Elon Musk
Chief Executive Officer at Tesla
Thank you. So the Tesla team did an incredible job in 2023. We achieved record production and deliveries of over 1.8 million vehicles in line with our official guidance. And in Q4, we were producing vehicles at an annualized run rate of almost 2 million cars a year. This is really a phenomenal achievement.
Looking at just the Fremont factory alone, we made 560,000 cars. This is a record. In fact, it's the highest output of automotive plants in North America. And people are often surprised that the highest output factory -- car factory in North America is in the San Francisco Bay area. It's a little counterintuitive, perhaps. And it's really had an incredibly positive impact on that entire area. What would have been a rundown strip mall is the highest-productivity car plant in the Americas. Think about that. It was derelict when we got it, and now it's the most productive plant in this entire part of the world. And it's enriched the community in so many different ways. It's really a gem. So I'm super proud of the people that work there.
Model Y became the best-selling vehicle globally, as predicted. The best-selling vehicle of any kind, not just electric vehicles, with over 1.2 million units delivered. The energy storage business delivered nearly 15 gigawatt hours of batteries in 2023, compared to 6.5 gigawatt hours the year before. So tremendous year-over-year growth, triple digits. And yeah, I think we'll continue to see very strong growth in storage, as predicted. I said for many years that the storage business would grow much faster than the car business, and it is doing that.
Free cash flow remains strong at $4.4 billion in 2023 in spite of record spending on future projects. So we had record capex expenses as well as record R&D. This brings us to 2024. There's a lot to look forward to in 2024. Tesla is currently between two major growth waves. We're focused on making sure that our next growth wave, driven by next-gen vehicle, energy storage, full self-driving, other projects, is executed as well as possible.
For full self-driving, we've released Version 12, which is a complete architectural rewrite compared to prior versions. This is end-to-end artificial intelligence. So BITNET basically, photons in and controls out, and it really is quite a profound difference. This is currently just with employees and a few customers, but we will be rolling out to all customers in the U.S. who request full self-driving in the weeks to come. That's over 400,000 vehicles in North America. So this is for the first time AI is being used, not just for object perception, but for path planning and vehicle controls. We replaced 330,000 lines of C++ code with neural nets. It's really quite remarkable.
Yeah, sort of, as a side note, I think Tesla is probably the most efficient company in the world for AI inference. Out of necessity, we've actually had to be extremely good at getting the most out of hardware, because Hardware 3 at this point is several years old. So I think we're quite far ahead of any other company in the world in terms of AI and inference efficiency, which is going to be a very important metric in the future in many arenas.
So, the new Model 3 is now available globally. So we did an updated Model 3. While the car looks similar, a lot of work has gone into the vehicle to make it better in every way. It is significantly quieter, more refined, better equipped, has longer range and many other improvements, and I recommend taking it for a test drive. If you have not driven a Model 3 in a long time, you should really try the new one. So, steady improvements.
And we're very far along on our next-generation low-class vehicle. This is an earnings call, not a product announcement. So there'll no doubt be many questions that try to ask us about new product -- new products coming. But we reserve product announcements for product announcements not earning calls. So -- but we're very excited about this, and this is really going to be profound, not just in its design of the vehicle itself, but in the design of the manufacturing system. This is a revolutionary manufacturing system, significantly far more advanced than any other automotive manufacturing system in the world by a significant margin.
Several years ago, I said, perhaps the most important competitive characteristic of Tesla in the future will be manufacturing technology and you will really see that come to bear with our next-gen vehicle. The first manufacturing location for this will be at our Gigafactory and headquarters in Austin, Texas, and then we'll follow that up with other locations around the world. Probably the factory we'll build in Mexico will be second, and then we'll be looking to identify a third location, perhaps by the end of this year or early next, outside North America.
In conclusion, we had a great year with record production, record deliveries, and a strong free cash flow in spite of a very high interest rate environment. And we are focused on exciting new projects that will -- I think, ultimately, if we execute on all these things, and it is very hard to do all these things, it's not a sure thing, but I do see a path where Tesla could one day be the most valuable company in the world. I do emphasize that is not an easy path and a very difficult one, but it is now in the set of possible outcomes and previously I would not have thought it is in the set of possible outcomes.
And thank you again to all of our investors, our employees, and our suppliers for a strong year, and looking forward to a great 2024 and years to come. Thank you.
