Tesla Q4 2024 Earnings Report

Tesla EPS Results

• Actual EPS: $0.66
• Consensus EPS: $0.74
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: N/A

Tesla Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $27.12 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Tesla Announcement Details

• Quarter: Q4 2024
• Date: 1/29/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, January 29, 2025
• Conference Call Time: 5:30PM ET

Tesla (NASDAQ:TSLA) is the world's leading manufacturer of electric vehicles. With more than 26% of the market share in 2022, the company's leadership position is all but assured for the coming decade if not longer. While specifically an EV manufacturer, however, the company is also engaged in many related and unrelated ventures that could produce significant results for shareholders.

Tesla, Inc. was first incorporated in 2003 in California as Tesla Motors, Inc but later changed its name. Founded by Martin Eberhard and Marc Terpening, Elon Musk became the company's largest shareholder in 2006 and then its CEO in 2008. Tesla went public via IPO in 2010 making it the first American automobile company to do so since Ford back in 1956. The company reached a half million in annual vehicle sales in 2020 and crossed over the 1 million mark in 2022.

Under Musk's guidance, the company was reborn and moved away from the high-end sports-car segment and into a line of cars geared toward a larger audience. The first model, the Roadster, was soon eclipsed by the Model S which is the top-selling plug-in EV car to this day. Follow-on models include the Model X SUV in 2015, the Model 3 sedan in 2017, and the Model Y crossover in 2020.

Tesla, Inc.'s name change came in 2017 shortly after then and current CEO Elon Musk agreed to acquire SolarCity and expand the company's product line. Tesla is now headquartered in Austin, Texas, and operates global manufacturing capacity through a network of Gigafactories. The company has 5 Gigafactories in key locations around the world with a 6th planned. The Gigafactories are noteworthy for multiple reasons including their size, end-to-end production capability, and non-reliance on grid-supplied power.

Tesla's automobile segment designs, develops, manufactures, leases, and sells electric vehicles in the U.S., Europe, Asia, and internationally. This segment offers a line of luxury Ev s equipped with industry-leading features. The company also generates revenue by selling excess EV credits to the business at large. The Energy Generation and Storage segment designs, manufactures, sells, and installs, solar energy generation and energy storage products for residential, commercial, and industrial customers as well as electric utilities.

One of Tesla's related products is the Tesla Powerwall and Tesla Powerpack battery packs. The Powerwall and Powerpack are stationary lithium-ion battery packs for home or industrial use. The power packs can store solar or other green-generated powers for later use or backup power in emergency situations. This segment of the business was merged with Solarcity to form the Energy Generation and Storage segment. Among the many technologies worked on by the company are self-driving/autonomous vehicles, AI, and glass along with EV motors and batteries.

Tesla Q4 2024 Earnings Call Transcript

Presentation

[Travis Axelrod, Head of Investor Realtions at Tesla]

Good afternoon, everyone, and welcome to Tesla's Q4 2024 Q and A webcast. My name is Travis Axelrod, the Head of Investor Relations here at Tesla, and I am joined today by Elon Musk and Bevav 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.

[Travis Axelrod, Head of Investor Realtions at Tesla]

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 and A, Elon has some opening remarks. Elon?

[Elon Musk, Co-Founder & CEO at Tesla]

Thank you. So in summary, in Q4, we set a record and delivered vehicles at an annualized rate of nearly 2,000,000 a year.

[Elon Musk, Co-Founder & CEO at Tesla]

So congratulations to the Tesla team on excellent work achieving record production and deliveries. Model Y was the best selling vehicle of any kind for 2024. That's worth noting that not just the best electric vehicle, the best vehicle of any kind on earth, number 1 was Model Y. We're staying focused on maximizing volumes and obviously doubling down more. I don't know what it's really I was going to say doubling down on autonomy, but really it's like autonomy is like 10xing things, frankly.

[Elon Musk, Co-Founder & CEO at Tesla]

Doubling is not even enough. We made many critical investments in 2024 in manufacturing AI and robotics that will bear immense fruit in the future. Immense. Like it's in fact, to such a scale that it is difficult to comprehend. I've said this before and I'll stand by it.

[Elon Musk, Co-Founder & CEO at Tesla]

I see a path, but I'm not saying it's an easy path, but I see a path to Tesla being the most valuable company in the world by far, not even close, like maybe several times more than I mean, there is a path where Tesla is worth more than the next top 5 companies combined. There's a path to that. I mean, I think it's like an incredibly just like a difficult path, but it is an achievable path. And that is overwhelmingly due to autonomous vehicles and autonomous humanoid robots. So our focus is actually building towards that.

[Elon Musk, Co-Founder & CEO at Tesla]

And then that's where we're laying the ground. We laid the groundwork for that in 2024. We'll continue to lay the groundwork for that in 2025. In fact, more than lay the groundwork actually. So we'll be building the structure.

[Elon Musk, Co-Founder & CEO at Tesla]

We're building the manufacturing lines. And I'd like setting up for what I think will be an epic 2026 and a ridiculous 20 728. Ridiculously good. That is my prediction. As yet, very few people understand the value of full self driving and our ability to monetize the fleet.

[Elon Musk, Co-Founder & CEO at Tesla]

Some of these things I've said for quite a long time, and I know people have said, well, you know, Elon wants the boy who cried wolf like several times. But I'm telling you there's a damn wolf at this time, And you can drive it. In fact, it could drive you. It's a self driving wolf. You know, for a lot of people, their experience of Tesla autonomy is like, if it's even a year old, if it's even 2 years old, that it's like meeting, it's like meeting someone when they're like a toddler and thinking that they're going to be a toddler forever.

[Elon Musk, Co-Founder & CEO at Tesla]

But obviously, they're not going to be a toddler forever. They grow up. But if their last experience was like, oh, FSD was a toddler. It's like, well, it's grown up now. Have you seen it?

[Elon Musk, Co-Founder & CEO at Tesla]

It's like walks and talks. And, that's really what we've got. And it's difficult to, for people to understand this because human intuition is linear as opposed to what we're seeing is exponential progress. So that's why my number one recommendation for anyone who doubts is simply try it. Have you tried it?

[Elon Musk, Co-Founder & CEO at Tesla]

When's the last time you tried it? And the only people who are skeptical, the only people who are skeptical are those who have not tried it. So, you know, a car goes, a passenger car typically has only about 10 hours of utility per week out of 168, a very small percentage. Once that car is autonomous, my rough estimate is that it is in use for at least a third of the hours per week. So call it 50, maybe 35 hours of the week.

[Elon Musk, Co-Founder & CEO at Tesla]

And it can be used for both, cargo delivery and people delivery. So even let's say people are asleep, but you can deliver packages in the middle of the night or resupply restaurants or whatever the case may be, whatever people need, at all hours of the day or night. That same asset, the thing that that is these things that already exist with no incremental cost change, just a software update, now have 5 times or more the utility than they currently have. I think this will be the largest asset value increase in human history. Maybe there's something bigger, but I just don't know what it is.

[Elon Musk, Co-Founder & CEO at Tesla]

People who look in the rearview mirror are looking for past precedent, except I don't think there is one. So, but the reality of autonomy is upon us. And I repeat my advice. Try driving the car or let it drive you. Now, it works very well in the US, but of course, it will over time work just as well everywhere else.

[Elon Musk, Co-Founder & CEO at Tesla]

We're working hard to grow our annual volumes. Our current constraint is battery packs this year, but we're working on addressing that constraint. And I think we will make progress in addressing that constraint. And then things are really going to go ballistic next year and really ballistic in 'twenty seven and 'twenty eight. So, So a bit more on full self driving.

[Elon Musk, Co-Founder & CEO at Tesla]

Our Q4 vehicle safety report shows continued year over year improvement in safety for vehicles. So the safety numbers, if somebody has supervised full self driving turned on or not, the safety differences are gigantic. So, and people have seen the immense improvement with version 13 and with incremental versions in version 13. And then version 14 is going to be yet another step beyond that, that is very significant. We launched the Cortex training cluster at Gigafactory Austin, which was a significant contributor to FSD advancement.

[Elon Musk, Co-Founder & CEO at Tesla]

And we continue to invest in training infrastructure out of Texas headquarters. So the training needs for Optimus for Optimus human like robot are probably at least ultimately 10x what's needed for the car, at least to get to the full range of useful roles. You can say like, how many different roles are there for a humanoid robot versus a car? Humanoid robot has probably, well, a 1000 times more uses and more complex things than in a car. That doesn't mean that the training scales by 1,000, but it's probably 10x.

[Elon Musk, Co-Founder & CEO at Tesla]

Now you can do this progressively. So it doesn't mean like hotels are going to spend like $500,000,000,000 in training compute. Because we're obviously trained optimists to do enough tasks to match the output of optimists robots. And obviously, the cost of training is dropping dramatically with time. So it is it is like it is one of those things where I think long term optimists will be optimists has the potential to be north of $10,000,000,000,000 in revenue.

[Elon Musk, Co-Founder & CEO at Tesla]

Like it's really bananas. So then you can obviously afford a lot of training compute in that situation. In fact, even $500,000,000,000 of training compute in that situation would be quite a good deal. Yeah. The future is going to be incredibly different from the past, that's for sure.

[Elon Musk, Co-Founder & CEO at Tesla]

We live at this unbelievable inflection point in human history. So So, the proof is in the pudding. So, we're going to be launching unsupervised full self driving as a paid service in Austin in June. I've talked with the team. We feel confident in being able to do an initial launch of unsupervised, no one in the car, full self driving in Austin in June.

[Elon Musk, Co-Founder & CEO at Tesla]

We already have Tesla's operating autonomously unsupervised full self driving at our factory in Fremont, and will soon be doing that at our factory in Texas. So thousands of cars every day are driving with no one in them at our Fremont factory in California. They will soon be doing that in Austin and then elsewhere in the world, the rest of our factories, which is pretty cool. And the cars aren't just driving to exactly the same spot because obviously it all when it collided at the same spot. The cars are actually programmed with where with what lane they need to park into to be picked up for delivery.

[Elon Musk, Co-Founder & CEO at Tesla]

So they drive from the factory end of line to their destination parking spot and to be picked up for delivery to customers. And then doing this reliably every day, thousands of times a day. It's pretty cool. Like I said, the Teslas will be in the wild with no one in them in June in Austin. So, what I'm saying is this is not some far off mythical situation.

[Elon Musk, Co-Founder & CEO at Tesla]

It's literally 5, 6 months away, 5 months away type of thing. And while we're stepping and putting our toe in the water gently at first, just to make sure everything's cool, our solution, our solution is a generalized AI solution. It does not require high precision maps of a locality. So we just want to be cautious. It's not that it doesn't work beyond Austin.

[Elon Musk, Co-Founder & CEO at Tesla]

In fact, it does. We just want to be put a toe in the water, make sure everything is okay, then put a few more toes in the water, then put a foot in the water with safety of the general public as and those in the car as our top priority. With regard to Optimus, obviously, I'm making these revenue predictions that sound absolutely insane. I realize that. But they are I think they will prove to be accurate.

[Elon Musk, Co-Founder & CEO at Tesla]

Now, with Optimus, there's a lot of uncertainty on the exact timing because it's not like a train arriving at the station for Optimus. We are designing the train and the station and in real time while also building the tracks. They're like, why didn't the train arrive exactly at 12:05? We're literally designing the train and the tracks in the station in real time while, you're seeing, you're like, how can we predict this thing with absolute precision? It's impossible.

[Elon Musk, Co-Founder & CEO at Tesla]

The normal internal plan calls for roughly 10,000 Optimus robots to be built this year. Will we succeed in building 10,000 exactly by the end of December this year? Probably not. But will we succeed in making several 1,000? Yes, I think we will.

[Elon Musk, Co-Founder & CEO at Tesla]

Will those several 1,000 Optimus robots be doing useful things by the end of the year? Yes, I'm confident they will do useful things. Those Optimus in use at the Tesla factories, production design 1 will inform how will we change for production design 2, which we expect to launch next year. And our goal is to ramp optimist production faster than maybe anything's ever been ramped, meaning like aspirationally, an order of magnitude ramp per year. Now, if we aspire to an order of magnitude ramp per year, perhaps we only end up with a half order of magnitude per year.

[Elon Musk, Co-Founder & CEO at Tesla]

But that's the kind of growth that we're talking about. It doesn't take very many years before we're making 100,000,000 of these things a year. If you go up by, let's say, a factor by 5x per year.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

It's insane.

[Elon Musk, Co-Founder & CEO at Tesla]

Insane. Not 50%, 500%. So you know, these are big growth numbers. Yes. But we do need to this is an entirely new supply chain.

[Elon Musk, Co-Founder & CEO at Tesla]

It's entirely new technology. There's nothing off the shelf to use. We tried desperately with Optimus to use any existing motors, any actuators, sensors. Nothing worked for a human or robot at any price. We had to design everything from physics first principles to work for a humanoid robot, and with the most sophisticated hand that has ever been made before by far.

[Elon Musk, Co-Founder & CEO at Tesla]

Optimists will be able to play the piano and be able to thread a needle. This is the level of precision no one has been able to achieve. And so it's really something special. Yes. So and my prediction long term is to optimist will be overwhelmingly the value of the company.

[Elon Musk, Co-Founder & CEO at Tesla]

Regarding energy, back to It was Elon.

[Elon Musk, Co-Founder & CEO at Tesla]

Can you come back here for

[Elon Musk, Co-Founder & CEO at Tesla]

a minute? Okay. Back to earth. Energy storage is a big deal, and will become it's already super important, will become incredibly important in the future. And it is something that enables far greater energy output to the grid than is currently possible.

[Elon Musk, Co-Founder & CEO at Tesla]

Because the grid, the grids are the vast majority of the grid has no energy storage capability. So they have to design the power plants to for very high peaks, and assuming that there's no energy storage. Once you have grid energy storage and home based energy storage, the actual total energy output per year of the grid is dramatically greater than people think. Maybe it's at least double. This will drive the demand of stationary battery packs and especially the grid scale ones to insane basically as much demand as we could possibly make.

[Elon Musk, Co-Founder & CEO at Tesla]

So we have our second factory, which is in Shanghai, that's starting operation and we're building a 3rd factory. So we're trying to ramp output of the stationary battery storage as quickly as possible. Now there is a challenge here where we have to be careful to that we're not robbing from one pocket to take to another pocket because for a given gigawatt hours per year of the cell output, we have to say, does it go into stationary applications or mobile applications? It can't go both into both. So we have to make that trade off.

[Elon Musk, Co-Founder & CEO at Tesla]

Yes. But overall, the demand for total gigawatt hours of batteries, whether mobile or stationary, that will grow in a very, very big way over time. So in conclusion, 2025 really is a pivotal year for Tesla. And when Google look back on 2025 and the launch of unsupervised full self driving, true real world AI that actually works, yeah, I think they may regard it as the biggest year in Tesla history, maybe even bigger than our first car, the Roadster or or the Model S or the Model 3 or Model In fact, I think it probably will be viewed 'twenty five as maybe the most important year in Tesla's history. There is no company in the world that is as good at real world AI as Tesla.

[Elon Musk, Co-Founder & CEO at Tesla]

I don't even know who's in 2nd place. Like, you say like, who's in the 2nd place for real world AI? I would need a very big telescope to see them. That's how far behind they are. All right.

[Elon Musk, Co-Founder & CEO at Tesla]

Great. Thank you

[Travis Axelrod, Head of Investor Realtions at Tesla]

very much, Elon. And Devav has some opening remarks as well.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

Yeah. I'll talk about things on earth. As Elon mentioned, in Q4, we set records at vehicle deliveries and energy storage deployments in an uncertain macro environment. We were able to grow auto and energy storage volumes, both sequentially and on a year on year basis. For this, I would like to thank the efforts of everyone at Tesla to make this a reality and our customers who helped us achieve this feat.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

Coming into the Q4, our focus was to reduce inventory levels in the automotive business. And we accomplished that by ending the quarter with the lowest finished good inventory in the last 2 years. This was a result of offering not only attractive financing options but also other discounts and programs which impacted ASPs. While we saw volume growth in almost all regions that we operate in, we hit a new record for deliveries in the Greater China market. This is an encouraging trend since we grew volume in a highly competitive BV market.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

On the automotive margin front, we saw a quarter over quarter decline primarily due to lower ASPs and due to the recognition of FSD related revenue in Q3 from future releases. Our journey on cost reduction continues and we were able to get our overall cost per car down below $35,000 primarily by material costs. This was despite increased depreciation and other costs as we prepare for the transition to the new mobile, for which we recently started taking orders in all markets. All our factories will start producing the new Model Y next month. While we feel confident in our team's abilities to ramp production quickly, know that it is an unprecedented change and we are not aware of anybody else taking the best selling car on the planet and updating all factories at the same time.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

This changeover will result in several weeks of lost production in the quarter. As a result, margins will be impacted due to ID capacity and other wrap related costs, as is common in any launch but will be overcome as production is ramped. We'll be introducing several new products throughout 2025. We are still on track to launch a more affordable model in the first half of twenty twenty five and we'll continue to expand our lineup from there. On a dollar for dollar basis, we believe we have the most compelling lineup today compared to the industry, and it will continue to get better from here.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

As always, all our products come with the best software in the industry, autonomy features and capable of full autonomy in the future. And despite the premium experience, the total cost of ownership is close to mass market, less premium competitors. In our storage deployments reached an all time high in Q4, and resulted in but declined sequentially. This was a result of higher sorry, growth came from MegaPack and Powerwall. Both businesses continue to be supply constrained and like Elon mentioned, we're trying to ramp up production with Mega Factory Shanghai coming online this quarter onwards.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

While quarterly deployments will likely continue to fluctuate sequentially, we expect at least 50% growth in deployments year over year in 2025. Gross profit and margins in the service and other business was up year over year, but declined sequentially. This was the result of higher service center costs and lower profit from used car business. The businesses within service and other primarily support our new car business, especially through their impact on total cost of ownership. Therefore, while we manage them to be positive on a GAAP business, we do not expect similar margins as the rest of the business.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

There's a lot of uncertainty around tariffs. Over the years, we've tried to localize our supply chain in every market, but we are still very reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely, and any of the super capacity will have an impact on our business and profitability. Our operating expenses grew both year over year and sequentially. The biggest driver of the increase was R and D as we continue to invest in AI related initiatives.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

The remaining increase came from growth in our sales capabilities and marketing efforts from referral program. For 2025, we expect operating expenses to increase to support our growth initiatives. It is important to point out that the net income in Q4 was impacted by a 600,000,000 mark to market benefit from Bitcoin due to the adoption of a new accounting standard for digital assets, whereby we'll change we'll take mark to market adjustments through other income every reporting period going forward. Our free cash flow for the quarter was 2,000,000,000 and despite CapEx increase of over 2,400,000,000 in 2024, we were able to generate free cash flow of 3,600,000,000 for the year. CapEx efficiency is something we are extremely focused on.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

While we have invested in AI related initiatives, we've done so in a very targeted manner to utilize the spend to get immediate benefits. The build out of Cortex was accelerated because of the rule actually kind of accelerate the rollout of FSD with version 30. Accumulated AI related CapEx, including infrastructure, so far has been approximately 5,000,000,000. And for 2025, we expect our CapEx to be flat on a year over year basis. In conclusion, like Elon said, 2025 is going to be a pivotal year for Tesla.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

There are a lot of investments which we have made and we'll continue to make in this coming year, which will set the pace for the next phase of growth. And it is something which now I'm getting out of port, it is going to be out of this world. We're just putting the client foundation. That's all I have.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you very much, Vipaf. Now we will move over to investor questions and we'll start with say.com. The first question is, is unsupervised FSD still planned to be released in Texas and California this year? What hurdles still exist to make that happen?

[Travis Axelrod, Head of Investor Realtions at Tesla]

You addressed the Texas piece, I think already.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah, I'm confident that we will release unsupervised FSD in California this year as well. Yeah, in fact, I think we will most likely release unsupervised FSD in many regions of the country of the US by the end of this year. Like I said, we're just putting a toe in the water, then few toes, then a foot, then leg, then make sure everything's cool. And we're looking for a safety level that is significantly above the average human driver. So it's not anywhere like much safer, not like a little bit safer than human, way safer than human.

[Elon Musk, Co-Founder & CEO at Tesla]

So the standard has to be very high because the moment there's any kind of, you know, accident with an autonomous car, this immediately gets worldwide headlines, even though about 40,000 people die every year in car accidents in the US and most of them don't even get a mention anywhere. But if somebody scrapes a shunt within the autonomous car, it's headline news.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

We want to avoid that.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah.

[Elon Musk, Co-Founder & CEO at Tesla]

So it's really from an the only thing holding us back is an excess of caution. But people can certainly get a feel for how well the car would perform as unsupervised FSD by simply having a car allowing a car to drive you around your city and see how many times did you have to intervene, not where you wanted to intervene or were a little concerned, but how many times did you have to intervene for definite safety reasons. And you will find that that is currently very rare, and over time, almost never.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you very much. The next question is, are there any discussions with other auto companies about licensing FSD?

[Elon Musk, Co-Founder & CEO at Tesla]

Yes.

[Elon Musk, Co-Founder & CEO at Tesla]

What we're seeing is at this point significant interest from a number of major car companies about licensing Tesla full soft driving technology. What we've generally said is the best way to know what to do is take one of our cars apart. And then you can see where the placement of the cameras are, what the thermal needs are of the Tesla AI and Burns computer. That's better than us sending some CAD drawings. And then we're only going to entertain situations where the volume would be very high.

[Elon Musk, Co-Founder & CEO at Tesla]

Otherwise, it's just not worth the complexity. And we will not burden our engineering team with laborious discussions with other engineering teams until we obviously have unsupervised full self driving working throughout the United States. I think the interest level from other manufacturers to license FSD will be extremely high once it is obvious that unless you have FSD, you're dead.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you very much. The next question is, is Optimus now mostly design locked for 2025 production?

[Elon Musk, Co-Founder & CEO at Tesla]

Just Optimus is not design locked. So when I say like we're redesigning the train as it's going down the tracks while redesigning the tracks and the train stations.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah, it's

[Elon Musk, Co-Founder & CEO at Tesla]

rapidly evolving. It's rapidly evolving in a good direction. You know, it's pretty, pretty damn amazing actually. The team is doing a fantastic job. We really have by far, I think by far the best team of humanoid robotics engineers in the world.

[Elon Musk, Co-Founder & CEO at Tesla]

And we also have all the other ingredients necessary because you need a great battery pack, you need great power electronics, you need great charging capability, you need great communications, go to WiFi and cellular connectivity. And, and of course, you need real world AI. And then the ability to scale that production, to huge levels. So you have to design for manufacturing. The things that I mean, really what other companies are missing is they're missing the real world AI and they're missing the ability to scale manufacturing to millions of units a year.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

I think that is an underappreciated thing that industrialization of design is a whole different thing than meeting a design.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah. Prototypes are trivial, basically. Prototypes are easy. Production is hard. I've said that for many years.

[Elon Musk, Co-Founder & CEO at Tesla]

The problem is that there's like those who have never been involved in production or manufacturing somehow think that once you come up with some Eureka design that you magically can make a 1000000 units a year. And this is totally false. There needs to be some there's some Hollywood story or where they show actually the problem is manufacturing. I never even heard of one. It's just doesn't fit the narrative.

[Elon Musk, Co-Founder & CEO at Tesla]

The Hollywood thing is like it's like some loan inventor in a garage goes, Eureka! And suddenly it files a patent and suddenly there's millions of units. But like I'm listening to guys, we're missing really 99% of the story. 1% is you know, the old saying, a product is 1% inspiration, 99% perspiration. The Hollywood Church is 1% inspiration and minus, but forgets about the 99% perspiration of actually figuring out how to make that initial prototype manufacturable and then manufactured at high volume such that the product is reliable, low cost, consistent, doesn't break down all the time.

[Elon Musk, Co-Founder & CEO at Tesla]

And that is 100 times hotter, at least, than the prototype.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Then you have to get it there, deliver it back. Yeah.

[Elon Musk, Co-Founder & CEO at Tesla]

You're going to meet all these regulations and there's a zillion regulators around the world. It's very difficult.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you. The next question is also Optimus related. When will Tesla start selling Optimus? And what will the price be?

[Elon Musk, Co-Founder & CEO at Tesla]

Well, for this year, we expect to just close the loop with Optimus being used internally at Tesla because we obviously can easily use several 1,000 humanoid robots at the Tesla for, you know, like the most boring, annoying tasks in the factory, like the task nobody wants to do, where we have to like beg people to do this task. And then they, it's like, like the robots are totally happy to do the boring, dangerous, repetitive task that no humans want to do. And that's also actually some of the easiest use cases for us to, you know, have optimists do things like, you know, like load the hopper, like for, you know, like say, if you're looking body line, if you're like transporting pieces of sheet metal to the robot, which is ready robot, the robot welding line for the body. And you just have to non stop take things out of a, from one fixture to another fixture. And it's a very boring job.

[Elon Musk, Co-Founder & CEO at Tesla]

That's the kind of thing what the optimist could do.

[Travis Axelrod, Head of Investor Realtions at Tesla]

The guy who runs around and dumps all

[Travis Axelrod, Head of Investor Realtions at Tesla]

the wealth types of independence.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah, there's a ton of boring jobs, tedious jobs, slightly dangerous jobs that are perfect for Optimus. So we expect to use Optimus for those tasks at our factories and that'll help us close loop for improvement this year. It's really with production version 2, which I think launches sometime next year. I'd like it to be the beginning of next year, but maybe it's more like the middle of next year.

[Elon Musk, Co-Founder & CEO at Tesla]

And then we have to just go with a production line that is designed for on the order of 10,000 units a month versus 1,000 units a month. So when you design a unit for like when you design a production line for 1,000 units a month, it takes you a while to actually reach anywhere close to 1,000 units a month. When you design for any given production output, it takes you a while to actually reach its potential. The current line that we're designing is for roughly a 1000 units a month of Optimus robots. The next line would be for 10,000 units a month.

[Elon Musk, Co-Founder & CEO at Tesla]

The line after that would be for 100,000 units a month. And I think probably with version 2, that is a very rough guess because there's so much uncertainty here. Very rough guess that we start delivering Optimus robots to companies that are outside of Tesla in the maybe the second half of next year, something like that. But like this is such an exponential ramp that will go from no one's receiving humanoid robots to these things are coming out like crazy. We can't build enough.

[Elon Musk, Co-Founder & CEO at Tesla]

What would they worry is going to be in the we can't build enough situation? Demand will not be a problem even at a high price. And then as I said, like once we start once we're at a steady state of above a 1000000 units a year, I think the production and I'm confident at a 1000000 units a year that the production cost of Optimus will be less than $20,000 You compare the complexity of Optimus to the complexity of a car. So just the total mass and complexity of Optimus is much less than a car. So I would expect that at similar volumes to say the Model Y, which is over a 1000000 units a year, that you'd see Optimus be, I don't know, half the cost or something like that.

[Elon Musk, Co-Founder & CEO at Tesla]

What the price of Optimus is is a different matter. The price of Optimus will be set by the market demand.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you very much. The next question is, what is the status on mass production of the Tesla Semi and how will it impact revenue and scale?

[Lars Moravy, VP, Vehicle Engineering at Tesla]

I can take that one. So we just closed up the semi factory roofing walls last week in Reno. Set the schedule, which is great with the weather. In Reno, you never know what's going to happen. But we're prepping for mechanical installation of all the equipment in the coming months.

[Lars Moravy, VP, Vehicle Engineering at Tesla]

The first builds of the high volume semi design will come late this year in 2025 and begin ramping early in 2026. But as we've said before, the semi is a TCO no brainer. It gets really similar to the optimist set by how much people pay and it has a total cost of ownership. It's much, much cheaper than any other transportation you can have. So at that point, when we're at scale, it will meaningfully contribute to Tesla's revenue.

[Lars Moravy, VP, Vehicle Engineering at Tesla]

Well, I think it's difficult

[Elon Musk, Co-Founder & CEO at Tesla]

to say how much. Tiffany, do you want to add anything on? No. I mean, I do think it tells us that again with autonomy is going to be incredibly valuable. You know, we actually have a shortage of truck drivers in America.

[Elon Musk, Co-Founder & CEO at Tesla]

That's one of the limiting factors on transport. And, And people are humans, so they get tired. And sometimes, I have a lot of respect for truck drivers because it's a tough job. But But because it's a tough job, there's not that many people that want to do it. And there's actually, fewer, I believe, if I'm saying is correct, there are fewer people entering truck driving as a profession than are leaving it.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

Yes.

[Elon Musk, Co-Founder & CEO at Tesla]

So when you

[Elon Musk, Co-Founder & CEO at Tesla]

think of yeah, exactly. So when you consider, okay, there's more people leaving truck driving as a profession than entering it. Well, we've got to have a real logistics problem as time goes by. So autonomy will be very important to meet that need. So like, yeah, it'll it'll I don't know.

[Elon Musk, Co-Founder & CEO at Tesla]

It's a it's a it's a several 1000000000 a year opportunity, which I don't know in this context is that these days, do several 1000000000 a year matter? I think it does. Nothing. It's probably like a 10,000,000,000 year thing. Yes, it's a 1,000,000,000 a month at some point, probably.

[Elon Musk, Co-Founder & CEO at Tesla]

But it's all this is going to pale in comparison to Optimus. So yes, a 1,000,000,000 a month is a lot, but it's not it's it's going to be like 1% optimist or something.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you very much. We already covered the next question in opening remarks. So moving on, is it expected that Tesla will need to upgrade hardware 3 vehicles and if so, what is the timeline? And Tesla's CapEx?

[Travis Axelrod, Head of Investor Realtions at Tesla]

I think they're referring to cost there.

[Elon Musk, Co-Founder & CEO at Tesla]

They're really asking the tough questions, aren't they?

[Ashok Elluswamy, Executive Officer at Tesla]

I guess we haven't stopped working on hardware 3 yet. We are still making software releases. We released the 12.6 release recently, which was like a it's like a baby v13, but it's a significant improvement compared to what they had previously. And, you know, people are still finding ways to distill larger models and the smaller models. So we don't give in upon hardware 3.

[Ashok Elluswamy, Executive Officer at Tesla]

We're still working on it. Just the releases will trail the hardware 4 releases.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thanks, Joe.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah. I mean, I think the honest answer is that we're going to have to upgrade people's hardware 3 computer for those that have bought full self driving. And that is the honest answer.

[Elon Musk, Co-Founder & CEO at Tesla]

And that's going to be painful and difficult, but we'll get it done. Now I'm kind of glad that not that many people bought the FSD package.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Thanks, Elon. The next question, has Tesla given up on ramping their solar roof product?

[Elon Musk, Co-Founder & CEO at Tesla]

No, we're sorry, Mike. Oh, Mike, go ahead.

[Executive]

Oh, yes, I can take it. Yes, solar roof remains a core part of the residential product portfolio, and it still remains where it draws a lot of customer interest despite it being premium products. We've worked on multiple iterations of engineering to make the product easier to install and distribute by reducing the SKU count. And more recently, rather than direct installation, we are focused on growth through our nationwide network of certified installers. And many of those, they've been installing Solar Roof with us for many years.

[Elon Musk, Co-Founder & CEO at Tesla]

That's actually turned out to be a much better way for the like it's just let the roof just supply products to the roofing industry. And especially when somebody is getting a new roof anyway or building a house from scratch, obviously, this is by far the most efficient time to put in a solar roof as opposed to putting a solar roof on a house that where the roof still has 20 years of life. That's not economically sensible. But if it's a new house or the roof needs to be replaced anyway, then solar roof can make a lot of sense. And it is a premium product.

[Elon Musk, Co-Founder & CEO at Tesla]

It's like the it's kind of like Model S, Model X or something. It's like a it's a premium product. I think it looks really cool. And your house I mean, your house generates electricity. And if you combine it with the Tesla Powerwall battery, then you can be self sufficient.

[Elon Musk, Co-Founder & CEO at Tesla]

So even if the grid turns off, even if the grid turns off for several days, your house still works, and your roof looks awesome. So it's like, I recommend anyone who can afford it get the Tesla's solar roof and the Powerwall. Your family's life might depend on it. And just in terms of convenience, you know, your kids are not going to yell at you because their computers don't work because the power went out and you can't charge your phone. True story.

[Elon Musk, Co-Founder & CEO at Tesla]

Actually happens. It does. Over time. Yeah. You literally can't even call in

[Travis Axelrod, Head of Investor Realtions at Tesla]

one because your phone's out of juice. Thank you very much. The next question was covered in opening remarks, so we will skip that. And the last question from say.com, what technical breakthroughs will define V14 of FSD given that V13 already covered Photon to Control?

[Elon Musk, Co-Founder & CEO at Tesla]

Well, we've got a hell of a

[Elon Musk, Co-Founder & CEO at Tesla]

hell of a

[Elon Musk, Co-Founder & CEO at Tesla]

hell of a further than photons to output. We've been in sort of the nothing but dance situation, nothing but neural nets from photons to controls for a while now. We're just improving the neural nets. I guess we could get into some of the technical details to some degree. I have to say I continue to be amazed by just how effective autoregressive transformers are at solving a wide range of problems.

[Elon Musk, Co-Founder & CEO at Tesla]

I mean, Ashok, is there anything you'd like to add there without giving away the sort of family secrets?

[Ashok Elluswamy, Executive Officer at Tesla]

We expect things to put on X already. Yeah, so continuing to scale the model size a lot. You know, we scale a bunch in V13, but then there's still room to grow. So we're going to continue to scale the model size. We're going to increase the context length even more.

[Ashok Elluswamy, Executive Officer at Tesla]

The memory is sort of, like, limited right now. We want to increase the amount of memory, in both second to even minutes of context for driving. We're going to add audio and emergency measures better, add, like, data of the tricky corner cases that we get from the entire fleet, you know, any interventions or any kind of like, you know, user intervention. We just add that to the data, the dataset. So scaling in basically every access to training compute, dataset size, model size, model context, and also all the reinforcement learning objectives.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. All right. With that, we will move over to analyst questions. So just as a reminder, you will need to unmute yourself to ask your question. The first question will be coming from Daniel Roeska from Bernstein.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Daniel, please go ahead and unmute yourself.

[Daniel Roeska, Equity Research Analyst at Bernstein]

Hey, good evening, everybody. It's Daniel from Bernstein. Elon, Tesla's share price clearly already includes quite a few of the anticipated benefits you talked about today, yet realizing what you call kind of difficult but achievable will take some time. What are you pushing the Tesla executive team to do differently now to accelerate the innovation in order to realize the value you described for

[Daniel Roeska, Equity Research Analyst at Bernstein]

the company?

[Elon Musk, Co-Founder & CEO at Tesla]

Well, I mean, we're working on perfecting real world AI and making rapid progress week over week, if not month, you know, the month over month, but often week over week. I spent a lot of time with the Tesla AI team and the Tesla Optimus team. I mean, I go where the problem is essentially, like, not, you know, if something's this is unfortunate. Sometimes I don't talk to a Tesla executive.

[Elon Musk, Co-Founder & CEO at Tesla]

I'm like, hey, we don't see you very often. I'm like, that's because your stuff is working awesome. Your stuff is working really great. Unfortunately, I didn't see them very often because I go where the problem is. So, one of the problems is like what's the greatest challenge that lies ahead?

[Elon Musk, Co-Founder & CEO at Tesla]

So obviously, there are many challenges with optimists. It's a hard problem to solve. Many challenges for the vehicle autonomy. But we're making rapid progress in both. Yeah.

[Daniel Roeska, Equity Research Analyst at Bernstein]

Okay. I mean, it sounds like you've got a conviction that the pieces you need, right, are in place.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah.

[Daniel Roeska, Equity Research Analyst at Bernstein]

If we kind of go 12 months down the line and we look back, and you had some of those, but maybe what are the kind of 2 or 3 KPIs that would tell you that you're on track and it's going the right way and the pieces you've put in place are the right pieces, right? That's kind of what I'm looking for. Or other way around, where would it be off most likely in your mind that you'd say, hey, I need to go back there and I need to change something to enable the team better?

[Elon Musk, Co-Founder & CEO at Tesla]

Well, I mean, I think the predictions that I'm making here are going to be pretty accurate. And it's worth noting that because sometimes people say, oh, Elon's always late. Well, actually, no, the problem is that the media reports them when I'm late, but never reports them when I'm early. So sure, I'm optimistic, but I'm not that optimistic. You know, there are many cases in past where I actually would've been early, you know, such as completion of the Shanghai factory or factory completion has generally been ahead of schedule, not behind.

[Elon Musk, Co-Founder & CEO at Tesla]

So,

[Elon Musk, Co-Founder & CEO at Tesla]

yes,

[Elon Musk, Co-Founder & CEO at Tesla]

so the but I like I said, I'm very confident we'll have released onto flexible self driving, fully autonomous Teslas in Austin and several other cities in America by the end of this year. That's probably everywhere in America next year, and everywhere in North America at least. I think in terms of next year, our constraints, I think it's likely to be just regulatory. Like Europe really has, for example, Europe is a layer cake of regulations and bureaucracy, which that really needs to be addressed. This is a joke like America innovates, Europe regulates.

[Elon Musk, Co-Founder & CEO at Tesla]

It's like guys, there's too many reps on the field. I mean, for example, for us to just to release just to release supervised full self driving in Europe, even though it works really well, we have to go through a mountain of paperwork with the Netherlands, which is our primary regulatory authority. Then the Netherlands presents this to the EU in I think May. And there's like this big EU country committee. We expect it to be approved at that time, but there's nothing we can do to make that May happen sooner.

[Elon Musk, Co-Founder & CEO at Tesla]

In fact, nobody seems to do it. But I guess all the countries would have to somehow vote in some way to have it happen sooner than May. Otherwise, it won't happen sooner than May. So then when is unsupervised FSC allowed in Europe? I'm like, May next year, maybe?

[Elon Musk, Co-Founder & CEO at Tesla]

I don't know. Well, as you'll find out when the EU is meeting again. Sometimes it's a 12 month cadence, sometimes a 6 month cadence. Then in China, which is a gigantic market, we do have some challenges because they weren't currently allow us to transfer training video outside of China. And then the U.

[Elon Musk, Co-Founder & CEO at Tesla]

S. Government won't let us do training in China. So we're in a bit of a bind there. So I put like what are quandary. So what we are resolving then is by literally looking at videos of streets in China that are available on the Internet to understand and then feeding that into our video training so that publicly available video of street signs and traffic rules in China can be can be used for training and then also putting it in a very accurate simulator.

[Elon Musk, Co-Founder & CEO at Tesla]

And so it will train using SIM for bus lanes in China. Like bus lanes in China, by the way, what about the biggest challenges in making FSD work in China is the bus lanes are very complicated. And there's like literally like hours of the day that you're allowed to be there and not be there. And then if you accidentally go in that bus lane at the wrong time, the you get an automatic ticket instantly. So it's kind of a big deal, bus lanes in China.

[Elon Musk, Co-Founder & CEO at Tesla]

So we put that into our simulator train on that, the car has to know what time date is, read the sign. Anyway, we'll get this solved. But I think we'll have untubized FSD in almost every market this year, limited simply by regulatory issues, not technical capability. And then unsupervised FSD in the US this year in many studies, but nationwide next year. And hopefully we have unsupervised FSD in most countries by the end of next year.

[Elon Musk, Co-Founder & CEO at Tesla]

That's my prediction with best data that I have right

[Elon Musk, Co-Founder & CEO at Tesla]

now.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great, thank you very much. The next question will come from Adam Jonas at Morgan Stanley. Adam, please feel free to unmute yourself.

[Adam Jonas, Analyst at Morgan Stanley]

Thanks everybody. So Elon, you've said in the past about LIDAR for AVs at least, that LIDAR is a crutch, a fool's errand. I think you even told me once, even if it was free, you'd say you wouldn't use it. You still feel that way?

[Elon Musk, Co-Founder & CEO at Tesla]

Yes.

[Adam Jonas, Analyst at Morgan Stanley]

Care to elaborate or just I have another question.

[Elon Musk, Co-Founder & CEO at Tesla]

Look, we even have a radar in the car and we turned it off.

[Adam Jonas, Analyst at Morgan Stanley]

I got it. Alright. So you're you're still Yeah. People think you're crazy, you know, but, for not Well, look,

[Elon Musk, Co-Founder & CEO at Tesla]

I mean, obviously, humans drive without shooting lasers out of their eyes. I mean, unless you're Superman, You know, but like humans drive just with passive visual, you know, humans drive with eyes and a neural net and a brain neural net, so sort of biological, which is so the digital equivalent of eyes and a brain are cameras and digital neural nets or AI. So that's the entire road system was designed for passive optical neural nets. That's how the whole system was not designed and what everyone is expecting other that's how we expect other cars to behave. So therefore, that is very obviously the solution, for full self driving as a generalized but the generalized solution for full self driving, as opposed to the very specific neighborhood by neighborhood solution, which is very difficult to maintain, which is what our competitors are doing.

[Adam Jonas, Analyst at Morgan Stanley]

I got you. Yeah, yeah.

[Adam Jonas, Analyst at Morgan Stanley]

I mean, LIDAR doesn't work in the fall, guys.

[Elon Musk, Co-Founder & CEO at Tesla]

Yeah, LIDAR has a lot of issues. Like, it's like I don't have something like that SpaceX Dragon docks with the space station using LIDAR that a program that I personally spearheaded. I don't have some fundamental bizarre dislike of LiDAR. It's simply the wrong solution for driving cars on roads.

[Adam Jonas, Analyst at Morgan Stanley]

Right. You understand how LiDAR works. I get it.

[Elon Musk, Co-Founder & CEO at Tesla]

I get it. Literally designed and built to own red LiDAR. I oversaw the project, the engineering thing. It was my decision to use LIDAR on Dragon, and I oversaw that engineering project directly. So I'm like, we literally designed and made a radar, a LIDAR to dock with the space station.

[Elon Musk, Co-Founder & CEO at Tesla]

If I thought it was the right solution for cars, I would do that, but it isn't.

[Adam Jonas, Analyst at Morgan Stanley]

Got it. All right. Just as a follow-up, at CES, you said, I'm paraphrasing, that any AI will be able to do any cognitive task not involving atoms within the next 3 or 4 years. And that would imply, Elon, that before the end of President Trump's term in office, that AI would be moving pretty damn quickly into the physical world, into the world of photons and atoms. And I'm thinking, given your work with the administration, how confident are you that the U.

[Adam Jonas, Analyst at Morgan Stanley]

S. Has, will have the manufacturing and the supply base to make good on your excitement about physical AI by the end of by latter this decade, we seem pretty vulnerable right now, I've seen you tweeting about, or sorry, X ing, excuse me, Elon, about China, Freudian slip, about China having, like making more drones in a day than the US makes in a year and all the entanglement of the supply. So what has to happen in the US to make that possible? What's your message and what can you do about it and what's relevant for Tesla shareholders? Thanks Elon.

[Elon Musk, Co-Founder & CEO at Tesla]

Well, at Tesla, obviously, we think manufacturing is cool. SpaceX, we think manufacturing is cool. But in general, for talented Americans, they need to beyond, you know, my beyond my companies, beyond me and my teams here, in general, we need to make manufacturing cool again in America. And, you know, like, I honestly think people should move from like law and finance into manufacturing. That's my honest opinion.

[Elon Musk, Co-Founder & CEO at Tesla]

We have too much this is both a compliment and a criticism. We have too much talent in law and finance in America, and there should be more of that talent in manufacturing. So yeah, I mean, at Tesla, we're making sure that we can continue to manufacture our stuff even in the event of geopolitical tensions rising to very high levels.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. Thank you very much. The next question will come from Pierre Ferragu at New Street. Pierre, please feel free to unmute yourself.

[Pierre Ferragu, Technology Infrastructure at New Street Research]

Hey. Thanks, guys. I'll take the question. So I have a question on deploying like robotaxis in June in Austin. So that's great news.

[Pierre Ferragu, Technology Infrastructure at New Street Research]

And I was wondering if it means I can drive down to Austin in June and try and try unsupervised by myself with my car or it's going to be more like your fleets testing it. It?

[Elon Musk, Co-Founder & CEO at Tesla]

It'll be our fleet testing it, because that's our sort of toe in the water. You know, we'll be scrutinizing it very carefully, make sure it was not something we missed, but it will be, you know, right autonomous ride hailing for money in Austin in June. And then as shortly as possible, other cities in America, and I expect us to be operating doing unsupervised activity with our internal fleet in several cities by the end of the year. Then it's probably next year when people are able to add or subtract their car from the fleet. So kind of like Airbnb where you can sort of add or subtract your house or your guest room.

[Elon Musk, Co-Founder & CEO at Tesla]

You can say like add it to the Airbnb inventory or don't add it to the Airbnb inventory. You know, if you're traveling for a month, you can or whatever the case may be, you can let other people use your house. And then you can anyway, so that's probably next year because we want to just make sure we've ironed out any kinks. And a lot of it is it's not like we're not splitting the atom here. It's just a bunch of work that needs to be done to make sure the whole thing works efficiently, that people can order the car.

[Elon Musk, Co-Founder & CEO at Tesla]

It it comes, you know, it's the right spot, does exactly the right thing. All the payment systems work. The billing works. Yeah.

[Pierre Ferragu, Technology Infrastructure at New Street Research]

Okay. But then like so my follow-up question would be you know I have a Tesla. I have it as the and I have to keep my eyes on the on the road all the time. It's super boring because I don't really need to intervene anymore. And the really annoying thing is that I can't just check my emails.

[Pierre Ferragu, Technology Infrastructure at New Street Research]

And so are you working also on introducing you know like a kind of like free and supervised where I could be eyes off and I would be able to check my emails and we just need to with a 5 second notice have to go back and keep an eye on what's happening or is that something you're working on as well because it feels so close with this certain

[Pierre Ferragu, Technology Infrastructure at New Street Research]

that I

[Pierre Ferragu, Technology Infrastructure at New Street Research]

wonder if it's something we'd expect for this year. It's a very selfish question I asked for myself to be honest.

[Elon Musk, Co-Founder & CEO at Tesla]

Yes, we just need, we need to be very confident that the probability of injury is low before, we allow people to check with their email and text messages. In fact, right now, we're in this perverse situation where you may have encountered yourself, where, people will actually go to manual driving to check their text messages Yep. So the computer doesn't yell at them, and then go then put it back on autonomous mode once they have checked their text messages, which is obviously less safe, significantly less safe. Significantly less safe, significantly less safe than just letting people check their text once in a while, without the computer yelling at them. Yep.

[Elon Musk, Co-Founder & CEO at Tesla]

But we just wanna be cautious about that the advent of that. We're in this sort of, you know, neither here nor there. But just for I mean, I think it's not for many months longer. But, yeah, we're in this perverse situation where people turn the car off autopilot so the computer doesn't yell at them, check their text messages while steering the car with their knee and not looking out the window.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

Like Elon said, if you have any problems with the system and when people are not looking, that is dangerous. That's what we're trying to avoid. The capability is getting there, but it's not fully there. That's why he was using the term of tipping our tool in the water, then getting comfortable and keep going.

[Elon Musk, Co-Founder & CEO at Tesla]

Anyway, it's not far off. But we would want to prove to ourselves and obviously prove to regulators that the car is unequivocally safer, in autonomous mode than not. And that's we're not far off. So this is like low single digit months.

[Travis Axelrod, Head of Investor Realtions at Tesla]

To the safety aspect, we did publish our safety, vehicle safety report today. And in Q4, it was one crash for every 5,900,000 miles driven compared to a crash every 700,000 miles without falling behind it. Right.

[Elon Musk, Co-Founder & CEO at Tesla]

So at it. We're getting to the point where it's an order of magnitude.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Yeah, it's like 8.5 times 6,000,000.

[Elon Musk, Co-Founder & CEO at Tesla]

So it's just about there. Yeah,

[Travis Axelrod, Head of Investor Realtions at Tesla]

it's amazing. Great. Alrighty. And, our last question will be coming from, Dan Levi at Barclays. Dan, feel free to unmute yourself.

[Dan Lévy, Senior Equity Research Analyst at Barclays]

Great. Good evening. Thank you for taking the questions. Elon, you've talked about the need for proliferation of sustainable transport in the past as part of sort of broader push to sustainable energy. Okay.

[Dan Lévy, Senior Equity Research Analyst at Barclays]

I know we've heard a lot about President Trump's plans to reverse the EV mandate. And I think there's a view that given regulation is a driver of EV uptake, this could slow EV uptake in the US. So what would be your view on the right policy in the US given your comments in the past of the need to push for sustainable transport?

[Elon Musk, Co-Founder & CEO at Tesla]

You know, at this point, I think that sustainable transport is inevitable. I'm highly confident that all transport will be autonomous electric, including aircraft, and that it's simply it can't be stopped any more than one could have stopped the advent of the external combustion engine, steam engine, or one could have stopped the advent of the internal combustion engine. Like even if you've been the biggest force advocate on Earth, like a horses are the way, not these newfangled car automobiles. You can't stop the advent of the automobile. It's going to happen.

[Elon Musk, Co-Founder & CEO at Tesla]

And you can't stop the advent of electric cars. It's going to happen. The only thing holding back electric cars was range and that is a solved problem.

[Dan Lévy, Senior Equity Research Analyst at Barclays]

Great.

[Dan Lévy, Senior Equity Research Analyst at Barclays]

And then as a follow-up, in the past, Elon, you had made a comment that you'd be willing to sell cars effectively, no margin to get the cars out there. And there's a comment in the release today of the rate of acceleration of autonomy efforts does impact volume growth. So perhaps you could just talk about, you know, with your efforts on FSD, how we should think about your desire to put more vehicles out in the market to take advantage of your tech advances?

[Elon Musk, Co-Founder & CEO at Tesla]

So I'm not sure I understand the question. We have a lot of cars. I mean, we've got millions of cars out there.

[Vaibhav Taneja, Chief Financial Officer at Tesla]

So is your question, Dan, that how do we marry our future growth aspects with FSD?

[Travis Axelrod, Head of Investor Realtions at Tesla]

Go ahead and mute yourself, Dan.

[Dan Lévy, Senior Equity Research Analyst at Barclays]

Yeah. More so just how much more aggressively you would be willing to you know, sell your cars versus, you know, in light of your improvements on FSD?

[Elon Musk, Co-Founder & CEO at Tesla]

Well, right now, the constraint we're trying to solve is battery production, as opposed to demand. So we're and now Q1, we've got this massive factory retooling for the new Model Y, for example, that obviously has a short of impact on output. But the problem we're seeing with, in fact, we're talking the executive team and I were talking about just before this call was how we've got to figure out how to increase total gigawatt hours of battery production this year one way or another. That's the constraint on our output.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Great. All righty. And with that, I think we are all done for today. So, thanks everyone so much for all of your questions. We look forward to talking to you next quarter.

[Travis Axelrod, Head of Investor Realtions at Tesla]

Thank you very much and goodbye.

Participants

Executives

• Travis Axelrod, Head of Investor Realtions
• Elon Musk, Co-Founder & CEO
• Vaibhav Taneja, Chief Financial Officer
• Lars Moravy, VP, Vehicle Engineering
• Ashok Elluswamy, Executive Officer

Analysts

• Executive
• Daniel Roeska, Equity Research Analyst at Bernstein
• Adam Jonas, Analyst at Morgan Stanley
• Pierre Ferragu, Technology Infrastructure at New Street Research
• Dan Lévy, Senior Equity Research Analyst at Barclays