

think around 1.8 million vehicles and

we're seeing about half of people use it

so far and that percentage is increasing

with each passing week so we now have

over 300 billion miles that have been

driven with FSD V12 since the launch of

full self driving supervised full self

driving it's become very clear that the

vision based approach with endtoend

neural networks is the right solution

for scalable autonomy it's really how

humans Drive our entire Road network is

designed for biological neural Nets and

eyes so naturally cameras and digital

neural Nets are the solution to our

current road system to make it more

accessible we've reduced the

subscription price to $99 a month so

it's easy to try out and as we've

announced we will be showcasing our

purpose buil robot taxi or cyber cap in

August yeah regarding regarding AI

compute over the past few months we've

been actively working on expanding

Tesla's core AI infrastructure for a

while there we were training constrained

in our progress we are at this point no

longer training constrained and so we're

making rapid progress we've installed

and commissioned meaning they're

actually working 35,000 h100 computers

or gpus GPU is wrong wood they need a

new

wood always feel like a win when I say

GPU because not GPU stands G stands for

graphics and doesn't do Graphics but

anyway roughly 35 h100s are active and

we expect that to be probably 85,000 or

their abouts by the end of this year and

training just for training we are making

sure that we're being as efficient as

possible in our training it's not just

about the number of h100s but how

efficiently they're used so in

conclusion we're super excited about our

autonomy road map and get it should be

obvious to anyone who's driving a

version 12 in a test that is only a

matter of time before we see the

reliability of humans and not much time

at that and we're really headed for an

electric vehicle an autonomous future

and I'll go back to something I said

several years ago that in the future

gasoline cars that are not autonomous

will be like riding a horse and using a

flip phone and that will become very

obvious in in hindsight we continue to

make the necessary Investments that will

drive growth and profits with Tesla in

the future and I want to thank the Tesla

team for incredible execution during

this period and look forward to

everything that we have planned ahead so

what is the current status of Optimus we

are ble to do simple Factory tasks or at

least I should say Factory tasks in the

lab the in terms of actually we do think

we will have Optimus and limited

production in the factory in the actual

Factory itself doing useful tasks before

the end of this year and I think we we

may be able to sell it externally by the

end of next year these just guesses as

I've said before I think Optimus will be

more valuable than everything else

combined uh if you've got a sentient

humanoid robot that is able to navigate

reality and do T asks at at request

there is no meaningful limit to the size

of the economy so that's what's going to

happen and I think Tesla is best

position of any humanoid robot maker to

be able to reach volume production with

efficient inference on the robot itself

the this perhaps is a point that is

worth emphasizing Tesla's inference

efficiency is vastly better than anyone

any other company there's no company

even close to the inference efficiency

of Tesla we've had to do that because we

were constrain by the inference Hardware

in the car wouldn't have a choice but

that that will pay dividends in many

ways what is the current assessment of

the pathway towards regulatory approval

for unsupervised FSD in the US it's

actually been pretty helpful that other

autonomous car companies been cutting a

path through the regulatory jungle but

the which is that's actually quite

helpful and they they have obvious been

operating in San Francisco for a while I

think they got approval for City of La

so these approvals are happening rapidly

I think if you've got at scale a a

statistically significant amount of data

that shows conclusively that the

autonomous car has let's say half the

accident rate of a human driven car I

think that's difficult to ignore because

at that point stopping autonomy means

killing people so I I actually do not

think that there will be significant

regulatory barriers provided there is

conclusive data that the autonomous car

is safer than a human driven car and in

my view this will be much like elevators

elevators used to be operated by a guy

with a relay switch but sometimes that

guy would get tired or drunk or just

make a mistake and Che somebody in half

between flows so now we just have we

just get in an elevator and press button

we don't think about it in fact it's

weird if somebody's standing there with

relay switch that'll be how cars work

you just summon a car using your phone

you get in it takes you to a destination

you get out you don't even think about

it just like an elevator it takes you to

to your floor that's it don't think

about how the elevator is working or

anything like that and and something I

should clarify is that Tesla will be

operating the fleet so you can think of

like how Tesla think of know some

combination of Airbnb and Uber meaning

that there'll be some number of cars

that Tesla owns itself and operates in

the fleet there'll be some number of

cars and there'll be a bunch of cars

where they're owned by the end user but

that end user can add or subtract their

car to the fleet whenever they want and

they can decide if they want to only let

the car be used by friends and family or

only by five star users or by anyone at

any time they could have the car come

back to them and be exclusively theirs

like an Airbnb you could ran out your

guest room or not anytime you want as

our Fleet grow

we have 7 million cars going to 9

million cars going to eventually tens of

millions of cars

worldwide with with with a constant

feedback loop every time something goes

wrong that gets added to the training

data and you get this training flywheel

happening in the same way that Google

search has the sort of flywheel it's

very difficult to compete with Google

because people are constantly doing

searches and clicking and and Google's

getting that feedback GL it's the same

with Tesla but at at a scale that is

maybe difficult to comprehend But

ultimately be 10

I I think there's also some potential

here for an AWS element down the road

where if we've got very powerful

inference because got Hardware 3 in the

cars but now all cars are being made

with Hardware 4 Hardware 5 is pretty

much designed and should be in cars

hopefully towards the end of next year

and there's the potential to have for

the to run when the car is not moving to

to actually run distributed inference

like AWS but with distributed inference

like it takes lot of computers to train

an AI model but many orders magnitude

less compute to run it so if you can

imagine the future paths where there's a

fleet of 100 million Teslas and on

average they've got like maybe a

kilowatt of inference compute that's 100

gaw of inference compute distributed all

around the world it's pretty hard to put

together 100 gaw of AI computer and even

in an autonomous future where the the

car is perhaps used instead of being

used 10 hours a week is used 50 hours a

week still leaves over 100 hours a week

where the car and fence computer could

be doing something else and seems like

it would be a waste not to use it we we

do have some insight into how good the

things will be in like let's say 3 or 4

months because we have advanced models

that are far more capable than what is

in the car but have some issues with

them that we need to to fix so they're

like they'll be they'll be a step change

Improvement in the capabilities of the

car but it'll have some quirks that are

that need to be addressed in order to

release it as a is saying we have to be

very careful in what we release to the

fleet or to to customers in general so

if we look at say 12.4 and 12.5 which

are really could arguably even be

version 13 version 14 because it's

pretty close to Total retrain of the

neural Nets in in each case or

substantially different so we have good

insight into where the models where how

the call how well the car will perform

in say 3 or 4 months can we get an

official announcement of the timeline

for the $225,000 vehicle really the way

to think of Tesla is almost entirely in

terms of solving autonomy and being able

to turn on that autonomy for a gigantic

Fleet and I think it might be the

biggest asset value appreciation in

history when that day happens when you

can do unsupervised full self driving

have any of the Legacy automakers

contacted Tesla about possibly licensing

FSD in the future we're in conversations

with one major order maker regarding

licensing FSD can we make FSD transfer

per permanent until FSD is fully

delivered with level five economy no I

was just wondering if you could

elaborate a little bit more on kind of

the new vehicles I think we've settled

we will on that front so what's your

follow maybe you can just talk about

where your heart is at as a constitutes

a majority of my work time and I work

pretty much every day of the week it's R

for me to take Sunday afternoon off make

sure Tesla is very prosperous and it is

I think it is prosperous and it will be

very much so in the future what's your

team's degree of confidence on growth

above 0% no I think we'll have higher

sales this year than last year how long

would it take your best Chinese

competitors to copy a cheaper and better

vehicle that you could offer a couple

years from now I don't know what our

competitors could do except we've done

relatively better than they have you

know if you look at the drop in our

competitors in China sales versus our

drop in sales our drop was less than

theirs so we're doing well but I think

Kathy would said it best like really we

should be thought of as an AI robotics

Company If You value Tesla as just like

a an auto company you just have to

fundamentally it's just the wrong

framework and will count if you ask the

wrong question then the right answer is

impossible so I mean if somebody doesn't

believe T is going to solve autonomy I I

think they should not be an investor in

the company like that is but we will and

we are and then you have a car that goes

from 10 hours of use a week like an hour

and a half a day to probably 50 but it

costs the same if you've not tried the

FSD

12.3 and like I said 12.4 is going to be

significantly better and 12.5 even

better than that and we have visibility

into those things then you really don't

understand what's going on it's not

possible we're putting the actual Auto

in automobile tell us about future horse

carriages you're making I'm like

actually doesn't need a horse that's the

whole point that's really the whole

point you've spoken about your desire to

obtain 25% voting control of the company

I think no matter what Tesla even if I

got kidnpped by aliens tomorrow Tesla

will solve autonomy maybe a little

slower but it would solve autonomy for

vehicles at least I don't know if it

would win on with respect to Optimus or

with respect to future products but it

would that there's enough momentum would

Tesla to solve autonomy even if I

Disappeared for vehicles now there's a

whole range of things we can do in the

future beyond that i' be more reticent

with respect to Optimus if we have a

super sentient humanoid robot that can

follow you indoors and that you can't

escape we're talking Terminator level

risk and yeah I'd be uncomfortable with

if there's not some meaningful level of

influence over how that is deployed and

if those shareholders have an

opportunity to ratify or ratify the sort

of competition I guess I can't say that

but that is a fact they have an

opportunity okay very good and yeah

we'll see if the company generates a lot

of posi cash flow we could obviously buy

back shares what are the types of

activities that you're presumably

sacrificing as a result of parting ways

with these folks we're not giving up

anything that it's significant that I'm

aware of we' we've just had a long

period of prosperity from 2019 to now

and so if a company organizationally is

5% wrong per year that accumulates to 25

30% of of inefficiency we've made some

corrections along the way but it is time

to reorganize the company for the next

phase of growth and you really need to

reorganize it just like a a human when

we start off with one cell and become of

zygote and elasticy and when you start

growing arms and legs and briefly you

have a tail and but you shed the tail

shed the tail hopefully and then your

baby and you basically you have to be

the organism a company is a creature

growing and if you don't reorganize it

for different phases of growth it it

will fail you can't have the same

organizational structure if you're 10

Cells versus 100 versus a million versus

a billion versus a trillion where humans

are like around 35 trillion cells

doesn't feel like it feels like one

person but you're you're basically a

walking cell colony of roughly 35

trillion depending on your body mass and

about three times that number in

bacteria anyway you you've got to

reorganize the company for a new phase

of growth or it will fail to achieve

that growth can you elaborate on how

much the licensing business opportunity

you mentioned today has progressed I

think we just need to it just needs to

be obvious that our approach is the

right approach and I think it is I think

we now with 12.3 if you just have the

car drive you around it is obvious that

our solution with a relatively low cost

inference computer and standard cameras

can achieve self-driving no Liars no

Radars no Ultrasonics nothing just no

heavy integration work for vehicle

manufacturers yeah it's so it would

really just be a case of having them use

the same cameras and inference computer

and Licensing out software and but it's

once becomes obvious that if you don't

have this in a car nobody wants your car

it's a smart car and I remember like

back when I was King of the Hill cell

phone yeah cring I come out with a

smartphone that was basically a brick

with limited functionality and then

iPhone and Android but people still did

not understand that all the phones are

going to be that way there's not going

to be any foot phon if there will be a n

product or home phone yeah not even

exactly it was last time you saw a home

phone the people don't understand all

cars will need to be smart cars or they

or you will not sell this the car will

not nobody will buy it once that becomes

obvious I think licensing becomes not

optional license it or nobody will buy

your car a deal signed now would result

in it being in a car 3 years that's like

lightning basally I I wouldn't be

surprised if we do sign a deal I think

good chance we do sign a deal this year

maybe more than one but yeah it would be

probably three years before it's

integrated with a car even though all

you need is cameras and our inference

computer so it's like not a massive

design change you still see meaningful

incremental price reductions as making

sense from here for the existing

products yeah I think we can be PR Casal

positive meaningfully end of the day

like for any given company if you sell a

great product at a great price the sale

if if you have a great product at great

price the sales will be excellent mhm

that's true of any Arena over time we do

need to keep making sure that that it's

a great product at a great price and

moreover that price is accessible to

people so it's not you have to solve

both the value for money and the

fundamental affordability question the

fundamental affordability question is

sometimes overlooked somebody's earning

hundred several hundred thousand a year

they they don't think of a car from a

fundamental affordability standpoint but

for vast majority of people are living

paycheck to paycheck so it actually

makes difference if the cost month for

lease or financing is $10 one way or the

other it's important to keep improving

the

affordability to keep s of like making

the price more yeah exactly make the

price more accessible the value for

money better and to keep improving that

over time but also to make kickass cost

that people want to buy yeah it's got to

be a great product at a great price and

the standards for what constitutes a

great product at a great price keep

increasing so there's you you can't just

be static you have to keep saying keep

making the car better improving the

price but improving the cost of

production and that's what we're doing

can you please help us understand maybe

some of the timing of launching FSD in

additional geographies including maybe

clarifying your recent comment about

China like new markets yeah we are a

bunch of markets where we don't

currently sell cars that we should be

selling cars in we'll see some

acceleration of that so the thing about

the all the an to neural net based

autonomy is that just like a human it

actually works pretty well without

modification in almost any market so we

plan on with the pro of The Regulators

releasing it as a supervised autonomy

system in any Market that that where we

can get regulatory approval for that

which we think includes China so yeah

it's just like a human you can go rent a

car in a foreign country and you can

drive pretty well obviously if you're if

you live in that country you'll drive

better and so we will make the car drive

better in these other countries with

country specific training but it can

drive quite well almost everywhere and

understands that it shouldn't hit things

no matter whether or not you feel that

Supply constraints that you mentioned

throughout the release impacted the

results and maybe can you help us

quantify that and is that why you have

some confidence in N growth in 2024 yeah

if you're' got cars that are sitting on

ships they obviously cannot delivered to

people and if you've got de excess

demand for one for model 3 or model Y in

one market but you don't have it there

it's like it's a quite a logist it's

it's extremely complex Logistics

situation so you know and I'd say also

the we did over complicate the sales

process which we've just in the past

week week or so have greatly simplified

so the it just it became far too complex

to buy a Tesla whereas it should just be

you can buy the car in under a minute so

we're getting back to the you can buy

Tesla in under a minute interface from

what was quite complex and your comments

around distributed inference can you

talk about what that approach is

unlocking Beyond what's happening in the

vehicle right now that's why I think

it's analogous to Amazon web services

where people didn't expect that AWS

would be the most valuable part of

Amazon when it started out as a

bookstore so that was on nobody's radar

but they found that they had excess

compute because the compute needs would

spike to extreme levels for brief

periods of the year and then they had

idle compute for the rest of the year so

then what should they do with all that

excess compute for the rest of the year

that's yeah monetized so it seems like

no-brainer to say okay if we've got

millions and then tens of millions of

vehicles out there where the computers

are idle most of the time that we might

as well have them do something useful

yeah exactly and that if you get to 100

million vehicle level which I think we

will at some point get to then and

you've got a kilowatt of usable compute

and maybe you're on Hardware 6 or seven

by that time then you really I think you

have on the order of 100 gaw of usable

compute which might be more than anyone

more than any company probably more than

any company like technically like apple

would have the most amount of

distributed computer but you can't use

it because you can't get the you can't

just run the phone at full power and

drain the battery yep so whereas for the

car even if you're a kilowatt level

referance computer which is crazy power

compared to a phone if you've got a 50

or 60 Kow hour pack it's still not a big

deal to run your plug with your plug in

or not plugged in or not plugged in you

could run for 10 hours and use 10

kilowatt hours with your kilowatt of

compute forever yeah got buil in liquid

cool thermal management yeah exactly for

data centers it's already there in the

car exactly so it's distributed power

generation just distributed access to

power and distributed Cooling and it's

already paid for looking at the the 4680

ramp can talk about how close you are to

Target yields and when you might start

to accelerate we're making good progress

on that but I I don't think it's super

important for at least in near term as

as L said we think it will be exceed the

competitiveness of suppliers by the end

of this year and then we will continue

to improve it a big part of the

4680 T during interal sales was a hedge

against how what would happen with our

suppliers because for a while there it

was very difficult because every big car

maker put in massive battery orders and

so the prices the per kilow hour of of

batter of lithium batteries went to

crazy numbers crazy levels Bonkers just

Bonkers okay we've got to have some

hedge here to deal with cost per kilow

hours numbers that would double what we

anticipated if we have internal cell

production then we have that hge against

demand shocks with too much demand so

that's really the way to think about

it's not like we want to take on a whole

bunch of problems that just for the hell

of it we we we did this s program in

order to address the crazy increase in

cost per kilow hour from our suppliers

due to gigantic orders placed by every

car maker on Earth and once again would

just like to strongly recommend that

anyone who is thinking about the Tesla

stock should really Drive FSD 12.3 You'

really you you you can't it's impossible

to understand the company if you do not

do this you mentioned that autoc cogs

per unit for the nextg vehicle would

decline by 50% versus the current 3 and

Y on that topic of 4680 cells I I I know

you know you mentioned it you really

thought of it more as like a hedge

against against Rising battery cost from

other OEM what seems to be happening is

that the unless I'm missing something

the orders for batteries from other

order makers have declined dramatically

so we're seeing much more competitive

prices for sales from our suppliers

dramatically more competitive than in

the past it is clear that a lot of our

suppliers have excess capacity yeah now

this is going to wax and Wayne obviously

there's going to be a boom and bust in

in battery cell production you know

where production exceeds Supply and then

Supply exceeds production and back and

forth I know DRM or something but it's

like what is true today will not be true

in in the future there's going to be

somewhat of a boom and bus cycle here

and then there are additional

complications by with govern incentives

like the inflation reduction act the IRS

always found like a funny name for

comical name yeah is it like the Irish

Republican Army the internet research

agency from Russia independent

retirement account yeah exactly Roth IRA

has Force FID man situations which which

Ira wins ises complicate the incentive

structure so that there's there there is

perhaps a stronger demand for cells that

are produced in the US than outside the

US but then how long does the

IRA I don't know