Tesla's Q1 2024 Earnings Call

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[00:00:51] up on the latest episodes without the ads. My name is Martin Vieca VP of Invest Relations and

[00:00:59] I'm joined today by Elon Musk, Vaibhav Taneja and a number of other executives. During this call

[00:01:05] we will discuss our business outlook and make forward-looking statements. These comments are

[00:01:10] based on our predictions and expectations as of today. Actual events and results could

[00:01:15] differ materially due to a number of risks and uncertainties including those mentioned in

[00:01:20] our most recent filings with the SEC. Hello everyone and welcome to Kilowata podcast about

[00:01:42] electric vehicles, renewable energy, autonomous driving and much much more. My name is Bode and

[00:01:47] I am your host and on today's episode we are going to talk about Tesla's Q1 2024 financial results.

[00:01:57] Well actually we're just going to talk about the earnings call. We're not going to hit

[00:02:00] too much into the financial realm of things because that's not what this podcast is about.

[00:02:05] This podcast is about figuring out what Tesla's where they're succeeding, where they're failing

[00:02:11] and what their plans are. We try to read the tea leaves as to what their plans are

[00:02:16] for the next quarter and the next year. This is going to be a long one to be honest with you.

[00:02:21] So let's go ahead and jump into Elon's opening remarks. In Q1 we navigated several

[00:02:28] unposting challenges as well as the ramp for the updated Model 3 in Fremont.

[00:02:32] As people have seen the EV adoption rate globally is under pressure and a lot of other

[00:02:41] order manufacturers are pulling back on EVs and pursuing plug-in hybrids instead.

[00:02:46] We believe this is not the right strategy and electric vehicles will ultimately dominate the

[00:02:51] market. Despite these challenges the Tesla team did a great job executing it in a tough

[00:02:57] environment and energy storage deployments, the Mega Pack in particular reached an all-time high in Q1

[00:03:04] leading to record profitability for the energy business. That looks likely to continue to increase

[00:03:10] in the quarters and years ahead. It will increase. We actually know that it will.

[00:03:15] So significantly faster than the car business as we expected. We also continue to expand our

[00:03:24] AI training capacity in Q1 more than doubling our training compute sequentially.

[00:03:32] In terms of the new product roadmap there's been a lot of talk about our upcoming vehicle line

[00:03:37] in the past several weeks. We've updated our future vehicle lineup to accelerate the launch

[00:03:43] of new models ahead. I'll previously mentioned start up production in the second half of

[00:03:47] 2025 so we expect it to be more like the early 2025 if not late this year.

[00:03:53] These new vehicles including more affordable models will use aspects of the next generation

[00:03:58] platform as well as aspects of our current platforms and will be able to produce on the

[00:04:03] same manufacturing lines as our current vehicle lineup. So it's not contingent on any new factory

[00:04:09] or massive new production line. It'll be made on our current production lines much more efficiently.

[00:04:17] And we think this should allow us to get to over three million vehicles of

[00:04:26] capacity when realized to the full extent. Regarding FSD version 12 which is the pure AI based

[00:04:38] self-driving people that if you haven't experienced this I strongly urge you to try it out.

[00:04:43] It's profound and the rate of improvement is rapid. So we've now turned that on for

[00:04:54] all cars with the cameras and inference computer everything from hardware three on

[00:05:02] in North America so it's been pushed out to around 1.8 million vehicles

[00:05:07] and we're seeing about half of people use it so far and that percentage is increasing

[00:05:14] with each passing week. So we now have over 300 billion miles that have been driven with FSD V12

[00:05:23] since the launch of full self-driving supervised pull-out driving. It's become very clear that

[00:05:28] the vision based approach with end to end neural networks is the right solution

[00:05:31] for scalable autonomy. It's really how humans drive that our entire road network is designed for

[00:05:39] biological neural nets and eyes so naturally cameras and digital neural nets are the solution

[00:05:47] to our current system. To make it more accessible we've reduced the subscription price to $99

[00:05:55] a month so it's easy to try out and as we've announced we'll be showcasing our

[00:06:01] purpose-built robot taxi or cyber cab in August.

[00:06:09] Yeah regarding AI compute over the past few months we've been actively working on expanding

[00:06:16] Tesla's core AI infrastructure. For a while there we were training constrained in our progress.

[00:06:22] We are at this point no longer training constrained and so we're making rapid progress.

[00:06:27] We've installed and commissioned meaning they're actually working 35,000 H100 computers

[00:06:36] or GPUs. GPU is wrong word they need a new word. I always feel like a wince when I say GPU because

[00:06:44] not GPUs that's G-Sense graphics and some new graphics. But you know roughly 35,000 H100s are

[00:06:52] active and we expect that to be probably 85,000 or thereabouts by the end of this year

[00:07:02] in training just for training. We are making sure that we're being as efficient as possible in our

[00:07:07] training it's not just about the number of H100s but how efficiently they're used.

[00:07:14] So in conclusion we're super excited about our autonomy roadmap I think it should be

[00:07:19] obvious to anyone who's driving version 12 in a Tesla that is only a matter of time before we

[00:07:26] exceed the reliability of humans and not much time at that. And we're really headed for an electric

[00:07:36] vehicle, an autonomous future. And I wanted to thank the Tesla team for incredible execution

[00:07:43] during this period and look forward to everything that we have planned ahead.

[00:07:46] I think it's important to remind everybody that I do edit these clips on Elon's opening

[00:07:50] remarks. I cut a little bit off from the beginning but this is pretty much his entire opening remarks

[00:07:55] I didn't edit much out of this. So let's talk about it a little bit he talked about unforeseen

[00:08:01] circumstances which is why they had a down quarter well and some of that might be true but

[00:08:07] they produced a whole lot more vehicles than they delivered so I don't know if that's exactly

[00:08:12] what's going on with the unforeseen circumstances. Like that might have had a little play but I don't

[00:08:17] think it had as much as they are saying let's put it that way. He talked about other companies

[00:08:25] going moving a little bit away from electric vehicles and more into hybrids and that's a mistake

[00:08:30] I agree with him. The energy business hit record profitability that's fantastic

[00:08:36] they are Tesla is accelerating new models so the new models are not going to be a whole new

[00:08:44] platform. They're going to be a mix of this generation and next so I think that's smart

[00:08:50] honestly because I don't think Tesla has quite the capacity right now to be doing something

[00:08:55] that's revolutionary every single time they come up with a new model so it's good that they'll be

[00:09:00] able to run on the same production lines that's great let's get some affordable vehicles out

[00:09:05] there and then we can update them over time and then that brings us to FSD so they really hit AI

[00:09:14] a lot in this earnings call so I'm not going to say too much about FSD and their AI efforts I am

[00:09:20] going to correct I don't know if it's correct it's the right word I'm going to counter Elon

[00:09:26] a little bit he said that vision-based approach for FSD which is how humans see the world and

[00:09:33] how our road systems are set up is the right solution and I would say yeah it's the right

[00:09:38] solution for Tesla I'm not sure it's what Tesla is doing is the right solution for every auto

[00:09:44] manufacturer out there they may be a better way to do it or a different way to do it that's

[00:09:48] equally as good so when he says those kind of things I just kind of throw that out there

[00:09:55] he mentioned that it's only a matter of time before FSD exceeds the safety of a human safety

[00:10:03] driver it's only matter of time before FSD is safer than a human and only matter of time sure

[00:10:11] he implies that that's going to be sooner rather than later I've been hearing him say this since

[00:10:16] 2016 so I am skeptical all right let's go ahead and get to our first retail investor question

[00:10:25] what is the status of 4680 what is the current output

[00:10:30] Lars? Sure 4680 production increased about 18-20% over from Q4 reaching greater than 1k

[00:10:38] week for Cybertruck which is about 7 gigawatt hours per year as we posted on X

[00:10:42] we expect to stay ahead of the Cybertruck ramp with the sell production throughout Q2

[00:10:46] as we ramp the third or four lines in phase one while maintaining multiple weeks of

[00:10:51] selling the Torrey to make sure we're ahead of the ramp because we're ramping

[00:10:55] colleagues continues to drop rapidly week over week driven by yield improvements

[00:10:59] throughout the lines and production volume increases so our goal and we expect to do

[00:11:05] this is to beat supplier cost of nickel based cells spending into the year.

[00:11:08] All right I don't have much to say on that to be honest with you and we will get into more 4680

[00:11:14] sell battery questions later so let's move on to our second retail investor question.

[00:11:20] So what is the current status of Optimus already currently performing any factory tasks

[00:11:25] when do you expect to start mass production? We are able to do simple factory tasks or at

[00:11:34] least I should say factory tasks in the lab. In terms of actually we do think we will have

[00:11:42] Optimus in limited production in the factory in the actual factory itself doing useful tasks

[00:11:47] before the end of this year so and then I think we may be able to sell it externally

[00:11:58] by the end of next year. These are just guesses. As I've said before I think Optimus will be more

[00:12:07] valuable than everything else combined because if you've got a sentient humanoid robot that is

[00:12:17] able to navigate reality and do tasks apropos there is no meaningful limit to the size of

[00:12:26] the economy. So that's what's going to happen and I think Tesla is best positioned of any

[00:12:38] humanoid robot maker to be able to reach volume production with efficient inference

[00:12:47] on the robot itself. I mean this perhaps is a point that is worth emphasizing

[00:12:53] Tesla's inference AI inference efficiency is vastly better than anyone any other company.

[00:13:02] There's no company even close to the inference efficiency of Tesla. We've had to do that because

[00:13:08] we were constrained by the inference hardware in the car would never choice

[00:13:14] but that will pay dividends in many ways. I've said before I'm really looking forward

[00:13:18] to having a humanoid type robot in my house to do all of the things that I don't want to do

[00:13:24] which are many to be honest with you. I think it's cool that Optimus is helping out at the factory

[00:13:31] or at least in the lab since helping out at the factory have some factory robots by the

[00:13:36] end of the year on the line doing something maybe it's moving one box from one place to

[00:13:41] another I honestly don't know but I think the end of 2025 might be a little bit soon

[00:13:47] for Tesla to start selling this to other businesses. There's just too many things for a robot to do

[00:13:56] that I don't think Tesla I don't think not so much Tesla I don't think the Optimus robot is going

[00:14:03] to be good at those things by the time they're ready to sell it but what I do see happening and

[00:14:08] I think this is more likely is they do something like they did with the Tesla Semi where they

[00:14:13] go to a partner like Pepsi and they said hey we're going to sell you these you cool with that and

[00:14:19] Pepsi's like okay we'll take 10 and then those 10 are being tested in whatever capacity Tesla

[00:14:26] Pepsi needs them to be tested and they can technically say they sold some but in reality

[00:14:32] they're still in testing I think that's much more likely all right let's go ahead and move

[00:14:38] into our next question what is the plus current assessment of the pathway towards regulatory

[00:14:43] approval for unsupervised FSD in the US and how should we think about the appropriate safety

[00:14:48] threshold compared to human drivers sure I can start there are handful of states that already

[00:14:55] have adopted autonomous vehicle laws these states are paving the way for operations while the

[00:15:01] the data for such operations guides a broader adoption of driverless vehicles

[00:15:05] I think a show can talk a little bit about our safety methodology but

[00:15:09] expect that these states and the work ongoing as well as the data that we're providing will

[00:15:14] pave a way for a broad-based regulatory approval in the US at least and then other countries as well

[00:15:22] yeah it's actually been pretty helpful that other autonomous car companies have been

[00:15:29] counting a path through the regulatory jungle but the which is so that's that's actually quite helpful

[00:15:38] and they they have obviously been operating in times just go for a while I think they got approval

[00:15:42] for city of LA so these these approvals are happening rapidly I think if you've got at scale

[00:15:50] it's a statistically significant amount of data that shows conclusively that

[00:15:55] the autonomous car has let's say

[00:16:01] half the accident rate of a human driven car I think that's difficult to ignore because at that point

[00:16:07] the stopping autonomy means killing people so I actually do not think that there will be

[00:16:15] significant regulatory barriers provided there is conclusive data that the autonomous car is

[00:16:21] safer than a human driven car and now something I should

[00:16:26] clarify is that Tesla will be operating the fleet so you can think of like how Tesla

[00:16:35] think of Tesla like some combination of Airbnb and Uber meaning that you know there'll be some

[00:16:41] number of cars that Tesla owns itself and operates in the fleet there'll be some

[00:16:46] number of cars and then there'll be a bunch of cars where they're owned by the end user but that

[00:16:53] end user can add or subtract their car to the fleet whenever they want and they can decide if

[00:16:58] they want to only let the car be used by friends and family or only by five star users or by anyone

[00:17:07] and at any time I think there's also some potential here for an AWS element

[00:17:18] down the road where if we've got very powerful inference because we've got a hardware three

[00:17:27] in the cars but now all cars are being made with hardware four hardware five is pretty much

[00:17:32] designed and should be in cars hopefully towards the end of next year

[00:17:38] and

[00:17:41] there's a potential to have for the to run when the car is not moving to actually run distributed

[00:17:49] inference so kind of like AWS but distributed inference like it takes a lot of computers to

[00:17:57] train an AI model but many orders magnitude less compute to run it so if you can imagine

[00:18:07] future paths where there's a fleet of 100 million Teslas and on average they've got like maybe a

[00:18:14] kilowatt of inference compute that's 100 gigawatts of inference compute distributed all around the

[00:18:20] world it's pretty hard to put together 100 gigawatts of AI compute and even in an autonomous

[00:18:32] the future where the car is path used instead of being used 10 hours a week is used 50 hours

[00:18:36] a week that still leaves over 100 hours a week where the car inference computer could be doing

[00:18:41] something else and seems like it'll be a waste not to use it all right let's jump into this

[00:18:46] it's definitely to tesla's advantage that other autonomous car companies have gone through that

[00:18:53] as elan calls it that regulatory red tape that's definitely a big benefit for them

[00:18:59] as it stands today full self-driving still falls under level two autonomy according to

[00:19:06] the society of automotive engineers this is how they break down level two autonomy you are driving

[00:19:13] they put that in bold whenever these driver support features are engaged even if your feet are off

[00:19:18] the pedals and you're not steering so technically you're in control of that vehicle you must constantly

[00:19:24] supervise these features you must steer break and accelerate as needed to maintain safety

[00:19:30] so that's for level zero one and two of autonomy then they break down and as far as level two autonomy

[00:19:36] goes what these features do and it says these features provide steering and brake acceleration

[00:19:44] support to the driver example features are lane centering and adaptive cruise control at the

[00:19:50] same time so we're still under level two for full self-driving if we were going to move

[00:19:56] to level three this is what you're looking at for level three four and five you are not driving

[00:20:03] when these autonomous automated driving features are engaged even if you're seated in the driver's seat

[00:20:10] so for level three specifically when the feature requests you to take over you need to take over

[00:20:16] there's a little bit of crossover for level three and four because the features in level three and

[00:20:21] four can drive the vehicle under limited conditions and will not operate unless all of the required

[00:20:28] conditions are met when you get to level four there is some features for local driverless

[00:20:36] taxis but they again all of the conditions that are preset and i don't know exactly what those

[00:20:42] conditions will be but it would probably probably be uh the weather needs to be optimal

[00:20:48] it's only operating on these roads that kind of thing but in order for robotexie to really work we

[00:20:56] need level five autonomy which is you know really similar to level four but it will work in all

[00:21:03] conditions and locations so while i freely admit i have not experienced fsd version 12 from what

[00:21:11] i'm hearing from family members who have teslas and from people who listen to the show have

[00:21:15] tesla who have teslas um and just reading different articles about it of people who don't own stock in

[00:21:22] tesla and don't have a financial interest in hyping up the technology because there are a lot of

[00:21:28] people out there who uh have you know x accounts or youtube pages where they clearly own stock

[00:21:36] in tesla and they do not have a reason to be um unbiased let's put it that way but anyway

[00:21:46] it's neither here nor there um uh it is a bugaboo of mine but there are people that i trust who

[00:21:52] are saying very positive things about full self-driving but it's not perfect and when i ask

[00:21:58] is this something that you would feel comfortable riding in the car and not paying attention

[00:22:04] the answer is no i don't think i've had anybody say yes so we're not quite to level five yet maybe

[00:22:12] we will be soon i genuinely don't know but i've been down this road with elon so many times in

[00:22:18] terms of it's right around the corner it's right on the corner it's right on the corner

[00:22:22] it's never around the corner one day it will be right around the corner but i don't think that

[00:22:27] day is anytime soon so now that we got that out of the way um elon said that the autonomous car will

[00:22:38] be someday safer than a human and i do believe that as to when that will be i have no idea i think

[00:22:43] it's further out than elon thinks and then finally let's bring it back to the regulators

[00:22:48] who are saying yay or nay you can drive on our roads in level four or five autonomy even if

[00:22:55] tesla gets that approval there are still citizens that are going to be in the areas where tesla gets

[00:23:03] approval who may not be happy about this i will be 100 on us the the people in my neighborhood

[00:23:09] when wemo fans started driving around when i say my neighborhood i mean like the larger neighborhood

[00:23:15] the communities around that wemo fans are driving and people were not happy about it now take that

[00:23:23] uh um healthy skepticism of something new and then add to that uh uh uh uh ceo of a specific company

[00:23:33] that may or may not say crazy things randomly on twitter and may or may not say things just to

[00:23:40] make other people mad because he gets a uh or they excuse me get a chuckle out of it

[00:23:46] um and then add to that that maybe that ceo ordered people in his company to fake a video

[00:23:55] and so it looked like the technology of their car could do something that it couldn't do imagine

[00:24:01] of all those things for the case and then that company wanted to let's say test their cars in

[00:24:08] a certain community there might be a little bit of an uproar in that regard um and i still like

[00:24:19] now i'm even i have even more doubt that we'll get full autonomy with hardware three

[00:24:24] than i did in the past elon said hardware five cars will be coming at the end of next year

[00:24:30] which is uh soon compared to how long it took hardware three and hardware four to be put out

[00:24:38] hardware three was out for a good long time before they put out hardware four and then

[00:24:43] that'd be about a year and a half between hardware four and hardware five all right that's

[00:24:47] enough of me i have more thoughts on other things but i'm going to go ahead and cut it off here

[00:24:51] because i'm getting too long-winded let's move on to our next question can we make fsd transfer

[00:24:57] permanence until fsd is fully delivered with level autonomy you know so after elon

[00:25:04] answered no there was giggles in the room and i think this is extremely inappropriate i think it's

[00:25:12] poor taste because again and i hate to continue beating this uh dead horse here but the promise

[00:25:24] of hardware two of having full self-driving level five autonomy did not happen the promise of full

[00:25:35] self-driving with level a hardware three autonomy uh is probably not going to happen and there are

[00:25:42] people who have for variety of different reasons have had to buy new cars whether that's because

[00:25:48] their cars just aged out or they wanted a new car or it got in an accident or whatever

[00:25:53] there are people who have paid for full self-driving and never got to use it and in some instances

[00:25:59] they've paid for full self-driving because they believe in the mission that elon has has put

[00:26:05] out there they've paid for it several times and they still have not received full self-driving

[00:26:12] i am not a litigious person but i could definitely see a class action lawsuit in the

[00:26:18] not too distant future for tesla and i really believe that they're going to end up losing

[00:26:25] and the bad news about the class action lawsuit is all of the people involved will probably get

[00:26:30] pennies and the lawyers will get the lion's share of the settlement which sucks

[00:26:38] all right let's go ahead and jump into our analyst questions

[00:26:42] let's go to adam jonas from morgan stanley assuming that you nail execution on your

[00:26:46] next gen cheaper vehicles you know more aggressive giga castings i don't want to say one piece but

[00:26:53] getting closer to one piece structural pack unboxed 300 mile range 25 000 price point

[00:26:59] putting aside robo taxi those features unique to you how long would it take your best chinese

[00:27:06] competitors to copy a cheaper and better vehicle that you could offer a couple years from now

[00:27:12] how long would it take your best chinese competitors to copy that thanks i mean i don't know

[00:27:22] what our competitors could do except uh we've done relatively better than they have

[00:27:29] you know if you look at the drop in our competitors in china sales versus our drop in sales

[00:27:34] our drop was less than theirs so we're doing we're doing well um but uh you know i i i i think

[00:27:42] you know catheter said it best like really we should be thought of as an ai robotics company

[00:27:48] if you value telsa as just like an order company you would just have to fundamentally it's just

[00:27:55] the wrong framework okay and it will come to you if you ask the wrong question then the right answer

[00:28:00] is impossible um so i mean i if somebody doesn't believe telsa is going to solve autonomy i i

[00:28:10] think they should not be an investor in the company like that that is but we will and we are

[00:28:20] and then you have a car that goes from 10 hours of use a week like an hour and a half a day to

[00:28:26] probably 50 but it costs the same i think that's the key thing to remember right especially if you

[00:28:37] look at fsd supervised if you didn't believe in autonomy they should they should give you a preview

[00:28:44] that this is coming it's actually getting better day by day yeah if you if you've not tried the fsd

[00:28:53] 12.3 and like i said 12.4 is going to be significantly better than 12.5 even better than

[00:29:00] that and we have feasibility into those things then you really don't understand what's going on

[00:29:05] it's not possible yeah and and that's why we can't just look at just as a car company because

[00:29:11] a car company would just have a car but here we have more than a car company because the cars

[00:29:16] can be autonomous and like i said it's happening yeah this is all in addition to tesla it's working

[00:29:23] the overall ai community is just like increasing like improving rapidly yeah yeah and we're putting

[00:29:29] the actual auto in automobile so you know so sort of like well sort of like tell us about

[00:29:37] future horse carriages you're making i'm like well actually it does need a horse that's the whole

[00:29:42] point um that's that's really the whole point so i left that clip mostly unedited because i

[00:29:51] wanted you to get a sense of where elon was at i don't think he answered that question by the way

[00:29:58] um you know he says i don't i don't really pay attention to the chinese market he's mentioned

[00:30:03] in the past that chinese automakers are doing incredible things so he does pay attention to it

[00:30:08] and he's competing competing against them so the likelihood of him paying attention to the

[00:30:14] chinese auto market is quite high at the very least he gets reports about what how his

[00:30:20] competitors are doing and what they're up to and what cars they're they're offering

[00:30:24] to answer the question that elon did not answer i don't think it's a matter of chinese automakers

[00:30:31] copying tesla because there are already chinese automakers like byd that are putting out very

[00:30:36] nice affordable e v's it's a matter of these automakers being able to put out an e v that

[00:30:46] that closely compares to what tesla's offering at 25 000 at a cheaper price so if tesla's offering

[00:30:56] their car at 25 000 and the chinese automaker is able to build almost as good of a car for 20 000

[00:31:05] but it includes many of the same features as full self-driving for instance

[00:31:11] for a lot of people five thousand dollars is a big difference and if you can get many of the

[00:31:15] same features without having to pay extra as full self-driving and you get similar features

[00:31:21] that you would get in the in the tesla 25 000 version that it's really hard to choose a tesla

[00:31:30] when you want to buy a new car you want to buy an e v but you can't afford 25 000 for a new

[00:31:35] car but you can't afford 20 and you can't afford 25 000 for a new car and an additional

[00:31:42] hundred dollar payment on top of that so which would be for the full self-driving so i think

[00:31:49] that tesla will build us a very nice 25 000 affordable car and i think that that is needed

[00:31:59] for sure but the chinese automakers are already they're already building cheaper cars

[00:32:06] and then elon makes mention that if you don't understand that tesla is an ai robotics company

[00:32:13] then you've missed the point well right now you're a car company and you're kind of an

[00:32:18] energy company on top of that and maybe one day you'll turn into an ai robotics company

[00:32:24] but you're not there yet you right now you sell cars and some of what those cars have some ai in it

[00:32:31] and that's it like it's not let's looking 10 years in the future maybe you are an ai and

[00:32:39] robotics company and you just started by building cars but right now you're a car company

[00:32:45] let's go ahead and move on to our next question which is about the round of layoffs

[00:32:51] that tesla just had i'd be interested also in potentially more qualitative discussion

[00:32:58] of what the implications are for these headcount reductions what are the types of activities

[00:33:03] that you're presumably sacrificing as a result of parting ways with with these folks thanks very

[00:33:09] much so you know like we said we've done these headcount reductions across the board and

[00:33:18] you know as companies grow over time you you know there are certain redundancies there's some

[00:33:23] duplication of efforts which happens in certain areas so you need to go back and look at where

[00:33:29] where where all these pockets are get rid of it so we're basically going through that exercise

[00:33:35] wherein we're like hey how do we how do we set this company right for the next phase of growth

[00:33:42] and the way to think about it is you know any tree which grows it needs pruning

[00:33:49] this is the pruning exercise which we went through and at the end of it will be much

[00:33:55] stronger and much more resilient to deal with the future because the future is really bright

[00:34:01] like i said in my opening remarks we just have to get through this period and get there

[00:34:08] yeah we're not giving up anything that it's significant that i'm aware of so

[00:34:18] we've just we've had a long period of prosperity from 2019 to now and you know so if a company sort

[00:34:24] of organizationally is five percent wrong per year you know that accumulates to

[00:34:30] 25 30 percent of inefficiency we've made some corrections along the way but

[00:34:35] but it is it is time to reorganize the company for the next phase of growth

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[00:36:30] that's 15 off at burrow.com slash a cast all right i think that was a good explanation

[00:36:41] i did cut out the part where elon was talking about cells in your body and how your body grows

[00:36:47] and how that's like a company i cut all that stuff out so if you want to go back and listen to that

[00:36:52] you can i'm not sure why you would want to though let's go ahead and move on to our next question

[00:36:57] let's go to mark delaney from goldman sacks mark please go ahead and unmute

[00:37:04] yes good afternoon thanks very much for taking the question the company had previously characterized

[00:37:08] potential fsd licensing discussions as in the early phase and some of oems had not really been

[00:37:13] believing in it can you elaborate on how much the licensing business opportunity you mentioned

[00:37:18] today has progressed and is there anything tesla needs to achieve with the technology

[00:37:21] in terms of product milestones in order to be successful at reaching a licensing agreement

[00:37:25] in your view but i think we just need to it just needs to be obvious that our approach

[00:37:32] is the right approach and i think it is i think we're now with 12.3 if you just have the car drive

[00:37:39] you around it is obvious that our solution with a relatively low cost inference computer

[00:37:47] and standard cameras can achieve self-driving no light ours no radars no ultrasonic nothing

[00:37:57] just no heavy integration work for vehicle manufacturers yeah it's uh so really just be a case of

[00:38:04] you know having them use the same cameras and inference computer and licensing our software

[00:38:13] and but but it's it's once becomes obvious that if you don't have this in a car nobody wants your car

[00:38:19] yeah it's like it's a smart car it you know i mean i just remember like the fact when no qia was

[00:38:27] at king of the hill yeah cell phone yeah crushing and um and and and i slowly come out with

[00:38:35] a smartphone that was basically a brick um with limited functionality um and then uh

[00:38:42] you know the iphone and android but people still did not understand that all the phones are

[00:38:48] going to be that way there's not going to be any flip phones if they'll be a niche product or home

[00:38:53] phones yeah not even exactly where's last time you saw the home phone i know i have no idea yeah

[00:39:01] in a hotel sometimes in a hotel yeah the hotels have them yeah um so

[00:39:08] if people don't understand all cars will need to be smart cars or they or or you will not sell

[00:39:13] the car will not nobody will buy it um once that becomes obvious i think licensing

[00:39:21] becomes not uh optional becomes a method of survival yeah so it's licensed that or nobody will buy your

[00:39:28] car all right this is something that frustrates me sometimes when elon's talking license it or

[00:39:34] nobody will buy your car let me tell you why that's not true first um i think the tesla interface

[00:39:41] on my car like the infotainment system is fantastic i love it uh it is way better than the

[00:39:49] crappy mozda rx9 that i used to have that and i loved my mozda but the interface

[00:39:57] it didn't have an infotainment system first of all just had a radio and a cd player

[00:40:01] but the interface on that was very blah and with the tesla it changes and things get better and

[00:40:08] it's awesome it's way better than my mozda okay so i'm telling you that so i can tell you this

[00:40:15] in our fire department we uh have had a rash of new people and what tends to happen after

[00:40:23] somebody graduates the fire academy is they go out and buy a new vehicle and i'm looking at the

[00:40:28] cars in the parking lot of the station that i work in those cars are they have very minimal

[00:40:35] interfaces if they have any electronic interface at all right teslas is clearly better anytime

[00:40:41] somebody sits in my car like oh this is so cool but their cars interface in terms of like the radio

[00:40:47] and stuff like that awful absolutely awful it's the most basic interface you can get but they're

[00:40:52] still buying those cars i actually have on another shift one of the firefighters she has

[00:40:58] a Mercedes i don't know which one it is but it's very nice she likes the tesla interface better

[00:41:04] than her car's interface now her car is gorgeous and she takes really good care of it but um in terms of

[00:41:13] you know the the what she can do with her car that i can do with mine completely different like i

[00:41:19] have way more options than she has now if you move that analogy to full self-driving versus

[00:41:26] just driving on your own right most people don't have driver assist type features like they have an

[00:41:34] autopilot or or full self-driving they may have some of those features but they don't have

[00:41:40] they don't have it set up quite like tesla does uh for does a really good job and some other

[00:41:44] companies gm crews does a good job but you know just normal people they're just driving their

[00:41:50] cars they're not turning on anything special so now you have to convince that person that this

[00:41:57] new technology is going to be amazing but you're gonna have to spend a whole lot more money for it

[00:42:03] or or you have to have a subscription price or you can buy this car over here that's drives just

[00:42:10] as nice but doesn't cost as much um you know i don't think people are going to make that leap

[00:42:16] and spend the extra money some will i think most won't and i don't think they'll care that they didn't

[00:42:22] get the feature to be honest i think they're going to be okay with driving their own car versus a car

[00:42:29] that maybe drives itself and then elon makes the analogy of the smartphone right no kia at its

[00:42:37] height had the brick phone and then iphone came along and then android came along well in his

[00:42:44] own example apple's not licensing their technology out to other manufacturers android has made itself

[00:42:51] available to anybody who wants to use it so we now we have two options in the cell phone market

[00:42:58] so using his own example against them uh there there's going to be many different options and i

[00:43:04] think apple will be one of these options one day but there is going to be many different options

[00:43:09] in the full self-driving or autonomous driving space for automakers to choose from and in most

[00:43:15] cases i do think that the automakers are going to roll their own autonomous driving suite um maybe

[00:43:24] event maybe initially they license it from a company like tesla but i really i really feel

[00:43:30] confident that those those automakers don't want to be beholden to tesla that i'm sure they

[00:43:36] don't mind partnering for a period of time with tesla or other automakers but in the long run i don't

[00:43:43] think they want to be holden to their competitors all right let's go ahead and resume the answer

[00:43:49] from the tesla team and they're going to talk about how you know uh legacy automakers are

[00:43:56] implementing this new technology or could implement this new technology i mean one other

[00:44:02] thing which i'll add is in the conversations which we have had with some of these oems i just

[00:44:07] want to also point out that they take a lot of time in their product life cycle yeah they're

[00:44:13] talking about years before they will you know put it in their product they might we might have

[00:44:19] a licensing deal earlier than that but it takes a while so this is where the big difference between

[00:44:26] us and them is yeah i mean really a deal signed now would result in it being in a car probably three

[00:44:34] years something like that yeah that's like lightning basically so let's be an eager oem yeah so i

[00:44:46] don't know i would be surprised if we do sign a deal i think we're good chance we do sign a deal

[00:44:51] this year um maybe more than one um but yeah it would be probably three years before it's

[00:44:58] integrated with a car even though all you need is cameras and our inference computer so it's

[00:45:05] like not a massive design change yeah and again just to clarify it's not the work which we have

[00:45:11] to do it's the work which they have to do with paper time i would imagine that it's more

[00:45:16] complicated than they are are stating in this situation i don't have anything else to add on this

[00:45:24] and i'm going to go ahead and end the show here because listening back to the clips

[00:45:29] they just kind of circle back on some of the things that we've already covered and

[00:45:33] i don't know that there's a huge benefit in listening to those but i would encourage everyone

[00:45:38] if they want to to go and and listen to the entire earnings call this one was a very low energy

[00:45:43] elon and when we get a low energy elon it's a it's a weird earnings call i don't know how to

[00:45:51] explain it this one just felt very weird and stilted but he started to engage more towards the end

[00:45:57] and i think you could you probably notice that all right everybody i want to thank you for listening

[00:46:03] to this episode i want to thank you for listening to the kilowatt podcast i really appreciate it

[00:46:09] i appreciate it that was a weird way of saying that i've been up for a long time today i'm very tired

[00:46:15] so i'm going to go to bed after this if you want to email me it's bodi b o d i e at

[00:46:20] nine one eight digital dot com you can also find me on twitter at nine one eight digital

[00:46:26] and uh yeah that is it i hope you all have a wonderful weekend and i will talk to you

[00:46:33] on tuesday and we're going to go over gm's earnings call i would like to make a short

[00:46:59] announcement and i wanted to let the investment community know that about a month ago i met up

[00:47:06] with elon and bybuff and announced that i'll be moving on from the world of investor relations

[00:47:12] i'll be hanging around for another couple of months or so so feel free to reach out anytime

[00:47:17] but after this seven-year sprint i'm gonna be taking a break

[00:47:21] and spending some good quality time with my family and i wanted to say that these seven years have been

[00:47:26] the greatest privilege of my professional life i'll never forget the memories from

[00:47:31] i started literally at the beginning of production hell and just watching the company

[00:47:35] from the inside to see what it's become today and i'm especially super thankful to the people

[00:47:42] in this room and dozens of people outside of this room that i worked for over the years

[00:47:48] i think the the team strength and teamwork at tesla is unlike anything else i've seen in my career

[00:47:55] elon thank you very much for this opportunity um that i got back in 2017 thank you for seeking

[00:48:01] investor feedback and regularly and debating it with me uh yeah well i mean the reason i reached

[00:48:07] out to you was because i thought your analysis of telsa was the best that i'd seen thank you so um

[00:48:13] yeah thank you for helping telsa get to where it is today over seven years it's been a pleasure

[00:48:17] working with you thank you so much and um yeah thank you for all the thousands of shareholders that

[00:48:23] we've met over the the years and walked around factories and loved all the interactions even

[00:48:29] but even the tough ones and uh yeah looking forward to the call in the next three months

[00:48:34] but i'll be on the the other side listening in thank you very much tired of ads barging into

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