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[Music] [Music] [Applause] [Music] [Music] oh [Applause] [Music] [Applause] [Music] [Applause] n [Music] [Applause] [Music] [Applause] [Music] [Music] [Music] a oh [Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] good afternoon everyone and welcome to Tesla's thirdd quarter 2024 Q&A webcast my name is Travis aelod head of investor relations and I'm joined today by Elan musk deot t and a number of other Executives our Q3 results were announced at about 3 p.m. central Time in the update deck we published at the same link as this

webcast during this call we will discuss our business Outlook and make forward-looking statements these comments are based on our predictions and expectations as of today actual events or results could differ materially due to a number of risks and uncertainties including those mentioned in our most recent filings with the SEC during the question and answer portion of sp's call please limit yourself to one question and one followup please use the raiseed hand button to join the question Q before we jump into Q&A Elon has some opening remarks Elon thank you so to recap as someone seeing

um uh something that of Industry I seeing year-over-year declines in what of volumes in Q3 uh Tesla at the same time has achieved uh record deliveries in fact I think if you look at uh EV companies uh worldwide to the best of my knowledge no EB company is even profitable and I'm I to the best of my knowledge there's no EV division of any company of any existing a company that is profitable so it is notable that Tesla is profitable despite uh very challenging one of environment um and uh and and this quarter actually is

a record Q3 for us um so we produced our 7th million vehicle actually just yesterday so congratulations to the teams that made it happen in Tesla that's staggeringly immense amount of work to make 7 million cars um so uh let's see and we also have energy storage business is um growing like wildfire uh with strong demand for both mega pack and power wall um and as people know um on October 10th we laid out a vision for an autonomous an electrical future that I think is very compelling you know the Tes team did a phenomenal

job there with um actually giving people an opportunity to experience the future uh where where you have humanoid robots walking among the crowd not not you know with the can but presentation or anything but literally walking among the crowd serving drinks and whatnot and um and we had 50 autonomous vehicles they were 20 cyber caps but there were an additional 30 model y operating fully autonomously the entire carrying thousands thousands of people thousands of people um with with no incidents the entire night so and and for those who went there that I it's worth emphasizing

that the the Cyber cap had no steering wheel or brake or accelerator pedals meaning there was no there's no POS there was no way for anyone to intervene manually even if they wanted to um and the whole night went very smoothly so um regarding the vehicle business we are still on track to deliver more affordable uh models starting in the first half of 2025 um you know this is I think probably people wondering what should they assume for vehicle uh vehicle sales growth next year and at the risk of to take a bit of risk

here I I I do want to give some some rough estimate which is I think 20 to 30% vehicle growth next year um you know not withstanding negative external events like if there's some Force measure events like some big war breaks out or interest rates go Skyhigh or something like that then you know we we can't overcome massive Force mature events but I I think with our lower cost vehicles with the Advent of autonomy something like a 20 to 30% growth next year is is uh my best gu um and uh and then and then

COC cap reaching volume production in 26 we do feel confident of cyab reaching volume production in 26 not just stting production but reaching volume production at 26 um and that you know that that should be substantial growth we're aiming for you know these two million units a year of of cyoc cab um that that'll be in more than one Factory it I think it's at least 2 million un year maybe 4 million ultimately um so uh yeah these are just my best guesses but if you ask me what my best guesses that those are my

best guesses um the uh the 46 the the cell 4680 lines the team is actually doing great work there um the 4680 is uh rapidly approaching the point where it is the most competitive cell so when consider the the fully the fully landed the cost of a of a battery pack um fully landed in the US net of incentives and duties uh the 4680 is tracking to be the most competitive me being lower cost K hour fully considered than any other alternative which is not quite there yet but we're we're close to being there which

I think is uh extremely exciting and we've got um several a lot of ideas to go well beyond that so if I I think there's if we execute well the 4680 will have the the Tesla internally produced cell will be the most cost competitive uh cell in inly North America I testimon to a tremendous amount of hard work there from by the team so um that that's say we we'll continue to buy a lot of cells from our competitors so our T it's not to make to to provide to to make sales just internally so

I don't want to set off any longarm bells here uh we we're obviously increasing uh substantially our vehicle output and our stationary storage output so we need a lot of cells um and most of them will still come from suppliers but but I think it is it is a some good news that the Tesla internal cell um is likely this track needs to be the most competitive in the US so with respect to autonomy um as people have are experiencing in the cars um really from week to week uh there are significant improvements and the

miles between interventions um so with the the new version 12.5 the release of full self-driving cyber truck the the combining the code into a single stack so that the U City driving and the anine highway driving are are one stack which is a big Improvement for the highway driving so it's it's just all neural Nets and the release of Ashley SM summon um we try to have a sense of humor here at Tes uh and we're also so that that's 12.5 version 13 of FSD uh is going out soon um sure we'll elaborate more on

that later in the call um we expect to see some roughly a five or six fold Improvement in miles between interventions compared to 12.5 um and actually looking at the the year as a whole of the Improvement uh in miles between interventions we think will bring at least three orders magnitude so um that's that's a very dramatic Improvement uh in the course of the year and uh and we expect that train to continue next year so um the current the current internal expectation say internal expectation or uh the Tesla FSD having um longer miles between

interion than human is the second quarter of next year um which means it may end up being the third quarter but it's it's next it seems extremely likely to be next year sh do you want to anything yeah in mentioning miles between critical interventions um yeah like you mentioned Neon we already made a 100x uh improvement with 12.5 from starting of this year and then with v13 release we expect to be ,x from the beginning from January of this year on my production release software um and this came in because technology improvements going to end

to end uh having higher frame rate uh partly also helped by Hardware force uh more capabilities um so on uh and we hope that you know we continue to scale the neural network the data the training compute Etc by Q2 next year we should cross over the uh average human minus for critical intervention or Collision in that case I mean that that is just um unboned our internal estimate yes yeah um so um that that's no sandbagging or anything else um our internal estimate is Q2 of next year to be uh safe than human um

and then to continue with rapid improvements uh thereafter um to a lot um vast majority of humanity has no idea that Tes by themselves so especially for something like like a model 3 or model wi it looks like a normal car so you don't expect a normal car to be be able to be intelligent enough to drive itself Cy cap looks looks different cyber truck looks different but model Y and model 3 are look they're good-looking cars but look they look fairly normal you don't expect a fairly normal looking car to have the intelligence you

enough AI to be able to drive itself but it does um so we do want to expose that to more people and uh and so we're doing every time we have um a significant Improvement in the software we'll roll we'll roll out another sort of 30-day trial so to encourage people to try it again and uh and we are seeing a significant Improvement in adoption um so the the the take rate for FSD is has improved substantially especially after the 1010 event um yeah so so there there's no need to wait for robot to tax

savab for to experience full autonomy we expect to achieve that next year with the with our existing vehicle item um I want actually smart summon gives a small taste of what it's going to look like uh the car able to drive itself to the user within private parking lots currently it's speed limited but then it's going to quickly be increased and we already had more than a million usage items of smart s yep so um and we actually we have um for Tesla employees in the Bay Area we already are are offering a right handing

capability so so you can actually you with the development app you can request a ride um and it'll take you anywhere in the Bay Area we we do have a safety driver for now but the software required to do that um we've we've developed I mean David do you want to elaborate on that yeah sure David um we showed uh some screenshots of this in the q1 uh shareholder deck and um you know this is real we've been testing it for the better part of the year and uh the building blocks that we needed in

order to build this functionality and deliver it to production we've been thinking about working on for years um it just so happens that we've used those building blocks to deliver great features for our customers in the meantime such as sharing your profile synchronizing it across cars so that every single car that you jump into whether it's you know another car that you own or a car that somebody's loaned to you or a rental car that you jump into it looks exactly like yours everything synchronized seat mirror positions you know media navigation everything is the same

just what you would expect from uh one of our Robo taxis um but you know we gave that functionality to our customers uh right now because we built it uh intending for it to be used in the future um releasing that functionality now all the and then cyber security that we knew we were going to need to deliver that functionality um sending a navigation destination from your phone to the vehicle um and so you know you're doing that now with the with the ride hailing app but it's something that we've uh made available to customers

for years seen the progress on a route in the mobile app that's something you'll need for the r inhaling app but again we released it in the meantime so it's not like we're just starting to think about this stuff right now while we're building out you know the early stages of our ride healing Network we've been thinking about this for quite a long time and excited to get the function out out there yeah and and we do expect to roll out um R hailing in um California Texas next year to the public um not the

California is somewh there's quite a long regulatory approval process I it shouldn't I think we should get approval next year but but it's contingent upon regulatory approval uh Texas is um a lot faster so it's uh I'd say like we're um we'll definitely have available at Texas um and probably have it available in in California subject to regulatory approval um and then and and maybe some other states actually um next year as well but at least California Texas um so I think that'll be very exciting there really a profound change U Tesla becomes more than

a sort of a vehicle and you know after Manufacturing Company um at that point so um we published a Q3 Vehicle Safety report uh which shows one crash for every 7 million miles water pilot that compares to the US average of one crash roughly every 700,000 miles so it's currently showing a 10x safety Improvement relative to the US average and we continue to expand our AI training capacity uh to combinate the needs of both FSD and Optimus um we're are currently not not a training compute constraint that's probably big so many factors that the the

FSD is actually getting uh so good that it takes us a while to actually find um mistakes um when you start getting to where it could take 10,000 miles to find a a mistake it's uh it takes a while to actually figure out which it is is this uh B is this Sofer Bol better than is Sofer Bol a better than Sofer Bol B it it actually takes a while to figure it out because neither one of them is making mistakes what takes take a long time to make mistakes so that's actually the single liit

biggest limiting factor is how long does it take us to figure out which which which version is better um sort of high class problem um obviously having a Dr Fleet um is very helpful for buring buring this out and then with Optimus we show we show a massive Improvement in optimus's dexterity movement on October 10th and our next gen hand and forarm which has 22 degrees of freedom double which is double the prior uh um hand forong um it's it's extremely humanlike I say it's much better ATT tactile sing um it's really I feel confident

saying we have most advanced humanoid robot by Longshot and we're more over the only company that really has all of the ingredients necessary to scale of humanoid robots um because the the the things that what other companies missing is that they're they're missing the AI brain and they're missing the ability to really scale to very high volume production um so you some see some impressive video demos but what but they they like the they like the localized Ai and the um Rel to scale volume to very high numbers um as I've said on a few

occasions before I think Optimus will ultimately be most part and I think has good chance of being the most valuable product ever made for the energy business that's doing extremely well and this the opportunity ahead is gigantic the L um MEAP pack Factory uh reached 200 megapacks a week uh which is now a 40 G gwatt hour a year run rate and we have a second Factory in Shanghai that will uh begin with a 20 GW hour year run rate um in q1 next year so just next quarter um and uh that's that'll keep also

scale up it won't be long before we're shipping 100 GA hours a year stationary storage in tes and and it'll that that I mean I that'll ultimately grow I think to to to multiple terawatt hours per year it it has to actually in order to have a sustainable energy future if you not the terawatt scale you you're not really moving the needle so um if if you look at ourly very complicated uh last master plan which I think actually is too much detail maybe I'll ask Gro to analyze it and shorten it up yeah give

us the tldr on the last master plan but we we we showed in that master plan that it is possible to take oil of Earth to a fully sustainable energy situation uh using sustainable energy power generation um and batteries and Electric transport um and there are no fundamental material limitations like there's not some very rare material that that we don't have enough of on Earth we actually have enough of raw materials to yeah take all of human civilization make it fully sustainable and even if civilization dramatically increased its electricity usage would still be fully sustainable

you know what one way to think of um the progress of a civilization space out a little esoteric but is percentage completion of KF scale so carf scale one would be you're using all the power of of a planet we were we're currently less than 1% on car level level one level two would be using all the power of the Sun and level three all the power of the Galaxy so we got a long way to go long way to go um when you think in cter ship terms it becomes obvious that by that the

by far the biggest source of of energy is the sun everything else is in the noise so um so in conclusion Tesla is focused on building the future of energy transport Robotics and Ai and this is a time when others are just focused on managing around near-term Trends uh we think what we're doing is the right approach and if we execute on our objectives and I think we will tells that my prediction is T will become the most valuable company in the world and probably by a long by a long shot um I want to

thank the TS of Team once again for strong execution in a tough operating environment and we're looking forward to building an incredibly exciting future thank you great thank you very much Elon and that has big remarks as well yeah thanks our Q3 results were overall positive and once again demonstrate the skill in which businesses evolved over the years with the generation of record operating cash flows of 6.3 Billion automotive revenues grew both quarter on quarter and year on year while we had unit volume growth we did experience reduction in asbs primarily due to the impact

of financing incentives as a reminder we providing these incentives primarily using third party Banks and financial institution and recognize the cost of these incentives as an upfront reduction to R we released FSD for cyber Tru and other features like actually smart serone like El talked about in North America which contributed 326 million of revenues in the quarter we continue continue to see elevated levels of regulatory credit sales with over two billion of revenues so far this year expand on this at an industry level China continues to outperform us and Europe by a factor of three

and if there is something to be learned from that this gives a signal of what is to come in other regions as customers acceptance of e grows and we feel that is the right strategy to build affordable and more compelling needs our Focus remains on growing unit volume while avoiding a buildup of inventory to support this strategy we're continuing to offer extremely compelling vehicle financing options in every Market when you compare any vehicle in our lineup with other oems believe our vehicles provide much better value particularly when you consider the safety features performance and unparalleled

software functionality I like David also talked about include also what had talked about around autonomy music options parental controls and much more while every vehicle in our lineup comes up with these capabilities there is an awareness Gap not just with Buyers but at times even with existing owners we plan on making these more visible in our interactions with both existing and future customers Automotive margins impr improved quarter over quarter as a result of FSD featur release discussed before increase in our overall production and delivery volume contined benefit from commodity pricing and more localized deliveries in

region which resulted in lower fate and duties sustaining these margins in Q4 however will be challenging given the current economic envirment not that we are focused on the cost per vehicle and there are numerous work streams within the company to sree our cost without compromising on customer experience yeah and something that that's a helpful hopefully helpful macro trend is if there's a decline in in interest rates this has a massive effect on the on Automotive demand the vast majority of people it's the demand is driven by the monthly payment can they both multi payment so

um like most likely we see continue decline rates which helps with affordability Vehicles yeah I mean that is one Trend which we observed in the industry that you know because of the affordability being impacted because of interest rates people are holding on to the cars longer especially in the US and that is actually having an impact on overall industry too uh as we discussed uh earlier as we discussed in PR orders energy deployments fluctuate quarter or quarter due to customer Readiness location of orders being fulfilled and not necessarily an indicator of demand of production within

the quarter while we did see a decline in Q3 we expect to grow deployment sequentially in Q4 to end the year but more than double of last year energy margins in Q3 qu record at more than 30% this is a function of mix of projects being deployed in the quarter not that there will be fluctuation in margins as we manage through deployments and our inventory our Pipeline and backlog continue to grow quarter over quarter as we fill our 2025 production slots and we are doing our level best to keep up with the demand just coming

back on Automotive margins uh I talked about sorry uh I talked about what is happening one other thing which I want to also share is that we're that you know we will continue to keep whatever we can to squee like I said before about squeezing on the cost but this is something which we also are very capable of I mean just in Q3 we reach our lowest cost per vle and that is a trend which we want to keep focus on then going on to service another we continue to show improvements in Q3 this was

was a result of better performance both in our service business which includes Collision part sales and merchandise and continued growth is supercharging these Fleet based revenues will continue to grow as the overall Fleet size increases our operating expenses declined quarter over quarter in a year-on-year basis this is partially due to the restructuring we undertook in Kimu cost saving from these initiatives were partially offset by increase in costs related to our efforts we've started using the GPU cluster based out of our Factory in Austin ahead of schedule and now on track to get 50k gpus deployed

in Texas by the end of this month one thing which I'd like to elaborate is that we're being very judicious on our AI compute span too and saying how best we can utilize the existing infrastructure before making further Investments on the CeX FR we had over 3 and a half billion in the quarter this was a sequential inreased largely because of investments in AI compute we now expect the capex for the year to be an excess of 11 billion we shared our vision for the future at the V robot event at the beginning of the

month the Tesla team is hyperfocused and delivering on that mission all efforts are underway to make it a reality when we've achieved significant progress this year it will take time to get this as we Pioneer new and Incredibly complex Technologies and navigate a fragmented regulatory landscape future is incredibly bright and I want to thank the Tesla team once again follow the H great thank you very much feob uh now we'll go to investor questions the first one is is Tesla still on track to deliver the more affordable model next year as mentioned by Elon earlier

and how does it align with your AI and product redb sure I mean as Elon and vibol both said you are in plan uh to meet that in the first half of next year our mission has always been to lower the cost of of the of of our vehicles to increase the adoption of sustainable energy and transport um part of that is is lowering the cost of our current Vehicles which is where uh all of the personally owned vehicles that we sell today come in but the next stage in that really is it fits into

AI road map is when we bring in Robo taxis which lowers the initial cost of of getting into an EV and those that's really where we see the marriage of EV Road mapap and the AI road map yeah it'll be like with with with incentive Sub sub 30k which is kind of a key threshold great thank you very much uh similar question next uh when can we expect Tesla to give us the $25,000 non-root taxi regular car model we're not making a non robot yeah all our vehicles today are Rob I think we've made very

clear that uh we're we're the future is autonomous um I mean it's going to be you and I actually said this many years ago uh but that uh my strong belief and I believe that is panning out to be true it'll be very obvious in retrospect is that the futur is autonomous electric vehicles um and uh non-autonomous gasoline vehicles in the future will be like riding a horse and using a fli bone um it's not that there are no horses yeah there are some horses but they're unusual they're Niche um and uh you know so

so just everything's going to be electric autonomous um I think this this is blind like it should be frankly blindingly obvious at this point that that is the future um so a lot of Automotive companies most aut companies have not not internalized this which is surprising um cu we' shouting this from the rooftops for such a long time and it will accre to their detriment in the future um but all of our vehicles in the future will we even today yes all vehicles that we we really made all 7 million Vehicles vast majority are are

capable of autonomy um and um you know we're currently making on the order of 35,000 autonomous vehicles a week um you compare that to say way More's entire fleet it's less than they have less than a thousand cars we make 35k a week yeah and our cars look normal yeah they mostly look normal the Cyber truck looks yes thankfully you know uh looks abnormal um and then the you know cyber cab SL R taxi you know we wanted to have something futuristic looking and I think it does look futuristic um it's worth noing with respect

to the cyber cab it's not it's especially not just a revolution in vehicle design but a revolution in vehicle manufacturing that is also coming with the with the Cyber cab uh the the cycle time like the um the units per per hour of of the Cyber cab line uh is like this is just really something special I mean this is be yeah half order of Mag better than other car manufacturing lines like like like like like not not in the same league is what I'm saying not in the same league um so so it's it's

you know and I I said like you know several years ago that the maybe the most the hottest Tesla prod to copy will be the factory you just like buy a factory um yeah you can't reverse engineer Factory it's up M yeah it's like you know yeah um so the and and as we so we're rapidly evolving at manufacturing technology so so anyway there's like basically I think having a regular 25k model is pointless yeah it would be silly like it would be completely at us with what we believe in in in autonomous world what

matters is the lowest cost per mile of of of effici of that vehicle and that's what we've done with with the Rope taxi exactly autonomous it's fully considered cost per mile um is what matters and if you try to make a car that is you know essentially a hybrid manual automatic C it's it's it's not going to be as good as a dedicated autonomous car um so yeah Cy cab is is just not going to have steering wheels and pedals design optimized for autonomy it it'll it'll you know cost on the order of C cost

roughly 25k so it is a 25k car and you can you will be able to buy one Own It exclus exclusively if you want so just one have steer you don't need them great thank you very much um the next question is what is Tesla doing to alleviate long weight times at service centers so we aim on solving problems at the source so at the factory before they can even affect our customers we believe the best service is no service then yeah really is don't even have them the if the car doesn't break yeah exactly

that's the best thing don't see anyone with the Tesla Shir you either do it REM fix the issue upstream or do it remotely do it through software they can be at work or at home and you know car we park and we address fix the issue and we've partnered the field with service to make sure we're looking at the same issues and additionally just in Q3 and Q4 of this year alone we we have open and will open in total of nearly 70 locations and in North America we significantly expand the size of each location

and have doubled the size last year compared to this year yeah I think I think it's like actually a lot of erit to having large service cers because you can you can have specialization of Labor you can start you can start to approach yeah it should be more Factory like um you know where you can have dedicated lanes for particular types of service and and it's way easier for somebody to become expert in a few different types of repairs than in every repair exactly this has helped us with the base that these heavy repairs like

clogging up the lane they dedicated lanes for different type of repairs and so it's through put matters and really treating it like a factory yeah this is this is where Tesla structure I think Tesla has a structural Advantage relative to the rest of the Auto industry um because we make cars and we service the cars whereas I think there's a bit of a conflict of interest with the the dealer model and the O the de of traditional OEM a dealer model where the dealerships make most of their money on service um and so they they

don't they obviously have this incentive to reduce the servicing cost whereas in our case we are incented to reduce the servicing cost because we we carry that servicing cost um and we've got a good feedback with with our with our cars the exactly yeah would be with the factory with the service leaders together and send fact people from the factor to the field and field to the factory to see it firsthand ex provide suggestions for you know manufacturing as well as for engineering on design yeah so I view this as a structural fundamental structural advantage

of Tesla versus the rest of the Auto industry also doing a bunch of work on the software side not only to automate you know Diagnostics um to identify you know what needs to be done to a car before it comes into service but also automating all of the preparation work and aligning all the resources that are necessary in order for uh the car to be very efficiently worked on once it arrives so the parts are there like the lift is scheduled the technician scheduled like everything car this is what's wrong with me and tell till

the service center the the car everything ready in advance yeah please fix me and this is what's wrong instead of a customer trying to translate the cars telling a story directly and we're pulling that yeah yeah you don't most time you don't need to diagnose the car when it arrives the car yeah this is like again a fundamental technology advantage and structural Advantage compared to the rest of the order industry it's yeah I think it's underappreciated as to what all we are able to do and and that's why because like you said before most of

our cars except for cyber drug look the same yeah right so people don't realize that it has so much capability yeah yeah they they look better than other cars but but they they're not like obviously like super futuristic yeah great thank you very much uh the next question is uh please provide an update on the semi uh what will the next stage of growth look like and when will FSD be ready sure so as you we posted in the earnings back we're progressing swiftly on the build of the semi Factory in uh in our Giga

Factory in Reno um we've released all our major expenditures for that program and we're on track to start pilot builds in the second half of next year with production starting in the first half of 2026 and ramping really throughout the year to to full production um semi you know growth will largely depend on our customer adoption of the product uh well I I I don't think we're going to be demand limited honestly yeah which I say which is like aner for for the semi because it's really a commodity of total cost of ownership yes exactly

it's it's uh we have a kind of ridiculous demand for the semi um in that world where it's about how much do I spend to move per mile it's a no-brainer yeah fundamentally if if you've got a semar where the fully considered cost per mile per per ton of Transport uh is better than say a diesel truck uh any company that doesn't adopt an electric semi will will lose it's not a it's it's not a subjective thing it's like whether do you like comp I mean we like we we want the style we want we

want to have a beautiful semi- Tru but frankly if we made an ugly semi truck matter um and this is proving so in our fleets and in Pepsi's a partner um in fact the the Pepsi actually said last week they're having nobody want their drivers don't want to go back yeah yeah as soon as we give anyone the electric semi it's it's it's like the that that's like the choice it's the what they want to drive yeah yeah yeah that's like like so the like the most seen like they top drivers well they get to

drive the Tes s it's a it's it's the it's the thing they wanted drive it's it's it's super fun to drive it's also very easy to drive it's it's easy to drive and it holds ass it's like fast super maybe too fast well but I mean like like you know like like you've seen like the videos of where like they like Tes electric some like you know can go uphill yeah speeding fast like the diesel truck or even cars yeah even cars um so like it's responsive it it's you you you know you know you

floor it and that the truck actually emerged and that's a benefit not only for for the driver and for the goods but also for safety in terms of other drivers on the road you don't get stuck behind the semi you're not like yeah you know in a slow down situation and onr I mean how that plays into you know fstd which is the second part of the question all of the semis have been since the couple hundred we've deployed already and and the ones that we'll be building next year and throughout uh the future have

all the hardware and the cameras necessary to to uh deploy FSD and we're currently training with that small F that we have and as soon as the fleet is trained in the neural that'ss are up you know we we'll get FSD onto that platform yeah I mean it'll be a massive Improvement in uh driver fatigue you know because you uh and driver safety we've got sort of the anti- Jack knifing software uh we you know you don't have to worry about your brakes overheating if you go down a down a steep hill because because the

we use regenerative like that that energy goes back in into the pack actually when we leave Renos it's just like it's it's like radically better than than a diesel semi this what why the drivers love it great guys thank you very much our next question is when will Tesla incorporate X and Gro in all the Tesla vehicles well I mean this these are relatively small fry things you know um but yeah the I think um we'll keep expanding you know what what is available in the car on on the spot screen and um also improving

like the browser so like just generally you can access anything you want in the car in fact for the Tesla you know once you get to full autonomy you actually want F A A system that is uh can do anything like if you want to browse the internet if you want to uh you know ask ask AI questions if you want to watch a movie if you want to play a video game if you want to do you some productivity thing you can do anything you want in an autonomous vehicle because you don't need to

drive um so that's why the S cabs got a nice big screen and a great sound system so you can watch a watch a great movie with it's like being like personal movie theater yeah personal movie theater um awesome yeah this is why we've been building this functionality adding gaming to the car uh adding movies and other you know all sorts of different media applications to the car because you know um the car that's what you're going to that's yeah the cars that we buil today fun games by the way people haven't tried it there's

like uh castle doombad and politopia and a bunch of really fun games in the car yeah we're we're constantly looking at you know what features to add next and we're paying attention to what's most commonly requested by our customers yeah play castle doombad you wonder great uh thank you guys very much the next question is um Elon mentioned unsupervised FSD in California and Texas next year um does that mean Regulators have agreed to it in theti entire state for existing Hardware 3 and four vehicles uh no as we said as I said earlier you know

California loves regulation but they have a pathway yeah I mean there's a pathway obviously weo operates in California so there's just a lot of forms to spill out and a lot of approvals that are required um I I I mean I'd be shocked if we don't get approval next year but it's it's just not something we we totally control um but I think we will get approval next year in California and Texas and and and towards the end of the year I we'll Branch out be Beyond California Texas I mean I think it's important to

reiterate this like homologating or certifying a vehicle at the federal level in the US is done by meeting fmvss regulations all our vehicles today that are produced that are autonomous capable meet all those regulations the Cyber will meet those regulations and so the deployment of the vehicle to the road is not a limitation but is a limitation is what you said at the state level where they control autonomous vehicle deployment some states are relatively easy as you mentioned for Texas yeah and other ones have halfways like California that may take a little longer other ones

have set up anything yet and so we will work for those state by state I I do think we should have a federal um I agree like autonomous vehicles should be approved there should be it should be possible to Congress if you're listening let's get a federal AV there there should be a Fed Federal approval process for autonomous vehicles um I mean that's that's how the fbss is started and work Federal Mo motor vehicle F and fbss is federal yeah so I mean in 2017 and 18 they we you know it's when Regulators started looking

at it it's really kind of stalled since then but we would appreciate and would support helping out with those reg it really needs to be like at National approval is is important um you know if there's a department of government efficiency I'll try to help make that Happ for everyone not just Tesla um but uh you know just uh we like like some some things in the US are state-by-state regulated like for example insurance and it's like a it's incredibly painful to do it state byst state 50 states um and and uh I think we

should have there should be a national approval process for autonomy great thanks guys uh the next question is uh what is the plan for 2025 I I think we're just talk yeah we I mean basically we talked through this there's a lot going on Elon already mentioned that we're working on cheaper models to come out I mean there work which the team is doing to get the factories ready today to try and make that happen in yeah by the way the amount of work required to make a lower cost car is insanely high but like

it is harder to get like 20% of the cost out of a car than it is to design the car and build the entire Factory in the post place it's like excruciating and it's and and there's not a lot of movies made about the the the heroes who got 20% of the cost out of a car but let me tell you there should beone who got that is incredibly heroic is the little changes it's not like it's yeah it's like they should be you the heroes that go 20% cost out of a car is like

damn I have a lot of respect for them talking movie it's like you know I think you probably could make a compelling movie but it just no no like if you actually saw how hard if people actually saw how hard it was to do that you'd be like whoa that's damn hard um just yesterday we were talking about potting I mean honestly like like literally yeah I mean there's there's a lot of when I do call it sort of like getting cost out of things it's kind of like it's like game of pennies it's like

Game of Thrones but pennies you know first approximation you got if you've got 10,000 items um in a car very off approximation and each of them cost $4 then you have a $40,000 car so then if you want to make a you know a $35,000 car if you go to get 50 cents on average out of the 10,000 items every time every part yeah and it's like you know and then most the best is you delete some parts in fact we found be able to delete a lot of parts um I'm very I'm I'm very

excited about the the Cy cap uh design and and and the but you know how how we're rethinking the design of a car for the Cy cap designing it for ultra high volume production and then designing machine that builds the machine uh that is that I think is also revolutionary and it's just there's no other car company that's even TR trying to do what we're doing like I don't even heard of it actually in fact I'm certain there is Noone like like I think this this the on your machine that builds the machine like it's

it's a it's it's inherent like it's it's would it's designed to be like you five times better than traditional Factory like cycle time cycle time and like part deletion movement I don't think any other car company has the same level of like integration of thought that we have when it comes to like when you design a part from a white sheet of paper who's going to make it where's it going to be made how's it going to be shipped how's it going to be assembled into the vehicle and like at any one point if something

is done in a silo it becomes a bottleneck of either cost or time or efficiency but with the with the root taxi you know the development like we've done a a good job on the finding all that and then like blowing up how it's made and saying it should be made this way and rethinking it all so it's the most efficient Factory possible that's shows our it will sh in our capex efficiency when we deploy it shows in the number of Parts shows in the Simplicity of the vehicle but also how it performs in terms

of like end user um State yeah yeah just to close out just on the energy front also in 25 we will have started manufacturing at the mea shankai uh we'll continue to increase our overall storage deployments with power wall 3 plan to continue expanding our supercharging Network getting more OEM on our Network 4680 that cell ramp as Elon talked about that would keep going and then there's a we also will have our lithium Refinery starting to produce so there's a lot which is going on great yeah so many things yeah I mean like crazy thing

is like Tesla is winning basically on almost every single thing we're doing um if we're not winning now we're on try to one in arenas where there are entire large companies that that's the only thing they do yeah I mean it's it's a company multiple companies within the company yeah tla's like many companies within one yeah fantastic thank you guys um just a few more uh what is going on with the Tesla Roadster fun things well I just like to thank our longsuffering um deposit holders of the Tesla Roadster um you know the reason it

hasn't come out yet is because it is it the Roadster is not not just the icing on the cake it's the cherry on the icing on the cake and so um you know our our our larger mission is is to accelerate the progress towards a sustainable energy future uh you know try to do things that maximize the probably the future is good for for Humanity and for Earth um and um and so that necessarily means that like the things like that are kind of like deserted we' like we'd all love to work on the Tesla

next year Tesla Roose be super it is super fun and we are working on it but but but it has to come behind the more uh things the things that have a more serious impact on the good of the world um so just thank you to all longsuffering uh Tes Royer deposit holders um and and and we are actually finally making progress on that um and uh we're we're close to finalizing the design on that um it's really going to be something spectacular you know friend of mine Peter teal uh you know sometimes people think

Peter te and I Rivals we're really good friends to be clear you know pet Peter you know was lamenting how you know the future doesn't have flying cars well we'll see where to come yeah great thank you very much um the next one is quite similar to other questions we've had so I might find it with with the final question um so briefly could you just uh detail uh how robotaxi will roll out uh will it start with a test of deployed Fleet and then allow customers um to to add theirs on like a subscription

model and then we'll Hardware 3 capable level fiveing the hardware 3 um what we saw with 12.5 was it was easier to make rapid progress with starting with Hardware 4 and figuring out the solution and then backporting it to Hardware 3 instead of directly working on Hardware 3 given that Hardware 4 has uh more like fundamental Hardware capabilities uh I think that Trend will continue uh into the next few quarters as well but we first figure out the solution rapidly with um ai4 and then back ported write the kernels it just takes longer to develop

those things because it's not fundamentally supported in the hardware and it's emulated um but yeah is initially working on Hardware 4 backporting it to Hardware 3 yeah so it's I guess the answer is we're not we're not 100% sure um but um but but as a short mention um because uh by by some measures hard 4 has has really several times the capability of Hardware 3 it's it's easier to to get things to work with Hardware 4 um and then uh it takes a lot of effort to sort of squeeze that functionality into Hardware 3

um and uh you know there there is some chance that that Hardware 3 is does not achieve the safety level that um allows for unsupervised FSD uh you know there was some chance of that um and and if if that turns out to be the case we will upgrade those who have bought Hardware 3 FSD for free um and we have designed the system to be um upgradeable you so and it's really it's really you know just s sort of switch out the computer type of thing um the camera the cameras are you know they're

they're capable but um anyway we don't we don't actually know the answer to that but if it does turn out um we'll take we'll make sure we take care of those who aboard FSD on H 3 great uh in the last few minutes that we have left uh we will try to get in some analyst questions uh the first question will be coming from Pierre faru at New Street uh Pierre please feel free to unmute yourself um thanks a lot guys for taking my question um I was wondering about like um the compute you're um

you're ramping up so you gave like interesting statistics on how much you have and you said you you don't feel your compute constraint and I was wondering you know how you are putting to work this additional comp is that a game for you of creating like larger and larger models like next generation of models that are larger the way open ai go from gpt3 to GPT 4 or is that more like you're set on your model and you need to throw more and more compute to accelerate the pace of learning to to improve uh relability

um and then I had a quick followup really quick on your roll out in Texas and in there uh in California next year the plan as you see today uh is it to roll out like a fleet or two um with car that will start with like a supervisory uh like some onboard supervision someone uh sitting at the wheel just in case and removing the supervisors progressively or are you aiming for going uh fully fledged without even a human supervisor when you get started okay well I guess we're going I I'll answer yeah first part

of the question the the nature of real world AI is different from say an llm in that uh you you have a massive amount of context so that like the the you've got case of Tesla seven or eight cameras uh that uh you know nine about 9 if you include the internal camera that um that that so you got gigabytes of context uh and and that that is then distilled down into a small number of control outputs um you know whereas it's it's like you don't really it's very rare to have in fact I'm not

sure any LM out there do gigabytes of context um and then you've got to you've got to then process that in the car with a a very small amount of compute power um so um um you know it's it's a it's all doable and it's happening um but it is a different problem than than what say a gemini or an open AI is doing um and uh now part of the way you can make up for the fact that the inference computer is is quite small is by spending a lot of effort on training um

and just like just like a human like you the more you train on something the less um the less mental workload it takes when you try when when you when you do it like when the first time like a human starts driving it absorbs your your whole mind but then as you train more and more on driving get very good then you the driving com becomes a background task it doesn't it only absorbs a small amount of your mental capacity because you have a lot of training so we can make up for the fact that

the inference computers um it's it's it's tiny compared to you know a 10 kilowatt Bank of gpus um because you got you've got a few hundred Watts um of inference compute we can make up that with um heavy training um so yeah that's uh and and then there's also vast amounts the actual you know pedabytes of data coming in are tremendous um and then sorting out what training is important with you know of the vast amounts of video training video data coming in from Fleet what is actually most important for training that's quite difficult um

but as I said we're we're not currently training compute constraint you want to elaborate yeah like you mentioned the training has both train larger models also like train quicker um but in the end we still got to pick which models are performing better so the validation effort to picking the models because the miles SP intervention is um pretty large we try a lot of miles to know in close loop uh we do have simulation and other ways to get those metrics uh those two help uh but in the end that's a big bottleneck um yeah

that's why we not training computer constraint Alone um and there's other aess of scaring as well data figuring out which data is more useful um that that is an important task and we're focusing on that yeah okay so as it relates to the second part of your question Pier about Safety Drivers and rolling it out each state has different requirements that you know in terms of how many miles and how much time you need to have a safety driver and not have a safety driver we're going to follow all those we're not going to violate

whatever regulations are out there but safety is a priority but the goal is obviously that when we're ready and safety is there we we Mo Drive from from the r Cent yeah I mean I guess like we we think that we'll be able to have driverless Teslas of doing paid rides next year sometime next year all right thank you um and our next question uh comes from Adam Jonas at Morgan Stanley um Adam please feel free to unmute yourself okay thanks everybody um just had a question about the relationship between Tesla and xai many investors

are still not clear how the work at xai is is truly beneficial to Tesla some even take the view that the two companies may even be in competition with each other in terms of talent and Tech and even your time Elon so what's your message to investors on that relationship between Tesla and xai and where do you see it going over time thanks well I should say that you know has been helpful to Tesla AI uh you know quite a few times in terms of you know things like scaling up lot like training um you

know just even like recently in the last week or so uh improvements in all Toler training where if you you're doing a big training run and uh and note fails um be able to continue training and um and you know easyily recover from on training run X pretty helpful um so um but it but there are different problems you know XI is working on artificial general intelligence or artificial super intelligence um tells us trying to make autonomous cars and autonomous robots um they're different problems so uh yeah I mean I think we've said this before

also like all not all AI is equal right I mean there's AI is a broad spectrum yeah and we have our own swim length yes there are certain things which we can collaborate on if needed but for the most part we're solving different issues yeah tell Telles us focus on real world and as I was saying it is quite a bit different from an LM um you have you have massive context in video and and some out of audio uh that's got to be distilled very like with with extremely efficient experence compute I do think

Tesla is the most efficient u in the world in terms of inference compute like because out of necessity we have to we have to be very good at in efficient inurance um we can't put 10 10 kilowatts of gpus in a car um we've got a couple hundred watts and you know it's pretty well-designed Tesla AI ch um but it's still a couple hundred once um but there are different problems I mean it's like like the stuff that I add is like when it's running in fance I mean it's it is running in fance like

like answering questions it's answering Tes questions on on a 10 kilowatt rank it's like can't put that in a car it's a different problem please no no exactly um so you know X is because because I felt there wasn't there wasn't a truth seeking digital super intelligence company out there like that's what it came down to they needed to be a truth seeking like like an AI company that is just very rigorous about um being truthful and I'm not saying X is perfect but that is but that that that is at least the explicit aspiration

even if something is you know Politically Incorrect it should still be truthful um I think this is very important for AI safety so anyway I think XI will has been helpful to Tesla and will continue to be helpful to Tesla but there are very different problems um great you and I mean like Al think like like what is like what what other car company has it has a worldclass trip design team like zero um what other car company has a world class AI team like Tesla does zero those all startups that created from scratch great

thank you Lan um and I think that's unfortunately all the time that we have for today we appreciate all your questions and we look forward toing quarter thank you very much and goodbye [Music] [Applause] [Music] [Applause] [Music] [Applause]