Hey everybody. Welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads that shape SpaceX, Tesla X, The Boring Company, and Neurolink. I'm your host, Will Walden. Good afternoon, everyone, and welcome to Tesla's third quarter 2024 Q&A webcast. My name is Travis Axelrod, Head of Investor Relations, and I'm joined today by Elon Musk, Devat Teneja and a number of other executives.
Our Q3 results were announced at about 3:00 PM Central Time in the update deck we published at the same link as its webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC.
During the question and answer portion of today's call. Please limit yourself to one question and one follow up. Please use the Raise Hand button to join the question queue. Before we jump into Q&A, Elon has some opening. Remarks, Elon, thank you. So to recap some listening, something that would have been history of saying year over year declines in order volumes in Q3. Tesla at the same time has
achieved record deliveries. In fact, I think if you look at EV companies worldwide, to the best of my knowledge no EV companies even profitable and I'm not to the best of my knowledge there was no EV division of any company of any existing order company that is profitable. So it is notable that Tesla is profitable despite a very challenging automotive environment and and this quarter actually is a record Q3 for us. So we produced our 7 million
vehicle actually just yesterday. So congratulations to the teams that made it happen in Tesla. That's the staggeringly advanced amount of work to make 7 million cars. So the C and we also have energy storage business is growing like wildfire with strong demand for both Mega Pack and Powerwall.
And as people know on October 10th, we laid out a vision for an autonomous analytical future that I think is very compelling us. The Tesla team did a phenomenal job there with actually giving people an opportunity to experience the future where you have humanoid robots walking among the crowd, not, you know, with the canned video presentation or anything, but officially walking among the crowd serving drinks and whatnot. And and we had 50 autonomous vehicles.
There were NO20 cyber caps, but there were an additional 30 model wise operating fully autonomously the entire night, carrying thousands, thousands of people's thousands of people drink with with no incidents the entire night.
So, and for those who went there that it's worth emphasizing that these, the cyber cap had no steering wheel or brake or accelerated pedals, meaning there was no, there's no past, there was no way for anyone to intervene manually even if they wanted to. And the whole night worked very smoothly. So regarding the vehicle business, we are still on track to deliver more affordable models starting in the first half of 2025.
You know, this is I think probably purely wanting to go, what should they assume for vehicle, vehicle sales growth next year? And at the risk of to take a bit of risk here, I do want to give some, some rough estimate, which is I think it's 20 to 30% vehicle growth next year.
You know, notwithstanding negative external events like if there's some Porsche Majeure events, some big wall breaks out or interest rates go sky high or something like that, then you know, we can't overcome massive force mature events. But I think with our lower cost vehicles, with the Advent autonomy, something like a 20 to 30% growth next year is is my best guess. And and then, and then cybercap reaching volume production in 26.
I do feel confident of cybercap reaching volume production 26. So just starting production, reaching volume production at 26 and that you know that that should be substantial. Both we're aiming for at least 2 million units a year of Cyber Cab. That'll be in more than one factory, but I think it's at least 2 million units a year, maybe 4 million ultimately. So yeah, this is just my best guesses, but if you ask for my best guesses that those are my
best guesses. The the 46, the the cell 4680 lines, the team is actually doing great work there. The 4680 is rapidly approaching the point where it is the most
competitive cell. So when you consider the the fully get the fully landed, the cost of a of a battery pack fully landed in the US net of incentives and duties, the 4680 is tracking to be the most competitive, maybe lower costs between what are 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 extremely exciting and we've got several a lot of ideas to go well beyond that.
So if I think there's if we execute well the 4680 we'll have the the Tesla internally produced cell will be the most cost competitive cell in in North America, a testament to a tremendous amount of hard work there from by the team. So that's a rule we'll continue to buy a lot of cells from our competitors. So our intent is not to make to provided to make cells just internally. So I don't want to sort of any log bells here.
We're also increasing substantially our vehicle output and our stationary storage output. So we need a lot of cells and most of them will still come from suppliers. But but I think it is, it is some good news that the Tesla internal cell is likely it's track needs to be the most competitive in the US. So with respect to autonomy as people are experiencing in the cars really from week to week, there are significant improvements in the miles between interventions.
So with the new version 12.5, the release of wholesale driving and Cybertruck, the combining the code into a single stack so that the city driving and the engine highway driving are one stack, which is a big improvement for the highway driving. So it's just all neural Nets and the release of actually Smart Summon. We try to have a sense of humor here at death and we're also so that's 12.5 version 13 of FSD what is going out soon. Shark will elaborate more on that later in the call.
We expect to see some roughly a 5 or 6 fold improvement in miles between interventions compared to 12.5. And actually looking at the the years a hole the improvement in miles between interventions, we think we'll bring at least three orders of magnitude. So that's that's a very dramatic improvement in the course of the year and we expect that plan to
continue next year. So the current, the current internal expectation, upside internal expectation or the Tesla FSD having longer miles between and human is the second quarter of next year, which means it may end up being the third quarter, but it's next it seems extremely likely to be next year. Sure.
Do you want to? Yeah, I'm mentioning miles between critical interventions like you mentioned we already made 100 X improvement with 12.5 from starting of this year and then with V13 release we expect to be 1000 X from the beginning from January of this year on my production release software. And this came in because of technology improvements going to end to end having higher frame rate partly also helped by hardware force more capabilities so on.
And we hope that, you know, we continue to scale the neural network, the data, the training compute etcetera. By Q2 next year, we should cross over the average human minus per critical intervention public collision. In that case I mean that. Is just unbondished our internal estimate, yes, yeah. So that's not sandbagging or anything else. Our internal estimate is Q2 next year to be safer than human and then to continue with rapid
improvements thereafter. So vast majority of humanity has no idea that does those drive themselves. So especially for something like like a Model 3 or Model Y, it looks like a normal car. So you don't expect normal car to be able to be intelligent enough to drive itself. The cybercap 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 have enough AI to be able to drive itself, but it does. So we do want to expose that to more people. And so we're doing every time we have 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 we're all seeing a significant improvement in
adoption. So the the take rate for FSD is has improved substantially, especially after the 1010 event. Yeah. So there's no need to wait for robot taxi or server cab for to experience full autonomy. We expect to achieve that next year with the with our existing vehicle line. I wanted to actually spot someone gives a small taste of what it's going to look like. 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 billion usage items of smarts and then. Yep. So and we actually, we have for Tesla employees in the Bay Area, we already are offering a ride hailing capability. So, so you can actually use with the development app, you can request a ride and it'll take you anywhere in the Bay Area. We do have a safety driver for now, but that's not where we're required to do that.
We've, we've developed and I mean, David, do you want to collaborate on that? Yeah, sure. David. We showed some screenshots of this in the Q1 shareholder deck. And yeah, this is real. We've been testing it for the other part of the year and the the building blocks that we needed in order to build this functionality and deliberate to production we've been thinking
about working on for years. 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 loan to you or a rental car that you jump into, it looks exactly like yours.
Everything's synchronized, seat near positions, you know, media navigation, everything is the same. Just what you would expect from one of our robo taxis. But you know, we gave that functionality to our customers right now because we built it intending for it to be used in the future, releasing that functionality now all the and then cybersecurity that we knew we were going to need to deliver that functionality, sending a navigation to destination from
your phone to the vehicle. And so you know you're doing that now with the with the ride hailing app, but it's something that we've made available to customers for years, seeing the progress on a route in the mobile app. That's something you'll need for the ride hailing 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 hailing network.
We've been thinking about this for quite a long time and we're excited to get the. Functionality out there, yeah and and we do expect to roll out ride hailing in California, Texas next year to the public. But no, the California is somewhat this quite a long regulatory approval process, but it shouldn't, I think we should get a rule next year, but but it's contingent upon regulatory approval.
Texas is a lot faster. So it's I'd say like we're, we'll definitely have available in Texas and probably have it available in California subject to regulatory approval and then and maybe some other states actually next year as well, but at least California and Texas. So I think that'd be very exciting. That's really a profound change. Tesla becomes more than a sort of vehicle and battery manufacturing company at that point.
So we published that Q3 vehicle safety report which shows one pack for every 700 miles of autopilot that compressed the US average of water 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 to accommodate the needs of both FSD and Optimus. We're currently not not a
training compute constraint. That's probably the big slimming factors that the the emphasis is actually getting so good that it takes us a while to actually find mistakes. And when you start getting to where it could take 10,000 miles to find a mistake, it's it takes a while to actually figure out which it is. Is this, is this software ball better than a soccer ball A better than software ball B? It actually takes a while to figure it out because neither
one of them making mistakes. What takes take a long time to make mistakes? So that's actually the single little bit big so many factors. How long does it take us to figure out which which which version is better sort of high class problem. Obviously having a giant fleet is very helpful for breaking this out.
And then with Optimist we showed, we showed a massive improvement in Optimist dexterity movement on October 10th and our next Gen. handed forum which has 22° of freedom double which doubled the prior handed forum. It's extremely human like and we'll say it's much better a
tactile sentencing. It's really I feel confident saying that we have most advanced humanoid robot by Longshot and we're moreover the only company that really has all of the ingredients necessary to scale humanoid robots. Because the things that what other companies are missing is that they're missing the AI brain. They're missing the ability to really scale to very high volume
production. So you sort of see some impressive video demos, but what but they're they're like the they like the localized AI and the voyage scale volume to very high numbers. As I've said on a few occasions before, I think optimists will ultimately be the most part I think has a good chance of being the most valuable product ever made for the energy business that's doing extremely well. And there's the opportunity ahead is gigantic.
The Lathrop Megapack factory reached 200 Megapacks a week, which is now a 40 GW hour a year run rate. And we have a second factory in Shanghai that will begin with 20 GW hour a year run rate in Q1 next year, so just next quarter and that that'll also scale up. It won't be long before we're shipping 100 GW hours a year stationary storage in Tesla. And that I mean that'll ultimately grow I think to multiple terawatt hours per year. It has to actually in order to have a sustainable energy
future. If you're not at the term what scale, you're not really moving the needle. So if you look at our mentally very complicated last master plan, which I think actually has too much detail, I'll maybe last grow up to analyze it, shorten it up, give us the TLDR on the last master plan. But we we showed in that master plan that it is possible to take all of us to a fully sustainable energy situation using sustainable energy, power generation and batteries and electric transport.
And there are no fundamental material limitations. Like there's not some very rare material that we don't have enough of on Earth. We actually have enough of the raw materials to, you know, take all of human civilization, make it fully sustainable. And even if civilization radically increased, its electricity usage would still be fully sustainable. You know, one way to think of the progress of a civilization. Space. Sounds a little esoteric, but is percentage completion of
Khadoshi scale. So Khadoshi scale one would be you're using all the power of lava planet. We were. We're currently less than 1% on Khadoshi level level 1. Level 2 would be using all the power of the sun and Level 3 all the power of the Galaxy. So we got a long way to go Long way to go. When you think in Carter ship terms, it becomes obvious that by that the by far the biggest sources of energy is the sun.
Everything else is in the noise. So, 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. We think what we're doing is the right approach and if we execute on our objectives, I think we will Tesla. My prediction is Tesla will become the most valuable company in the world probably by a long by a long shot.
I want to thank the Tesla 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, Bob, has some big remarks as well. Thanks. Our Q3 results were more positive and once again demonstrate the scale to which businesses evolved what they
use. With the generation of record operating cash flows of 6.3 billion, our automotive revenues grew both quarter on quarter and year on year. While we had unit volume growth, we did experience reduction in ASPs primarily due to the impact of financing incentives. As a reminder, we are providing these incentives primarily using third party banks and financial institution and recognize the cost of these incentives as a deferral reduction to them.
We released FSD for Cybertruck and other features like actually smart someone like Peter talked about in North America which contributed 326 million of revenues in the quarter. We continue to see elevated levels of regulatory credit sales with over 2 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 3 and if there is something to be learnt from that, this gives a signal of what is to come in other regions as customers acceptance of EV growth and we feel that is the right strategy to build affordable and more compelling leads. Our focus remains on growing unit volume while avoiding a
build up of inventory. To support this strategy, we are continuing to offer extremely compelling vehicle financing options in every lock. When you compare any vehicle in a lineup with other OEMs, believe our vehicles provide much better value, particularly when you consider the safety features, performance and unbalanced software. Functionalities like David also talked about include also what Ashok had talked about about 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 improved quarter over quarter as a result of A50 features release
discussed before. Increase in our overall production and delivery volume, continued benefit from the marketing pricing and more localized deliveries in region, which resulted in lower freight and duties. Sustaining these margins in Q4, however, will be challenging given the current economic environment. Note that we are focused on the cost per vehicle and there are numerous work streams within the company to squeeze that cost without compromising on customer experience.
Yeah. Something that doesn't helpful, hopefully helpful macro trend is if there's a decline in interest rates, this has a massive effect on the on automotive demand. The vast majority of people is the demand is driven by the monthly payment, can they put monthly payment. So like most likely we'll see continued decline interest rates which helps with affordability vehicles.
Yeah. I mean, that is one trend which we observed in the industry that you know, because of affordability being impacted because of interest rates, people are holding onto the cars longer, especially in the US and that is actually having an impact on all of the industry
team. As we discussed earlier, as we discussed impact orders, energy deployments fluctuate quarter over quarter due to customer readiness, location of orders being fulfilled and not necessarily an indicator of demand or 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 doubled of last year. Energy margins in Q3 for a
record at more than 30%. This is a function of mix of projects being deployed in the quarter. Note 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, I talked about, sorry, 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 squeeze, like I said before about squeezing out the cost, but this is something which we also are very capable of. I mean just in Q3 we reached our lowest cost per vehicle and that is a trend which we want to keep focus off.
Then going on to service and other, we continue to show improvements in Q3. This was a result of better performance both in our service business which includes collision parts sales and merchandise and continued growth in supercharging. These field based revenues will continue to grow as the overall field 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 Q2.
Cost saving from these initiatives were partially offset by increase in costs related to our AI efforts. We've started using the GPU cluster based out of a factory in Austin ahead of schedule and 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 spend too and saying how best we can utilize the existing infrastructure before making investments. On the CapEx front, we had over
3 1/2 billion in the quarter. This was a sequential increase largely because of investments in AI Confused, we not expect the CapEx for the year to be in excess of 11 billion. We shared our vision for the future at the WE Robot event at the beginning of the month. The Tesla team is hyper focused on delivering on that version. The all efforts are underway to
make it a reality. While we've achieved significant progress this year, it will take time to get this as we find in 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 for all the help. Great. Thank you very much for all. 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 products right now? Sure. I mean as Elon and Bible both said, you are in plan to meet that in the first half of next year. Our mission has always been to lower the cost of of the of our vehicles to increase the adoption of sustainable energy and transport.
Part of that is is lowering the cost for current vehicles, which is where 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 of EV road map in the AI road map. Yeah. It'll be like with with with incentive sub sub 30K which is kind of a key threshold. Right.
Thank you very much. Similar question next, when can we expect Tesla to give us the $25,000 non robot taxi regular car model? We're not making it on. Yeah. All our vehicles today are. Robotaxi, I think we've made very clear that we're the future is autonomous. I mean, it's going to be, you know, actually said this many years ago, but that my strong belief, and I believe that is panning out to be true.
So it'll be very obvious in retrospect, is that the future is autonomous electric vehicles and non autonomous gasoline vehicles in the future will be like riding a horse and using a flip phone. It's not that there are no horses. Yeah, there are some horses, but they're unusual, they're niche and you know, so, so really just everything's going to be electric, autonomous. I think this this is blind, like should be frankly blindingly obvious at this point. That is the future.
So a lot of automotive companies or most automotive companies have not not internalized this, which is surprising because we've been shouting this from the rooftops for such a long time. And it will accrue to their detriments in the future. But all of our vehicles in the future we yes, sorry, older vehicles that we've really made obviously have millions of vehicles. The vast majority are capable of autonomy. And you know, we're currently making on the order of 30 by
1000 autonomous vehicles a week. If you compare that to say Wayne More's entire fleet, it's less than they have less than 1000 corners. We make 35 KA week. Yeah, and our cars look normal. Yeah, they mostly look normal. Cybertruck looks yes, thankfully, you know, looks abnormal. And then the, you know, cyber cab slash robotaxi. You know, we wanted to have something futuristic looking. It does look futuristic.
It's worth starting with respect to the Cyber Cab, it's not, it's actually not just a revolution in vehicle design, but revolution in vehicle manufacturing that is also coming with this with the Cyber Cab. The the cycle time like the the units per per hour of of the Cyber Cab line is like this is just really something special. I mean, this is probably, yeah, half ordered magnitude better than other car manufacturing lines. Like like, like like not in the same league, is what I'm saying.
Not in the same league. So so it's it's it's you know, and I said like several years ago that the maybe the most hottest Tesla point coffee will be the foundry. Yeah, just like buy a. Factory. Yeah. You can't reverse engineer a factory. This up to Mile, Yeah. It's like, you know, yeah, so the and as we're so we're rapidly evolving and manufacturing technology. So so anyway, there's like basically I think having a regular 25K models pointless. Yeah, it would be silly.
Like it would be completely at odds with what we believe. In, in an autonomous world, what matters is the lowest cost per mile of, of efficiency of that vehicle. And that's what we've done with, yeah, with the rope taxi. Exactly. Autonomous, it's fully considered cost per mile is what matters. And if you try to make a car that is, you know, essentially a hybrid manual automatic car, it's it's not going to be as good as a dedicated autonomous car.
So yeah, Sarah cab is just not going to have steering wheels and paddles. Well, you design optimized for autonomy, but now it'll it'll it'll, you know, cost on the order of cost roughly 25K. So it is a 25K car and you can, you won't be able to buy one on it exclusively if you want. So just won't have steering wheel paddles. You don't need it. Great. Thank you very much. The next question is what is Tesla doing to alleviate long wait 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 and. Really is. Don't even have them. If the car doesn't break. Yeah, exactly. That's the best thing. Don't see anyone with the test shirt you need to do it fix the issue upstream or you would
remotely do it through software. They can be at work or at home and you know car can be parked and we address the fixed 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 long we we have opened and will open in total at 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 merits that have any large service centers because you can, you can have specialization of Labor, you can start, you can start to approach. Yeah, it should be more factory like, you know, where you can have dedicated lanes for particular types of servers, OK. 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 of these heavy repairs like clogging up the lane. They've dedicated lanes for different type of repairs and so it's throughput 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 because we, we make the
cars and we service the cars. Whereas I think there's a bit of a conflict of interest with the dealer model and the sort of traditional OEM, a dealer model where the dealerships make most of their money on service. And so they don't, they obviously just incented to reduce the servicing cost. Whereas in our case, we are incented to reduce the servicing cost because we we carry that servicing cost and we've got a good feedback loop with our with our cars.
Yeah. With the factory, with the service leaders together and send people from the factories to the field and field to the factory to see it first hand. 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 register.
Also, doing a bunch of work on the software side, not only to automate, you know, diagnostics, so identifying, 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 the car would be very efficiently worked on once it arrives. So the parts are there like the lift is scheduled, the technician's schedule like everything that we like.
The farm said this is what's wrong with me and tell us to fill the service center the. Car. Everything ready in event? Yeah. Please fix me. And this is what's wrong, Yeah. This is what you're going to do now, Yeah. Instead of customer trying to translate, the car is telling us directly and we're pulling that. Yeah, yeah. You don't need, but most of the time you don't need to diagnose
the car exactly when it arrives. The car, Yeah, this is like, again, a fundamental technology advantage and structural advantage compared to the rest of the auto industry. Yeah, it's. I think it's under appreciated as to what all we are able to do 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, yeah. But look, that's better than
other cars. But they're not like, obviously, like super futuristic, yeah. Great. Thank you very much. The next question is please provide an update on the semi. 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 something on the build of the semi factory in our data factory in Reno.
We've released all our major capital 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 rampant really throughout the year to to full production semi, you know, growth will largely depend on our customers adoption of the product. Well, I, I, I don't think we're going to be divided limited. Honestly, yeah, what should I say? Which is like, you know, trainer for foot semi because it's
really a commodity of total. Cost of ownership, Yes, exactly. It's it's good we we have kind of ridiculous demand for the semi. In that world where it's about how much do I spend? Yeah, it excessinates per mile. It's a no brainer. Yeah, fundamentally, if you've got a semi work, the fully considered cost per mile per per ton of transport is better than say diesel truck. Any company that doesn't adopt an electric semi will will lose. It's not a, it's not a subjective thing.
It's like whether do you like? It's a competitive, I mean, we. We like, we, we want the style we want, we want to have a beautiful semi truck. But frankly if you made an Oxy semi truck it wouldn't matter. And, and this is proving so in our fleets and in Pepsi's partner. In fact, the the Pepsi actually said last week they're having nobody want their drivers don't want to go back once.
Yeah, yeah. As soon as we give anyone the electric semi, it's it's, it's like the 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 senior like their top drivers will they get to drive to tell the same one and it's it's the it's the thing they want to drive it's it's it's super fun to drive it's also very. Easy to drive. It's easy. It's easy to drive and it holds ass and it's like fast. Maybe too fast.
Well, but I mean like, you know, like, like you've seen like the videos of where like the electric semi, like, you know, can go uphill speeding past like the diesel truck. Yeah, in cars. So like it's responsive. It's you know, you know, you floor it and that the truck actually, but. 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, you know, in a slow down situation in the homeland. I mean, how that plays into, you know, FSD, which is the second part of the question.
All of the semis have been since the couple 100 we've deployed already and and the ones that we'll be building next year and throughout should you have all of the hardware in the cameras necessary to to deploy FSD and we're currently training with that small that we have and as soon as the fleet is trained and the neural Nets are up, you know we'll we'll get FSD onto that platform. Yeah, I mean, it'll be a massive improvement in driver fatigue, you know, because and driver
safety. We've got sort of the anti Jack knifing software. We're, 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, we use regenerating like that, that energy goes back in back into a pack. Actually, when we leave ring on. Something it's just like it's it's like radically better than than a diesel assembly. It's what what the drivers love it, OK. Great, guys.
Thank you very much. Our next question is when will Tesla incorporate X and CROC in all the Tesla vehicles? I mean, these are relatively small 5 things, you know, but yeah, I think we'll keep expanding, you know what, what is available in the car on the spot screen and 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 fully a, a system that is you can do anything like if you want to browse the Internet, if you want to, 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 some productivity thing, you can do anything you want and an autonomous vehicle because you don't need to drive. And so that's why the Cybercast got a nice big screen and it's a
great sound system. So you can watch it, watch a great movie with it's like bringing like a. Personal movie theatre. Yeah, personal movie theatre. Awesome. Yeah, This is why we've been building this functionality, adding gaming to the car, adding these and other all sorts of different media applications to the car, because you know, the cars, that's what you're going to. That's, yeah, the cars that we built today, There's some. Really fun games by the way.
People haven't tried it. There's like Castle Doobad and Paulotopia and a bunch of really fun games in the car. Yeah, we're, we're constantly looking at, you know, what features that annex and we're paying attention to what's most commonly refunded by our customers. Yeah, play Castle Bimbat, you wonder. Great. Thank you guys very much. The next question is, Elon mentioned unsupervised FSD in
California and Texas next year. Does that mean regulators have agreed to it in the entire state for existing Hardware 3 and 4 vehicles? No, as as I said earlier, California loves regulation, but they have a pathway. Yeah, I mean, there's a pathway. Obviously Waymo operates in California. So there's just a lot of forms about and a lot of approvals that are required. I mean, I'd be shocked if we don't get approved next year, but it's, it's just not something we totally control.
But I think we will get approval next year in California and Texas and, and and towards the end of the year it will branch out beyond California and Texas. I mean, I think it's important to reiterate this like you're certifying a vehicle at the federal level in the US is done by meeting FMBSS regulations. All our vehicles today that are produced that are autonomous capable meet all those regulations. The cyber cattle 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 and other ones have half place like California that they take a little longer, other ones haven't. Set up anything yet and so we will work for those state by state I, I do think we should have a federal. I agree that like autonomous
vehicles should be approved. It should be. It should be possible to. Congress, if you're listening, let's get a federal AB. There should, there should be a federal approval process for autonomous vehicles. I mean, that's that's how the FMBSS. Is starting to work. Federal Motor Vehicle. The FMBS is federal. Yeah. So I mean in 2017 and 18 that we, you know, some regulators started looking at it and it's really kind of stalled since
then. But we would appreciate and would support helping out it. Really needs to be at like a national approval is is important. You know, if there's a department of government efficiency. I'll try to help make them open. And you took for everyone, not just Tesla, but you know, just we, 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 by state
50 states. And and I think we should have, there should be a national approval process for autonomy. So. Great. Thanks guys. The next question is what is the plan for 2025I? Don't think we're just talking. Yeah, we, I mean, basically we talked through this and there's a lot going on. You know, ALDI mentioned that we're working on cheaper models to come out. I mean, they're work which the team is doing to get the factories ready today to try and make that happen.
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 1st place. It's like excruciating and it's 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 be. That is incredibly heroic. It's a little change, isn't it? It's not like.
This yeah, but it's like there should be the the heroes who got 20% the cost out of a car is like, damn, I'm going to respect to them. It's like, you know, I think you probably could make a compelling movie, but it's 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. Just yesterday we were talking about potty. Yeah. I mean, honestly, like
literally, yeah. I mean, there's a lot of what I do call it sort of like getting cost out of things. It's kind of like, it's like Game of pennies. So it's like Game of Thrones, but pennies. You know, first approximation you've got if you've got 10,000 items in a car. Very rough approximation. And each of them costs $4.00. Then you have a $40,000 car. So if you want to make a, you know, a $35,000 car, you're going to get $0.50 on average out of the 10,000 Landers.
Every. Every part, yeah. And it's like, you know, and then obviously the best is you delete some parts. In fact, we've not been able to delete a lot of parts. I'm very, I'm not very excited about the, the Sava cap design and, and, and the but you know, how how, how rethinking the design of a car for the side of a cab, designing it will offer high volume production and then design machine that builds the machine that is that I think is
also revolutionary. And it's just that there's no other car company that's even trying to do what we're doing. Like I've even heard of it actually. In fact, I'm certain there isn't one Like like like I'm, I think this, this the new machine that builds the machine like it's so it's, it's inherent like that. It's it's designed to be like five times better than provisional factory like cycle
time. Cycle time and like heart deletion, 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 row taxi, you know the, the development like we've done a good job on like combining 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 shows in our we will ship in our CapEx efficiency when when we deploy it, it shows in the number of parts, it shows in the simplicity of the vehicle, but also how it performs in, in
terms of like end user state. Yeah. Just to close up, just on the energy front, also in 25, we will have started manufacturing of the manufacturer. We'll continue to increase our storage deployments with Powerwall 3. We plan to continue expanding our supercharging network, getting more OEMs on our network 4680 in that cell ramp as you all talked about that would keep going. And then there's a, we're also we'll have a little refinery starting to produce.
So there's a lot which is going on. Great. Yeah, so many things, Yeah. I mean, the great like crazy thing is like Tesla's winning basically on, on almost every single thing we're doing. If we're not winning now, we're trying to run in arenas where there are entire large companies that that's the only thing they do, yeah. I mean that's it's a company. There are multiple companies within the company. Yeah, Tilda's, like many companies they want yeah. That's it. Thank you guys.
Just a few more. What is going on with the Tesla Roadster? Fun things. Well, I just thought you'd like to thank our long-suffering deposit holders of the Tesla Roadster. You know, the reason it hasn't come out yet is because it is the roaster is not not just the icing on the cake, it's the
cherry on the icing on the cake. And so, you know, our larger mission is to accelerate the progress towards a sustainable energy future, you know, trying to do things that maximize the probably the future is good for humanity and for Earth. And and so that necessarily means that like the things like that are kind of like dessert. But we'd like we'd all love to work on the Tesla, the next Gen. Tesla rose. We're super it is super fun and we are working on it, but it has
to come behind them. The more things, the things that have a more serious impact on the good of the world. So just thank you to all Lord suffering Tesla roster deposit holders. And we are actually finally making progress on that. And we're we're close to finalizing the design on that. It's really going to be, I think, spectacular. You know, a friend of mine, Peter Thiel. Yeah. And sometimes people like Peter Thiel and our rivals, we're
really good friends. You know, Peter, you know, was lamenting how, you know, the future doesn't have flying cars. Well, we'll see more to come. Yeah. Great. Thank you very much. The next one is quite similar to other questions we've had, so I might combine it with the final question. So briefly, could you just detail how Robotaxi will roll
out? Will it start with a Tesla deployed fleet and then allow customers to add theirs on like a subscription model and then we'll hardware 3D capable of level 5? Because you're going hardware 3. What we saw with 12.5 was it was easier to make progress with starting with Hardware 4 and figuring out the solution and then back porting into Hardware 3 instead of directly working on hardware 3. Given that hardware 4 has more like fundamental hardware capabilities.
I think that trend will continue into the next few quarters as well. But we first figured the solution rapidly with AI4 and then back ported, right, the kernels. It just takes longer to develop those things because it's not fundamentally supported in the hardware and it's emulated. But yeah, it's initially working on hardware 4, backboarding it to Hardware 3.
Yeah. So it's the answer is we're not, we're not 100% sure, but, but as a short mention, because by some measures Hyper 4 has really several times the capability of hardware 3. It's easier to get things to work with hardware 4 and then it takes a lot of effort to sort of squeeze that functionality into hardware 3. And there is some chance that hardware 3 is does not achieve the safety level that allows for unsupervised FSD. You know, there was some chance of that.
And if that turns out to be the case, we will upgrade those who have bought hardware 3 FSD for free and we have designed the system to be upgradable. So, and it's really, it's really what you know, just to switch, sort of switch out the computer type thing like the camera, the cameras are, you know, they're capable. But anyway, we don't, we don't actually know the answer to that.
But if it does turn out, we'll take, we'll make sure we take care of those who have bought MSD on Hot Route 3. Great. And in the last few minutes that we have left, we will try to get in some analyst questions. The first question will be coming from Pierre Ferrigan at New St. Pierre. Please feel free to unmute yourself. Thanks a lot guys for taking my question.
I was wondering about like the compute you're 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 compute. 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 GPT 3 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 reliability? And then I had a quick photo pretty quick on you roll out in Texas and in in California next year.
The plan as you see today is it to roll out like a fleet of two with cars that we start with like a supervisory like like some on board supervision, someone sitting at the wheel just in case and removing the supervisors progressively or are you aiming for going fully fledged without even a human super supervisor when you get? Started, OK, well, I guess we're
going to, I'll answer. Yeah. The first part of the question, Dean, the nature of real world AI is different from say an LLM in that you have a massive amount of context. So that like the, the you've got a case of Tesla 7 or 8 cameras that you know, 9 up to 9 if you include the internal camera that, that, that so you've got gigabytes of context and, and that that is then distilled down into a small number of control outputs.
You know, whereas it's like you don't really, it's very rare to have, in fact, I'm not sure any ALM out there can do gigabytes of context. And then you've got to, you've got to then process that in the car with a very small amount of compute power. So, you know, it's, it's a, it's all doable and it's happening, but it is a different problem than than what's say a Gemini or an open AI is doing.
And now part of the way you can make up for the fact that the first computer is, is quite small is by spending a lot of effort on training. And just like, just like a human like you, the more you train on something, the less, the less mental workload it takes when you try to when you when you do it like when the first time, like a human starts driving, it absorbs your whole mind. But then as you train more and more on driving get very good then you, the driving camera
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, it's tiny compared to, you know, A10 kilowatt Bank of GPUs because you've got a few 100 watts of difference compute. We can make up that with heavy training. So yeah, that's and then there's also vast amounts. The actual petabytes of data
coming in are tremendous. And then sorting out what training is important with, you know, all of the vast amounts of video training, video data coming in fleet, what is actually most important for training that's also quite difficult. But as I said, we're we're not currently training compute constraints. I'm sure you want to leverage. Yeah, like you mentioned the training. Has more trained larger models
also to train quicker. But in the end, we've still got to pick which models are performing better. So the validation effort to picking the models because the miles per intervention is pretty large. We're driving a lot of miles and going close to, we do have simulation and other ways to get those metrics. Those two help. But in the end, that's the big bottleneck. Yeah, that's why we're not training computer constraint alone. And there's other axis of scaling as well, which is the
data. Figuring out which data is more useful. That that is an important task. We're focusing on that. Yeah, so here. So as it relates to the second part of your question, Pierre 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'll we'll drive from from the right chair. Yeah. I mean, I guess like we, we think that we'll be able to have driverless Teslas during paid rides next year, you know, sometime next year. Arie, thank you. And our next question comes from Adam Jonas at Morgan Stanley. Adam, please feel free to unmute yourself. OK. Thanks everybody.
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, XAI has been helpful to Tesla AI, you know, quite a few times in terms of, you know, things like scaling up a lot like training, You know, just even like recently in the last week or so, improvements in all toner training where if you you're doing a big training 1 and I know it fails, being able to continue training and and easy to recover from on a train when the exam has been pretty helpful. So, but there are different
problems. You know, XAI is working on artificial general intelligence or artificial super intelligence tells us trying to make autonomous cars and autonomous robots. They're different problems, so 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 old swim lengths. Yeah. There are certain things which we can collaborate on if needed, but for the most part we're
solving different issues. Yeah, it doesn't tell us focus on real world and and that was saying it is quite a bit different from because you have massive context in the form of video and some amount of audio that's going to be still like with extremely efficient inference compute. I do think tells us the most efficient in the world in terms of inference compute like because out of necessity, we have to we have to be very good at inferred efficient inference.
We can't pretend 10 kilowatts of GPUs in a car. We've got a couple 100 watts. And so, you know, it's pretty well designed Tesla AI Cho, but it's still a couple 100 watts. But there are different problems. I mean, it's just, you know, like the stuff that XI is like when it's running in ferns. I mean, it's it is running in ferns like answering questions, answering testing questions on a on A10 kilowatt rack. It's like, yeah, put that in the car. It's a different problem.
Please. No, no, exactly. So you know, XAI 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 that they needed to be a truth secret like like an AI company that is very rigorous about being truthful. And so I'm not saying XAI is perfect, but that's but that that is at least the explosive aspiration. Even if something is, you know, politically incorrect, it should
still be truthful. I think this is very important for AI safety. So anyway, I think AI XAI will it has been helpful to Tesla and will continue to be helpful to Tesla, but there are very different problems. Great. And and and I mean like like what is like what, what are the car company has? It has a world class trip design team. Like 01 of the car company has a world class AI team like Tesla does 0. Those are all startups. They're creative from scratch. Great.
Thank you, Ilan. And I think that's unfortunately all the time that we have for today. And we appreciate all of your questions and we look forward to you next quarter. Thank you very much and goodbye. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it.
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