Hey, everybody. Welcome back to the Elon Musk Podcast. This is a show where we discuss the critical crossroads, the Shape, SpaceX, Tesla X, The Boring Company and Neurolink. I'm your host, Will Walden. Good afternoon, everyone and welcome to Tesla's fourth quarter 2024 Q&A webcast. My name is Travis Axelrod, the Head of Investor Relations here at Tesla and I'm joined today by Elon Musk and Bebop, Tunisia and a number of other executives.
Our Q4 results were announced at about 3:00 PM Central Time in the update deck we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. 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 in summary, in Q4 we set a record and limit vehicles at an annualized rate of only two million a year. So congratulations to the Tesla team on excellent work. We're achieving record
production and deliveries. We Model Y was the best selling vehicle of any kind for 2024. That's worth noting that the not just the best electric vehicle, the best vehicle of any kind on Earth, number one was Model Y. We're staying focused on on maximizing volumes and obviously doubling down for I don't know what it's really, I was going to say doubling down on autonomy, but really it's like autonomy is like 10 Xing. Frankly, doubling is not even enough.
We made many critical investments in 2024 in manufacturing, AI and robotics that will bear immense fruit in the future. Immense. Like it's in fact to such a scale that it is difficult to comprehend. And I've said this before and I'll stand by it. I see a path, but I'm not saying it's an easy path, but I see a path for Tesla being the most valuable company in the world, world by far, Not even close.
Like maybe several times more than I mean, there is a path where Tesla is worth more than the next top five companies combined. There's a path to that. I mean, I, I think it's like an incredibly, it's like a difficult path, but it is an achievable path. So, and that is overwhelmingly due to autonomous vehicles and autonomous humanoid robots. So our focus is, is actually building towards that. And then that that's what we're
laying the ground. We will lay the groundwork for that in 2024. We'll continue to lay the groundwork for that in 2025. In fact, more than lay the groundwork actually be building the structure, be we're building the manufacturing lines. And like, yeah, I'd like setting up for what I think will be an epic 2026 and a ridiculous 27 and 28. Ridiculously good.
That is my prediction. You know, we as you have very few, very few people understand the value of full self driving and our ability to monetize the fleet. You know, I've some of these things I've said for quite a long time and I know people have said, well, you know, he owns the boy. You cried wolf like several times, but I'm telling you there's a damn wolf at this time and you can drive it. In fact, it can drive you.
It's a self driving wolf. You know, for a lot of people that they're like their experience of Tesla autonomy is like if it's even a year old, if it's even 2 years old, that it's like me. It's like meeting someone when they're like a toddler and thinking that they're going to be a toddler forever, but obviously not going to be a toddler forever if they grow up. But if their last experience was like, oh, FSD was a toddler, it's like, well, it's grown up now. Have you seen it?
It's like walks and talks, and that's really what we've got. And it's difficult to for people to understand this because human intuition is linear as opposed to what we're seeing is exponential progress. So that's why my number one recommendation for anyone who doubts is simply try it. Have you tried it? When's the last time you tried
it? And the only people who are skeptical, the only people who are skeptical are those who have not tried it. So, you know, a car goes, a passenger car typically has only about 10 hours of utility per week out of 168, a very small percentage. Once that car is autonomous, my rough estimate is that it is it is in use for at least a third of the hours per week. So call it 50, maybe 35 hours of the week. And it can be used for both cargo delivery and people's
delivery. So even let's say people are asleep, but you can deliver packages in the middle of the night or resupply restaurants or whatever the case may be, whatever people need at all hours of the day or night. That same asset, the thing that that is these things that already exist with no incremental cost change, just a software update, now have five times or more the utility that they currently have. I, I, I think this will be the, the largest asset value increase in human history.
Maybe there's something bigger, but I'm, I just don't know what it is. And so people who look in the rearview mirror are looking for past precedent, except I, I don't think there is one. So, but you know, there's there. But like, the reality of autonomy is upon us. And I repeat my advice, try driving the car or let it drive you. So now it works very well in the US, but of course, it will, over time, work just as well
everywhere else. Yeah. So we're working hard to grow our annual volumes, our constraint this year, our current constraint is battery packs this year, but we're working on addressing that constraint and I think we will make progress in addressing that constraint. And then things are really going to go ballistic next year and really ballistic in 27 and 28. So, yeah, so a bit more on full self driving.
Our Q4 vehicle safety report shows continued year over year improvement in safety for vehicles so that the safety numbers, if somebody has supervised full self driving turn on or not the the safety differences are gigantic. So and people have seen the the immense improvement with version 13 and with incremental versions in version 13 and then version 14 is going to be yet another step beyond that.
That is very significant. We launched the Cortex training cluster at Bigger Factory Austin, which was a significant contributor to FSD advancement and we continue to invest in training infrastructure out of Texas headquarters. So the, the, the training needs for Optimist or Optimist humanoid robot are are probably at least ultimately 10X what what's needed for the car at at least to get to the full range
of of of useful roles. You can say like how many different roles are there for a humanoid robot versus a car Humanoid robot is has probably what 1000 times more uses and, and more complex things than in a car. That that doesn't mean that the training scales by 1000, but it's probably, you know, 10X now you can do this progressively.
So it doesn't mean like hotels are going to spend like $500 billion in training compute because we would obviously train the optimists to do enough tasks to match the output of Optimus robots. But and obviously the cost of training is dropping dramatically with time. So, but it is it is like it is one of those things where I think long term optimists will be optimist has the potential to be north of $10 trillion in revenue.
Like it's really bananas. So that you can obviously afford a lot of training compute in that situation. In fact, even $500 billion of training compute in that situation would be quite a good deal. Yeah, the future is going to be incredibly different from the past, that's for sure. We live at this unbelievable infection point in human history. So yeah, so in the proofs, the proof is in the pudding.
So we're going to be launching unsupervised full Self driving as a paid service in Austin in June. So if I've talked to the team, we feel confident in being able to do an initial launch of unsupervised no one in the car Full Self driving in Austin IN June. We already have Tesla's operating autonomously unsupervised for self driving at our factory in Fremont and will soon be doing that at our factory in Texas.
So thousands of cars every day are driving with no one in them at our Fremont factory in in California. They will soon be doing that in Austin and then elsewhere in the world at the rest of our factories, which is pretty cool. And the cars aren't just driving to exactly the same spot because obviously they're all when it's light at the same spot. The, the cars are actually programmed with, with where, with what lane they need to park into to be picked up for
delivery. So they, they, they drive from the factory end of line to their, to their destination parking spot and, and that, and that could be picked up for delivery to customers. And then doing this reliably every day, thousands of times a day. It's pretty cool. Like I said, these Teslas will be in the wild with no one in them in June in Austin. So what I'm saying is this is not some far off mythical situation. It's literally, you know, 5-6 months away, five months away sort of thing.
And while we're stepping into putting our toe in the water, gently at first, just to make sure everything's cool, our solution, our sort of our solution, our solution is a generalized AI solution. It is not, does not require high precision maps of a locality. So we just want to be cautious. It's not that it doesn't work beyond awesome.
In fact it does. We just want to be put a toe in the water, make sure everything is OK, then, you know, put a few more toes in the water, then put a foot in the water with safety of the general public as and those in the car as our top priority. With regard to optimist, obviously I'm making you know these revenue predictions, predictions that sound absolutely insane. I realized that, but but they are, I think they will prove to be accurate. Yeah, yeah.
Now with Optimus, there's there's a lot of uncertainty on on the exact timing because it's not like a train arriving at the station. For Optimus. We are designing the train and the station and in real time while also bullying the tracks. And, and so they're like, why did people just like, why didn't the train arrive exactly at 12:05? And like we're literally designing the train and the tracking station in real time while you're seeing like, how can we predict this thing with
absolute precision? It's impossible. You know, the, the, the normal internal plan calls for roughly 10,000 optimist robots to be built this year. Will we succeed in building 10,000 exactly by the end of December this year? Probably not. We we but I but will we succeed in making several thousand Yes, I think we will will those several 1000 optimists robust be doing useful things by the end of the year?
Yes, I'm confident they will they will do useful things that those the optimist in use at the Tesla factories for production design one will inform how would we change for production sign 2, which we expect to launch next year. And our goal is to ramp prop Optimus production faster than maybe anything's ever been ramped meaning like aspirationally an order of magnitude ramp per year.
Now if we aspire to an order of magnitude ramp per year, perhaps we only end up with a half order of magnitude per year, but that's the kind of growth that we're talking about. It doesn't take very many years before, you know, we're, we're making 100 million of these things a year. If you go up by let's say a factor, you know, by 5X per year, insane. Not 50%, five, 100%. So, you know, these are big growth numbers.
Yeah, but we do need to be. This is an entirely new supply chain, is entirely new technology. There's nothing off the shelf to use. We tried desperately with Optimist to to use any existing motors act, you know, any actuators, sensors, nothing. Nothing worked for a humanoid robot at any price.
We had to design everything from from physics first principles to work for humanoid robot and with the most sophisticated hand that has ever been made before by far right Optimus will be also like play the piano and be able to thread a needle. I mean, this is the level of precision no one has been able
to achieve. And so it's really something special so. Yeah, so in my prediction long term is the optimist will be overwhelmingly the value of the company regarding energy backed up back to us. It was the Elon can you come back here for a minute? OK, back to US. Energy storage is a big deal and will become it's already super important, will become incredibly important in the future. And and it is something that enables far greater energy output to the grid than is currently possible.
Because the the grid, the the grids are, are the vast majority of the grid has no energy storage capability. So they have to design the power plants to, you know, for very high peaks and assuming that there's no energy storage, once you have grid, grid energy storage and home based energy storage, the actual total energy output per year of the grid is dramatically greater than people think.
Maybe it's at least double. This will drive the demand of stationary battery packs and especially the grid scale ones to insane. Basically as much demand as we could possibly make. So we have our second factory which is in Shanghai that's starting operation and we're building a third factory. So we're trying to ramp output of the stationary battery storage as quickly as possible.
Now there, there is a challenge here where we have to be careful to that we're not robbing take robbing from one pocket to take to another pocket. Because for a given GW hours per year of of the cell output, where if still does it go into stationary applications or mobile applications, it can't go both into both. So we have to make that trade off yeah. But overall the demand for total GW hours of batteries whether mobile or stationary that will grow to in a very, very big way over time.
So in conclusion, 2025 really is a pivotal year for Tesla and I. And when people look back on 2025 and the launch of unsupervised full self driving, true real world AI that that actually works, I think they may regard it as the biggest year in Tesla history, maybe even bigger than our first car, the Roadster or or the model ISO, the Model 3 or Model 1. In fact, I think it probably will be viewed 25 as maybe the most important year in Tesla's history.
There is no company in the world that is as good at real world AI as Tesla. I don't even know if he's in 2nd place like you say. Like who's in 2nd place for real world? AII would need a very big telescope to see them. That's how Fall behind they are, all right. Great. Thank you very much, Elon. And Vaibhav has some updating
remarks as well. Yeah, I'll talk about things on Earth. As Elon mentioned in Q4, we set records and vehicle deliveries and energy storage deployments in an uncertain macro environment. We were able to grow auto and energy storage volumes both sequentially and on a year on year basis. For this, I would like to thank the efforts of everyone at Tesla to make this a reality and our customers who helped us achieve
this speed. Coming into the fourth quarter, our focus was to reduce inventory levels in the automotive business and we accomplished that by ending the quarter with the lowest finish quote inventory in the last two years. This was a result of offering not only attractive financing options, but also other discounts and programs which impacted ASPs. While we saw volume growth in almost all regions that we operate in, we hit a new record of for deliveries in the Greater
China market. This is an encouraging trend since we grew volume in a highly competitive Bev market. On the automotive margin front, we saw a quarter over quarter decline primarily due to lower ASPs and due to the recognition of FSD related revenue in Q3 from feature releases. Our journey on cost reduction continues and we were able to get our overall cost per car down below $35,000, driven
primarily by material costs. This was despite increased depreciation and other costs as we prepare for the transition to the new Model buy for which we recently started taking orders in all markets. All of that case will start producing the new Model Y next month.
While we feel confident in our team's abilities to ramp production quickly, note that it is an unprecedented change and we are not aware of anybody else taking the best selling car on the planet and updating all factories at the same time. This changeover will result in several weeks of last production in the quarter. As a result, margins will be impacted due to ID capacity and other land related costs as is common in any launch, but will be overcome as production
present. We will be introducing several new products throughout 2025. We are still on track to launch a more affordable model in the first half of 2025 and we'll continue to expand our lineup from there. On a dollar for dollar basis, we believe we have the most compelling lineup today compared to the industry and it will continue to get better from there. As always, all our products come with the best software in the industry, autonomy features and capable of full autonomy in the
future. And despite the premium experience, the total cost of ownership is close to mass market less premium competitors. Energy storage deployments reached an all time high in Q4 and this and resulted in but declined sequentially. This was a result of higher, this sorry growth came from Megapack and Power. Both businesses continue to be supply constrained and like Ilan mentioned, we're trying to ramp up production with mega Factory Shanghai coming online this quarter onwards.
While quarterly deployments will likely continue to fluctuate sequentially, we expect at least 50% growth in deployments year over year in 2025. Gross profit and margins in the service and other business was up year over year but declined sequentially. This was the result of higher service center costs and lower profit from used car business. The businesses with this there was another primarily support our new car business especially through their impact on total
cost of ownership. Therefore, while they manage them to be positive on a GAAP business, we do not expect similar margins as the rest of the business. There's a lot of uncertainty around tariffs. Over the years, we've tried to localize our supply chain in every market, but we are still really reliant on parts from across the world for all our businesses. Therefore, the imposition of tariffs, which is very likely and any of the supercosity will have an impact on our business
and profitability. Our operating expenses grew both year over year and sequentially. The biggest driver of the increase was R&D as we continue to invest in AI related initiatives. The remaining increase came from growth in our sales capabilities and marketing efforts from preferred program. For 2025, we expect operating expenses to increase to support our growth initiatives.
It is important to point out that the net income in Q4 was impacted by a 600 million mark to market benefit from Bitcoin due to the adoption of a new accounting standard for digital assets whereby we change we will take mark to market adjustments to other income every reporting period going forward. Our free cash flow for the quarter was 2 billion and despite CapEx increase of 2.4 billion in 2024, we were able to generate free cash flow of 3.6 billion for the year.
CapEx efficiency is something we are extremely focused on. While we have invested in AI related initiatives, we've done so in a very targeted manner to to to utilize the spend to get immediate benefits. The build out of Cortex was exceeded because of the rule ex actually how explored the rule out of FSD V version 13, a cumulative AI related CapEx including infrastructure so far has been approximately 5 billion. And for 2025, we expect our CapEx to be flat on a year over this year basis.
In conclusion, you know like Elon said, 2025 is going to be a pivotal year for Tesla. There are a lot of investments which we've made and we'll continue to make in this coming year, which will set the pace for the next phase of growth. And you know, it is something which now I'm getting out, out of work. It is going to be out of this world and we just are playing, putting the bank foundation and that's all I have. Great. Thank you very much, Vaibhav. Now we will move over to
investor questions. Maybe we'll start with say.com. The first question is, is unsupervised FSD still plan to be released in Texas and California this year? What hurdles still exist to make that happen? You addressed the Texas piece, I think already so. Yeah, I'm confident that we will release unsupervised FSD in California this year as well, you know, yeah, in fact, I think we will at most likely release unsupervised FSD in many regions of the country of the US by the end of this year.
Like I said, we're, we're just putting a toe in the water, then few toes, then the foot, then leg, then, you know, make sure everything's cool. And we're, we're looking for a safety level that is significantly above the average human driver. So it's not anywhere like much safer, not like a little bit safer than human, way safer than
human. So the standard has to be very high because the moment there's any kind of, you know, accident with an autonomous car, this immediately gets worldwide headlines. Even though about 40,000 people die every year in car accidents in the US and that most of them don't even get a mention anywhere. But if somebody's creates a shin with an autonomous car, it's headline news. We wouldn't want that.
Yeah, so it's really from an ex. The only thing holding us back is an excess of caution, but people can certainly get a feel for how well the car would perform as unsupervised FSD by simply having a car, allowing a car to drive you around your city. And see, how many times do you have to intervene? Not where you wanted to intervene or we're a little concerned, but how many times do you have to intervene for, for definite safety reasons.
And you will find that that is currently very rare and over time almost never great. Thank you very much. The next question is, are there any discussions with other auto companies about licensing FSG? Yes. What we're saying is at this point significant interest from a number of major car companies about licensing Tesla full soft
driving technology. What we've generally said is the best way to know what to do is take one of our cars apart and, and then you can see where the placement of the cameras are, what the thermal needs are of the Tesla AI furnace computer. That's better than us, you know, sending some CAD drawings and, and then we're only going to entertain situations where the
volume would be very high. Otherwise it's not worth the complexity and and we will not broaden our engineering team with laborious discussions with other engineering teams until we obviously have unsupervisable self driving working throughout the United States. I think the interest level from other manufacturers to license FSD will be extremely high once it is obvious that unless you have FSD, you're dead. Yeah, great. Thank you very much.
The next question is, is Optimist now mostly design locked for 2025 production? Optimist is not design locked. So when I say like we're, we're designing the train as it's going to, we're, we're redesigning the train as it's going down the tracks while redesigning the tracks and the train stations. Yeah, it's, it's, it's rapidly evolving. It's rapidly evolving in a good direction. You know, it's, it's pretty, pretty damn amazing actually. Teams doing a fantastic job.
We really have by far, I think by far the best team of humanoid robotics engineers in the world. And, and we also have all the other ingredients necessary, you know, because you need a, you know, great battery pack, you need great power electronics, you need great charging capability, you need, you know, great communications, going to have Wi-Fi and cellular connectivity. And, and of course, you need real world AI and then the ability to scale that production
to significant to huge levels. So you have to design for manufacturing the things that I mean really what what other companies are missing is they're missing the real world AI and they're missing the ability to scale manufacturing to millions of units a year. I think that is an underappreciated. I think that industrialization and design is a whole different thing than making a design. Yeah, prototypes are trivial. Basically, prototypes are easy,
Production is hard. I've said that for many years. The problem is that there's like those who've never been involved in production or manufacturing somehow think that once you come up with some Eureka design that you magically can make a million units a year. And this is totally false. The there needs to be some, there's some Hollywood story or where they show actually, the problem is manufacturing. I never even heard of one is is, you know, it's just doesn't fit
the narrative. The Hollywood thing is like, it's like some lone inventor in a garage goes Eureka and suddenly it files a patent and suddenly there's millions of units. I like, I'm listening to guys. We're we're missing really 99% of the story, 1% is any of the old saying one like a product is 1% inspiration, 99%
perspiration. The Hollywood church is 1% inspiration, and mine is, which forgets about the 99% perspiration of actually figuring out how to make that initial prototype manufacturable and then manufacture at high volume such that the product is reliable, low cost, consistent, doesn't break down all the time, and that is 100 times hotter at least than the prototype. Then you have to get it there, deliver it. Yeah.
Yeah, you're going to read all these regulations and there's a million regulators around the world. It's pretty difficult. Great. Thank you. The next question is also optimist related. When will Tesla start selling optimists? I mean mobile price pay.
Well, the IT may for this year, we expect to just close the loop with optimists being used internally at Tesla because we obviously can easily use several 1000 humanoid robots at the Tesla for, you know, like the most boring, annoying tasks in the factory. Like the task nobody wants to do where we have to like beg people to do this task.
And then they that it's like like the robots totally happy to do the boring, dangerous, repetitive task that no, no humans want to do. And then that's also actually some of the easiest use cases for us to, you know, have, have optimists do things like, you know, like load, load the the hopper, like like for, you know, like I say, lit in body line. If you like, transporting, you know, pieces of sheet metal to the, the, the, the robot, which is really robot, the robot
welding line for the body. And you just have to they non-stop take things out of out of a from 1 fixture to another fixture. And it's a very boring job. That's the kind of thing what the optimists could do. I'm a guy who runs around and comes all the wealth stubs and the independence. Yeah, there's, there's a ton of boring jobs, tedious jobs, dangerous, you know, slightly dangerous jobs that that's perfect botiness.
So we expect to use octopus for those tasks at our factories and and that'll help us close loop for improvement This year. It's really with the production version 2, which I think launches sometime next year. I'd like to be the beginning of next year, but maybe it, it's more like the middle of next year. And and then we have to just with a, with a production line that is designed for, you know, on the order of 10,000 units a month versus 1000 units a month.
So like when you design A unit for, like when you design A production line for 1000 units a month, it takes you a while to actually reach anywhere close to 1000 years a month. When you design and before any given product production output, it takes you a while to actually reach its potential. But the current line that we're designing is for roughly 1000 years a month of of Optimist robots. The next line would be for 10,000 years a month.
The line after that would be for 100,000 years a month. And I think probably with product with version two, that is a very rough guess because there's so much uncertainty here. Very rough guess that we start delivering optimist robots to companies that are outside of Tesla in the maybe the second-half of next year, something like that. But like, so this is such an exponential round that it'll go from no one's receiving humanoid robots to these things like coming out like crazy.
We can't build enough. Well, we're always going to be in the, we can't build enough situation. Demand will not be a problem even at a high price. And, and then as I said, like once we start, once we're at a steady state of above 1,000,000 units a year, I, I think the production, you know, I'm confident at 1,000,000 units a year that the production cost of optimists will be less than $20,000. You compare the complexity of optimists to the complexity of of a car.
So just the total mass and complexity of Optimus is is is much less than a car. So I would expect that at similar volumes to say the Model Y, which is the over a million years here that you'd see Optimus be, I don't know, half the for half the cost or something like that. What the, what the price of Optimus is is a different matter. The price of Optimus will be set by the market demand. Great.
Thank you very much. The next question is what is the status on mass production of the Tesla Semi and how will it impact revenue and scale? I can take that one. So we just closed up the semi factory roof and walls last week in Reno. So that has schedule which is great. With the weather in Reno, you never know what's going to happen. But we're prepping for mechanical installation of all the equipment in the coming months.
The 1st builds of the high volume Semi design will come late this year in 2025 and begin ramping early in 2026. But as we've said that before, you know, the Semi is ATCO, no brainer. It gets really similar to optimistic, you know, set by how much people pay and you know it, it has the total cost of ownership. It's much, much cheaper than any other transportation you can have. So at that point, when we're at scale, it will meaningfully contribute to, you know, Tesla's
revenue. I think it's difficult to say how much if you want anyone. No, I mean I I do think it tells us semi again with autonomy is going to be incredibly valuable. You know, that we actually have a shortage of truck that drivers in America. That's one of the limiting factors on transport. And, you know, and people are human, so they get tired and sometimes, you know, there's it's, you know, I have a lot of respect for truck drivers
because it's a tough job. But because it's a tough job, there's not that many people that want to do it. And there's actually fewer, I believe my saying is correct. There are fewer people entering truck driving as a profession than are leaving it. Yes. So when you think. Yeah, exactly.
So. So when you consider, OK, there's more people leaving truck driving as a profession than entering it, well, we're going to have a real logistics problem as time goes by. So autonomy will be very important to meet that that need. So like, yeah, it'll, it'll I don't know. It's it's it's it's a several billion a year opportunity, which I don't know in this context is that these days I do several billion a year matter. I think it does not nothing.
It's probably, you know, it might, it's probably a good ten billion year thing. Yes, a billion a month at some point probably. But but it's it's you know, all this is going to pale comparison to Optimus. So yeah, a billion a month is, it's a lot, but it's, it's not, it's going to be like 1% of optimism something, you know. Great. Thank you very much. We already covered the next question in company remarks. So moving on, is it expected that Tesla will need to upgrade
Hardware 3 vehicles? And if so, what is the timeline and expected impact to Tesla's CapEx? I can refer to cost there. They're really asking the tough questions on there. I I guess we, you know, we haven't stopped working on Hardware 3 yet. We are still making software releases. We released the 12.6 release recently, which was like it's like a baby V13, but it's a significant improvement compared to what they had previously. And you know, people are still
finding ways. There's still larger models in the smaller models. So we don't given up on hardware 3. We're still working on it, just the releases will trail the hardware for releases. Great. Thanks, Sheriff. Yeah. I mean, I think the honest answer is that we're going to have to upgrade people's hardware free computer for those that have bought, bought full self driving and that is the honest answer. And that's going to be painful and difficult, but we'll get it
done now. I'm kind of glad that not that many people bought the FSD package. Thanks, Elon. The next question Has Tesla given up on ramping their Solar Roof product? No, we're sorry, Mike. Oh, Mike, go ahead. Yeah. Oh, yeah, I can take it. Yeah. Solar Roof remains a core part of the residential product portfolio and it still remains where it draws a lot of customer interest despite it being
premium products. We've worked on multiple iterations of engineering to make the product easier to install and distribute by producing the SKU count. And you know, more more recently rather than direct installation, we are focused on growth through our nationwide network of certified installers and many of those they've been installing Solar Roof with us for many years.
Yeah. That's actually turned out to be a much better way for the like it's just let the roof just supply product to the roofing industry. And especially when somebody's going to is getting a new roof anyway or building a house from scratch. Obviously this is by far the most efficient time to put in a solar roof as opposed to putting a solar roof on a house that, where the roof still has, you know, 20 years of life, that that's not economically sensible.
But, but if it's a new house or the roof needs to be replaced anyway, then solar roof can make a lot of sense. And, and, and, and it is, it is a premium product. It's, it's like the, you know, it's kind of like Model S, model X or something. It's like a, it's a premium product. I think it looks really cool and your house, I mean your house generates electricity and if you combine it with the Tesla Powerwall battery, then you can
be self-sufficient. So even if the grid turns off, even if the grid turns off for several days, your house still works and your roof looks awesome. So it's like, I recommend anyone go ahead, you can afford it. Get the Tesla solar roof and the Powerwall. Your family's life might depend on it.
Get enough and and just just in terms of convenience, you know your kids are not going to yell at you because their computers don't work because the power went out and they're and you can't charge your phone first work actually happens Yeah, you wish we can't even call in one because your phone's energies. Thank you very much. The next question was covered in opening remarks, so we will skip that.
And the last question from say.com, what technical break theories will define the 14 of FSD given that the 13 already covered photon to control? Well, we're going to help a lot further than photons to output. We've been in sort of the nothing, but that's the situation, nothing but neural Nets from photons to controls for a while now. We're just improving the neural Nets.
I guess we could get into some of the technical details to some degree I'd say I continue to be amazed by just how effective order aggressive Transformers are at solving a wide range of problems. I mean, Ashok is anything you'd like to add there without giving away the sort of family secrets? I mean, except all things we put on next already. Yes, they continue to scale the model size a lot. You know, we scale a bunch of V13, but then there's still room
to grow. So we're going to continue to scale the model size. We're going to increase the context length even more. The memory is sort of like limited right now. We want to increase the amount of memory also give to even minutes of context for driving. We're going to add audio and emergency make this better, add like data of the tricky coral cases that we get from the entire fleet. You know, any interventions or any kind of like, you know, user intervention, we just add that
to the data, the data set. So scaling in basically every access to training, compute, data set size, model size, model context and also all the reinforcement learning objectives. Great. Already with that, we will move over to analyst questions. So just as a reminder, you will need to unmute yourself to ask your question. And the first question will be coming from Daniel Roska from Bernstein. Daniel, please go ahead and unmute yourself.
Hey, good evening, everybody. It's Tanya from Bernstein. Elon Tesla's share price clearly already includes quite a few of the anticipated benefits you talked about today. Yet, realizing what you call a kind of difficult but achievable will take some time. What are you pushing the Tesla executive team to do differently now to accelerate the innovation in order to realize the value you described for the company?
Well, I mean, we're working on perfecting real world AI and making rapid progress week over week. If not, you know, suddenly month over month, it's often week over week. I spent a lot of time with the Tesla AI team and the Tesla optimist team. I mean, I go where the problem is essentially like not, you know, something, you know, portion sometimes like don't talk to Tesla executive and like, hey, we don't see you very often. I'm like, that's because your
stuff is working awesome. Your stuff working really great. Unfortunately, I didn't see them very often because I go where the problem is. So, you know, whatever the problem is what like what's, what's the greatest challenge that lies ahead? So obviously there's, there's, there are many challenges with optimists. It's a hard problem to solve, many challenges with the vehicle autonomy. But we're making rounded progress in both, yeah. OK.
I mean, it sounds like you, you've got a conviction that the pieces you need right are, are in place. If we kind of go 12 months down the line and we look back and you had some of those. But maybe what are the kind of two or three KPIs that would tell you that, you know, you're on track and it's going the right way and the pieces you've put in place are the right pieces, but that's kind of what I'm looking for or other way around.
Where would it be off most likely in your mind that you say, hey, I need to go back there and I need to change something to enable the team better? Well, I mean, I think my, the predictions that I'm making here are going to be pretty accurate, you know, and it's worth an exercise. Sometimes girls say, oh, Elon's always late. Well, actually, no, the problem is that the media reports on when I'm late, but never reports when I'm early. So sure, I'm optimistic, but I'm
not that optimistic. You know, there are many cases in past where I actually we've been early, you know, such as completion of the Shanghai factory or in fact the factory completion is generally been ahead of schedule, not behind. So, yeah, so the, but I like I said, I'm very confident we'll have released unsupervised full self driving fully autonomous Teslas in Austin and several other cities in America by the
end of this year. That's probably everywhere in America next year that everywhere in North America at least. I think in terms of next year our constraints, I think it's likely to be just regulatory, you know, like like Europe really has for example. Europe is a layer cake of regulations and bureaucracy which that really needs to be addressed. You know, there's this, you know, joke like America innovates, Europe regulates. It's like guys, there's too many
reps on the field. I mean, for example, for us just to release just to release supervised full self driving in Europe, even though it works really well. We have we have to go through a mountain of paperwork with the Netherlands, which is our primary regulatory authority. Then the Netherlands presents this to the EU and I think May, and there's like this big EU country committee, we expect it to be approved at that time, but there's nothing we can do to
make that May happen sooner. In fact, nobody seems to do. If I guess all the countries would have to somehow vote in some way to have it happen sooner than May, otherwise it won't happen sooner than May. So then well then when is unsupervised ever see a lot in Europe? I'm like maybe next year maybe, I don't know to find out when the EU is meeting again. Sometimes it's a 12 month cadence, sometimes a six month cadence.
Then in China, which is the gigantic market, we do have some challenges because they weren't currently allow us to transfer training video outside of China and then U.S. government won't let us do training in China. So we're in a bit of a blind there. So but like what are a quandary? So, So what we're already solving then is by literally looking at videos of streets in China that are available on the Internet to understand, and then feeding that into our video
training. So that publicly available video of street signs and traffic rules in China can be can be used for training. And then also putting it in a very accurate simulator. And so it will train using SIM for, you know, bus lanes in China, like bus lanes in China. By the way, what about the biggest challenges in the FSD work in China is the bus lanes are very complicated and there's like literally like hours of the day that you're allowed to be
there and not be there. And then if you accidentally go in that bus lane at the wrong time, the the you get an automatic ticket instantly. So it's kind of a big deal bus lanes in China. So we're going to put that into our simulator train on that. The car has to know what time of day it is, read the sign anyway, we'll get the solved. But you know, I think we'll have anticipated FSD in almost every market this year limited simply by regulatory issues, not
technical capability. And then and then unsupervised FSD in the US this year in many cities, but nationwide next year. And and hopefully we have unsupervised FSD in most countries by the end of next year. That that's the best my prediction with best data that I have right now. Great. Thank you very much. The next question will come from Adam Jonas at Morgan Stanley. Adam, please feel free to unmute yourself.
Thanks, everybody. So, Elon, you've said in the past about LIDAR that for AVS at least, that LIDAR is a crutch, a fool's errand. I think you even told me once, even if it was free, you'd say you wouldn't use it. You still feel that way? Yes. Care to elaborate or just I have another question? Look, we even have a radar in the car and we turned it off. I got it. All right. So you're you're still. Yeah. People think you're crazy, you know, but for not.
Obviously humans drive without shooting lasers out of their eyes. I mean, what's your Superman, you know? But, but like humans drive just with passive visual, it was drive with, with eyes and a neural net and a brain neural net. So sort of biological. So the digital equivalent of eyes and a brain are cameras and, and, and digital neural Nets or AI. So that's the entire Rd. system was designed for passive optical neural Nets.
That's how the whole world system was not designed and what everyone's expecting other that's how we expect other cars to behave. So therefore that is very obviously the solution for full self driving in it as a generalized for the generalized solution for full self driving as opposed to the very specific, you know, neighborhood by neighborhood solution, which is very difficult to maintain, which is what our competitors are doing. I got it. Yeah, Yeah.
I mean, Lidar doesn't work in the fall guys. Lidar has a lot of issues. Like I don't absolutely like the SpaceX Dragon docks with the space station using LIDAR. That a a program that I've personally spearheaded. I don't have some fundamental bizarre dislike of Lidar. It's simply the wrong solution for driving cars on roads. Right you you understand how how Lidar works I I guess. I naturally designed in both the R and red Lidar. I oversaw the project, the engineering thing.
I, it was my decision to use Lidar and Dragon and I, I always saw the, that, that engineering project directly. And so I'm like, we literally designed a major, a lighter to dock with the space station. If I thought it was the right solution for cars I would do that, but it isn't. Yeah. All right, just as a follow up at CES, you said I, I, I'm paraphrasing that any AI will be able to do any cognitive tasks not involving atoms within the
next three or four years. And that would imply, Elon, that before the end of President Trump's term in office, that AI would be moving pretty damn quickly into the physical world. What are the world of photons and atoms? And I'm, I'm thinking, given your work with the administration, how confident are you that the US has will have the manufacturing and the supply base to, to make good on your excitement about physical AI by the, you know, end of by
the latter this decade? We seem pretty vulnerable right now. I've seen you tweeting about or sorry X saying, excuse me, Elon, about China Freudian slip about China having like making more drones in a day than the US makes in a year and all the entanglement of the supply. So what has to happen in the US to make that possible? What's your message and what can what can you do about it? And what's relevant for Tesla shareholders? Thanks, Elon. Well, at Tesla, obviously we
think manufacturing is cool. SpaceX, we think manufacturing is cool, but in general for talented Americans, they need to beyond, you know, my beyond my companies, beyond me and the people and my teams here in general, we need to make manufacturing full again in America. And you know, like, I honestly think people should move from like law and finance into manufacturing. That's my honest opinion. We have too much. This is both a complement and a criticism.
We have too much talent in law and engineering, law and finance in America, and there should be more of that talent in manufacturing. So, yeah, I mean, it tells us we're making sure that we can continue to manufacture our stuff even in the event of geopolitical tensions rising to very high levels. Great. Thank you very much. The next question will come from Pierre Fergu at New St. Pierre. Please feel free to unmute yourself. Hey, thanks guys for taking the question.
So I have a question, You learn on deploying like robotaxis in in June and in Austin. So that's great news. And I was wondering if it means I can, you know, drive down to Austin in June and try and try unsupervised by myself with my car. Oh, it's going to be more like your fleet testing it. It'll it'll be our fleet testing it. But that's not sort of toe in the water. You know, we'll be scrutinizing it very carefully. Make sure it's not something we
missed. But it will be, you know, right, autonomous ride hailing for money in, in Austin in June and then as shortly as possible other cities in America. And I expect us to be operating during unsupervised activity with, with, with our internal fleet in several cities by the end of the year. Then it's probably next year when people are are able to add or subtract their car from the fleet. So you know, kind of like Airbnb where you can sort of add or subtract your house or your
guest room. You know, if you can say like add it to the Airbnb inventory or don't add it to the Airbnb inventory. You know, if you're, if you're traveling for a month, you can or whatever in case maybe you can let other people use your house and then you can anyway. So like that's probably next year because we want to just make sure we've ironed out any, any kinks. And a lot of it is not like we're not splitting the atom
here. It's just a bunch of work that needs to be done to make sure the whole thing works efficiently, that people can order the car, it comes, you know, it's the right spot, does exactly the right thing. All the payment systems work. The billing works. Yeah. OK. But then like, so my sort of question would be, you know, I have a Tesla, I have FSD and I have to keep my eyes on the on the road all the time. It's super boring because I don't really need to intervene anymore.
And the really annoying thing is that I can't just check my emails. And so are you working also on introducing, you know, like a kind of like free unsupervised where I could be eyes off and, and I would be able to check my e-mail and we just need to with a 5 second notice. I have to go back and keep an eye on what's happening or? Is that something you're working on as well because it feels so close with with be certain that I wonder if it's something we'd
expect for this year. It's a very sensitive question I asked for myself, to be honest. Yes, we just need, we need to be very confident that the probability of injury is low before we allow people to to check, check, check with their
e-mail and text messages. In fact, right now we're in this perverse situation, which you may have encountered yourself, where people will actually go to manual driving to check their text messages so the computer doesn't yell at them and then go then put it back on autonomous mode once they've checked the text messages, which is obviously less safe, significantly less safe, significantly less safe, significantly less safe than just letting people check their
texts once in a while without the computer yelling at them. But we just want to be cautious about that, the advent of that we're in this sort of, you know, neither here nor there, but just for, I mean, I think it's not for many months longer. But yeah, we're in this perverse situation where people will turn the car off autopilot so the computer doesn't yell at them, check the text, text messages, well, while staring the car with their knee and not looking out the window and.
There like like Elon said, right? If you have any problems with the system and when people are not looking, that is a dangerous and that's what we're trying to avoid. It's the capabilities getting there, but it's not fully there. That's why he was using the Thermo, tipping a toe in the water, then getting comfortable.
Thank you. Anyway, it's it's not far off, but we wouldn't want to prove to ourselves, improve, improve to ourselves and obviously prove to regulators that the car is unequivocally safer in autonomous mode than than not. And that's we're not far off. So this is like low single digit months. To to the safety aspect, we did publish our safe vehicle safety report today and then.
Q 4 is. 1. Crash for every. 5.9 million miles driven compared to a crash every 700,000 miles without all kind of. Right. So we're we're getting to the point where it's an order of magnitude. Yeah, it's like 8.5 tons, so it's just about there. You know, it's amazing. Great. Alrighty. And our last question will be coming from Dan Levi at Barclays. Dan, feel free to unmute yourself. Great, good evening. Thank you for taking other questions.
Elon, you've talked about the need for proliferation of sustainable transport in the past as part of a sort of broader push to sustainable energy. OK. I know we've heard a lot about President Trump's plans to reverse the the EV mandate. And I think there's a view that given regulation is a driver of EV uptake, this could slow EV uptake in the US. So what would be your view on on the right policy in in the US given your comments in the past the need to push for sustainable
transport? You know, at this point, I think that that sustainable transport is inevitable. I'm highly confident that all transport will be autonomous electric, including aircraft, and that it's simply it's it can't be stopped any more than one could have stopped the advent of the external combustion engine, steam engine, or or one could have stopped the advent of the internal
combustion engine. Like like even if you've been the biggest horse advocate on Earth, it like it like a all your courses are the way got these newfangled car automobiles. You can't stop the advent of the automobile. It's going to happen and you can't. You can't stop the advent of electric cars. It's going to happen. The only thing holding back electric cars was range, and that is a solved problem. Great.
And then as a follow up, you know, in the past, Elon, you had made a comment that you know, you'd be willing to sell cars effectively no margin to get the cars out there. And there's a comment in the release today of the rate of acceleration of autonomy efforts does impact volume growth. So perhaps you could just talk about, you know, with your efforts on FSD, how we should think about your desire to put more vehicles out in, in the market to take advantage of
your, of your tech advances. So I'm not sure I understand the question, but we have a lot of cars. I mean, you've got millions of cars out there. So is, is there a question Dan that how do we, how do we marry our future growth aspects with FSD? And yeah, go. Ahead and meet yourself, Dan. Yeah, more, more so just how much more aggressively you would be willing to you know, sell your cars versus versus, you know, in light of your, of your improvements on FSD.
Well, right now the constraint we're trying to solve is battery production as opposed to demand. So you're and now Q1, we've got this massive factory retooling for the new Model Y, for example, that obviously has a sort of impact on output. But the problem reversing with in fact we're talking the executive team and I were talking about just before this call was how we've got to figure out how to increase total GW hours of battery production this year one way or another.
That's the constraint on our output. Great. All righty. And with that, I think we are all doing for today. So thanks everyone so much for all your questions. We look forward to talking to you next quarter. Thank you very much and goodbye. Hey, thank you so much for listening today. I really do appreciate your
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