Tesla's Q3 2026 Earnings Call

[00:00:01] Hello everyone and welcome to Kilowatt, a podcast about electric vehicles, renewable energy, autonomous driving and much, much more. My name is Bodie, I am your host and I'm kind of trying to talk quietly because we have people here and I don't want to wake anybody up and I'm doing this at, you know, close to 10 o'clock at night. So I'm going to try to be as quiet as possible to be as considerate as possible. Today we are going to be talking about

[00:00:32] Tesla's Q3 2026 Earnings Call. And before we get into that, yesterday or last episode, depending on when you're listening to this, I was talking about some weird things that FSD was doing and somebody wrote in and they're like, hey, I had that problem too with my hardware three car. Those problems largely went away with hardware four. And since I don't have a hardware four car or direct access to one,

[00:00:59] I can't test that. But I do believe that that is in fact the case. So that does make sense. Another thing is somebody emailed in, let me find it here. Sorry about that. Okay, somebody emailed in and they created an app that is a hands on roadster physics experiment.

[00:01:30] I do not know if this works, but the folks at cold gas physics lab built an interactive calculator that focuses on the claimed acceleration, grip, suction, and gas propulsion of the new Tesla roadster. It's pretty neat looking. It is kind of fun to play with.

[00:01:58] I will fully admit though. I do not. And when I say do not, I absolutely do not know if this is any of this is accurate. I have, I do not have the training or nor do I have the knowledge or education to tell you if this is a real thing or not.

[00:02:16] But I will put a link to it in the show notes if you want to check it out. It's, I think it's cool. So if that's something that you are interested in, there'll be a link in the show notes. All right, let's go ahead and dive into Elon's opening remarks. The third quarter was very strong and I'd like to give a big congratulations to the whole Tesla team for working hard to make it happen.

[00:02:42] Demand is growing rapidly for our vehicles. It's exceeding our production by, by a significant margin. And obviously we're going to be ramping and we are ramping production meaningfully. The biggest driver for demand is full self-driving. And today there's really no competitor for FSD in any car that you can buy. And to be clear, we're producing and delivering as many cars as we, as we can.

[00:03:09] And we're pushing very hard for FSD approval in additional markets. We're, we're, we're now approved in many countries in Europe and we're hoping for an EU wide approval. It's hard to predict, but maybe, you know, within a few months, but I would, I would be surprised if it takes longer than, than Q1. But obviously that's, that's not a timeframe we control, but we do anticipate being fully approved in, throughout Europe. And, and many other countries.

[00:03:37] And, um, we also began production of the Tesla semi truck in Q3, uh, and, uh, did the, the, the, the new roster demo, which was, I think one of the most exciting events. Um, I mean, arguably the, the coolest demo of any product ever. Um, and that's a testament to, to amazing work by the, the Tesla and SpaceX teams. Um, so, uh, we, we, we've, we've also been like laying the groundwork for a lot more manufacturing capacity.

[00:04:06] Um, the, uh, we were, uh, I think aiming for, uh, uh, 5 million vehicles a year by approximately 2030. Um, and, uh, that's, I think we've, we've got a good shot of achieving that goal. Um, uh, uh, and, uh, yeah. So, and energy demand is, is very strong.

[00:04:34] We're actually almost, almost sold out of all, uh, mega packs for 2027. And we're ramping production as quickly as possible to meet demand. Uh, we also expect, uh, gross margins on that to increase, uh, meaningfully. So, um, in a nutshell, after many years of, of, of sort of grind and, and things being fairly flat, I think we're, we're, we're now headed for a lot of fun and significant growth.

[00:05:04] So, yes, I would say that it's probably inevitable that Tesla will get FSD approval EU wide sooner rather than later. Uh, you know, gave a little update on the semi and the roadster. I would say it's pretty subjective, whether it was the most impressive demo or the most amazing demo of all time. However, he put it, I thought it was pretty cool. Some people did not, which is why it's subjective.

[00:05:33] Uh, talking about increasing manufacturing capacity, which I think is great. We're already almost through 2026 and they want to hit 5 million vehicles per year by 2030. I wonder if that is, oh, right now there are like 1.6 million vehicles. Like that's what they built in 2025.

[00:06:00] 1.6 million vehicles were delivered in 2025. That would be, I think, in three years, basically going to 5 million. That seems like it would be pretty difficult unless Tesla's counting like their own robo taxi fleet.

[00:06:24] And then even then, it seems like that's a lot of extra cars that they may need to buy or build, may not need to build. So yeah, that is, that's a lot. That's a lot of vehicles for sure. And the delivery numbers I'm getting are directly from Tesla's website. I'm not, um, getting that from some other source. So 1.6 million to 3 million in three or 5 million in three years seems like a lot.

[00:06:50] And again, unless they're building a lot of the vehicles for themselves, I'm sure, you know, some people will buy the robo taxis when those finally come available. Um, maybe that will be their, um, their 5 million, but those, those are relatively low margin when it comes to, well, according to Elon, they will be relatively low margin when it comes to purchasing, uh, the vehicles,

[00:07:16] but then they'll make money on by letting people put them on the robo taxi network if that's what they want to do. Uh, so yeah, 5 million is a lot though. We'll, we'll see where that goes. And then in terms of energy, uh, it sounds like demand's high for Tesla energy products. I mean, my wife and I, my kids are in high school. So when they graduate high school and go to college, maybe not immediately after,

[00:07:44] but we plan on moving to a much smaller house that's a little bit more realistic for two people. And when we do that, I definitely want to put power walls, um, or some other sort of battery storage on the house, probably power wall with solar. Uh, I don't want to do that with my current house though, because I don't want to spend $30,000 and then I'm, I'm leaving in four years.

[00:08:08] So that's not my, I don't think it adds $30,000 worth of value to the house. So anyway, um, I can see why Tesla's energy, uh, uh, uh, sector or their energy division is strong. Like mega packs, uh, home storage, commercial storage, really big right now, especially with as high as other prices as electricity is right now.

[00:08:39] All right. Uh, moving on, Elon's going to talk about robo taxi. Regarding a robo taxi, we're seeing the, uh, robo taxi, uh, miles driven or fully autonomous miles driven, uh, scale, uh, exponentially, meaning scaling very rapidly. Um, and, uh, it would be hard to overstate this.

[00:09:03] It really is, uh, an extremely fast week over week, uh, growth in autonomous miles. And, and I don't think there's any company in the world that can match our scale with autonomous vehicles, uh, as we continue to ramp, uh, the cyber club, cyber cab fleet in Austin, uh, for example, has grown by a factor of 10 since, uh, launch about a month ago. The, uh, and the, the cumulative mileage is, is really, when I look at the weekly chart,

[00:09:32] it's, it's, it's, it's wow. I mean, it looks like a rocket going over basically. It's very growing very fast. Um, and, and if I recommend, if you want to try it out, uh, you know, coming to Austin and you'll see cyber cabs in use at scale in Austin. Um, as I think a lot of people saw with the Austin city limits, uh, concert recently.

[00:09:58] So, um, so, um, so the, the, so this is, this is really going to, to a very good place. Um, I, I think that the robot taxi network and cyber cab and whatever else they decide to throw onto the app, the, the, the network, I think it will be eventually successful. However, I have a, like, what is scaling rapidly mean?

[00:10:27] Like, what are the numbers right now? We know that Waymo has more autonomous vehicles operate on the road than Tesla does. So I'm not, I, I, well, let's, let's hear the numbers. Cause if you 10 X, but you only had one cyber cab, it's not really a lot. If you had 30 cyber cabs to 300, it's still in the grand scheme of things, not a lot.

[00:10:55] So I'm curious as to how many, and I, I've heard that Tesla will put more cars on the road, more cyber tag taxis or robo taxis on the road when there are big events like this Austin city limits event that he's talking about. But then, and I think that's great. You should do that.

[00:11:18] You shouldn't, if you have 15 robo taxis and then you put out 60 robo taxis during these big events, that makes sense because you're, you're meeting demand, but it doesn't make sense to have 60 robo tax. I want to know what the demand is really was what I'm saying. Um, it can be up, you know, the, the chart can be up into the right, like a rocket. But if you started with very small numbers and you're growing even a little bit, it should

[00:11:48] be up into the right, like a rocket. I mean, that's what I would expect. So anyway, I'd be more interested in actually hearing what the numbers are than just that it's, that it's up into the right and it's scaling fast because we don't really know what that means. And one of the things that I've kind of been going over in my head and how I'm going to talk about this is the SpaceX and Tesla merger.

[00:12:17] So Elon said recently on, I think it was the SpaceX earnings call that both companies have, um, committees looking into whether or not this should, they should merge. And I mean, I'm going to be honest with you that that seems to be very, um, it seems like both companies want to merge and I don't care one way or the other.

[00:12:43] If SpaceX merges with Tesla, I'm not a shareholder of either company, but I do like when I hear things from that Elon says, like I'm there, you know, Tesla's going to give or Elon's going to give every child in the U S one SpaceX stock. I mean, okay. I, I, that feels like bribery to me, but fine.

[00:13:07] If a, if a kid gets SpaceX stock and you know, it remains between let's say 150 and $500, then great for them. Um, to me, it feels like somebody making a promise so that people will vote their way, which seems like almost, uh, bribery or, or some sort of manipulation, which I think is illegal, uh, for a CEO to do that kind of thing, but he didn't tie it to anything.

[00:13:37] So that's a different story. So it may not be, it may just be an altruistic gift. I don't think so. But, uh, in, in terms of whether or not SpaceX and Tesla merge, it really like a lot of, some people are very excited about it. Some people are wholly against it. It's honestly not going to affect my life one way or the other. So I don't really care other than I do this podcast and I talk about Tesla for half of it.

[00:14:06] So that's all that matters to me. All right. Uh, next up, Elon's going to talk about Optimus. Regarding Optimus, uh, we, we, we've started like what I'd call early production, uh, on a high volume line in Fremont. Now I want to elaborate on this point because the, and I have said this before that the, the growth of Optimus, it's an, it's an S curve, but the initial part of the S curve

[00:14:35] is, uh, has a shallow slope and is somewhat bumpy because it is such a radically new product. So, um, that, you know, the way to think about it is there's like 10,000 things that have to go right for production of the, of the robot. Um, but we do have, um, the, you know, the, the vast majority of a million unit per line

[00:15:01] production line, um, landed in Fremont right now. Um, but it, I would expect that it takes us probably at least a year, maybe a little longer to get to that annualized rate to get to 20,000 units a week. Um, so this is just a fundamentally because there's, you know, there's, there's still parts of the design that are changing. Um, like a lot of people ask me about Optimus.

[00:15:30] That's why I think I've got to kind of, um, sort of belabor this point. Um, because if people aren't, don't sort of understand like new technology that well, or volume production of complex new hardware that well, it sort of seems like, well, can't you just make a whole bunch of these things immediately and send them out? And, and it's like, no, you've, you've got to, um, basically build up an entire gigantic

[00:15:57] global supply chain and, uh, have domestically, um, a very, very big factory and everything's got to work. Um, and there's still some things we need to tweak about the design because you need to deliver a robot that is, that is safe and reliable and has long duration. So it can't like wear out after a month. Um, and, and, and there's still quite a lot of work to do with regard to the AI and the robot.

[00:16:26] Um, for it to be truly useful for open-ended tasks. Um, but if, if, but like I said, if, if, if I would expect that the, the AI, the, you know, the electromechanical design and the, um, reliability and, and, and, and, uh, duration usage duration, like the usage life of the robot.

[00:16:53] I expect these, I do expect these issues to be solved around the end of next year. Um, so that, that's the time to, to expect, um, when we're delivering Optimist, uh, to companies outside of Tesla. Um, and, and, uh, I remain convinced that Optimist will be the biggest product on earth. Um, and, and humanoid, humanoid robots in general will be the biggest product on earth.

[00:17:21] So, so it's, it's, it's a, Optimist is a very big deal. Um, but we should, I didn't want to temper expectations that we, we still have a lot to get through and it's about, about a year or so that it'll take us to get through all that stuff. Um, but I, as, as to the best of my knowledge, there is no one that is even close to Tesla with respect to a general purpose humanoid robot. The last couple of years that I've been at CES, the folks, uh, coming over from China

[00:17:50] to show off their humanoid robots, they're pretty impressive. Do I think they are like, uh, do I think that you just jump in and start doing a task without being trained? No, I don't even think they're close to that. They can do jujitsu, not jujitsu. They can do like martial arts because they showed that off quite a bit.

[00:18:13] They can dance and that's a fun demo, but that's not to say that they're any further along or, or less far along that doesn't say, doesn't mean Tesla's that far ahead of them. China is kind of widely known right now for how, uh, far they are, they've gotten with the humanoid robots. So I wouldn't necessarily say that Tesla's heads and tails above other companies.

[00:18:42] Tesla kind of got into this late. Like they didn't even announce Optimus until August of 2021. And I think they called it Tesla bot. Um, they, they, they had a guy in a suit and then, or a gal in a suit. I don't know what their, who was in there.

[00:19:02] They had a prototype in 2022 and then in 2023, let's see in 2022 in April, 22, Elon said that this could be production ready in 2023. And, you know, here we are. It's not quite there yet, but in the end, like, is this a, is this a mission critical thing for Tesla? Maybe for Tesla.

[00:19:32] It's not a mission. I don't think it's a mission critical thing for people outside of Tesla in terms of people waiting on this. Would it be nice if somebody, you know, we could have a Optimus robot come and make sure that my house is cleaned every single day. That'd be awesome. Um, but I don't, I generally, I think we have, I don't think Optimus is around the corner when it is.

[00:20:01] I do think it's going to be a big product, but it is a right at this point in time, just like Elon said, there's a lot of things that can go wrong. They're building a supply chain. Much of what he said, uh, in this, uh, about Optimus, we've heard about other products up to including like, this could be the biggest product ever. We've heard that. We heard about Tesla energy. We heard about the model three. We heard about this. We heard about that.

[00:20:28] We've heard this before and maybe it will be. I think it'll be a very big category, human robots, but we also have a little bit before, before it becomes, I think, uh, viable. I don't think it's next year or the year after or 2030 for that matter. And I'm not talking just Tesla.

[00:20:50] I mean, for all the robotics companies, it seems like creating a, uh, pretend human is a lot harder than creating an actual human. So might be cheaper in the long run, but it's, it's a lot harder to try to replicate what we're capable of doing, which is fine. And Elon has said that for sure. So anyway, Optimus, I think it's interesting and will be more interesting someday. Just not now. Okay.

[00:21:20] So we're going to continue on here. Um, I'm going to stop Elon's opening remarks. He did talk a little bit about the tariff fab in Austin, Texas. He said it might be the most valuable building in the world ever. He, let's see, said that they should start producing chips. He said other things, but the big, big, important parts stood, should start producing chips in Q3 of 2028. And those chips are going to be really important for Optimus.

[00:21:48] He did touch on the SpaceX merger, but he referred folks back to the SpaceX merger, uh, or SpaceX earnings call to hear his thoughts on that, which I think is appropriate. Next up, we have the CFO of Tesla, Vibhov, Vibhov Tanasia. And I'm not going to play nearly as much from his opening remarks, but I'll play what's relevant. As Elon said, FSD continues to be the key driver for demand.

[00:22:16] In Q3, over 75% of deliveries in North America, including a signup for paid FSD subscription at the time of delivery, which is approximately 20% higher than Q2. Overall, the FSD attached rate continued to improve, reaching over 1.7 million paid customers globally, of which for the first time, 50% is based on subscriptions.

[00:22:42] Given the strength of FSD in the U.S., we are taking, uh, you know, extra steps to sell certain cars in Europe with, with some, uh, benefits to try and get more fleet out there before a broader FSD approval is obtained. So around 1.7 million cars right now have FSD, whether that was subscription or, or paid

[00:23:09] for, um, way back when I don't, I wonder how far back they call their counting FSD. Cause way back when in 2017, you know, it's obviously not what it is today, but with hardware two, it is a little bit of a different, um, doesn't have the same capabilities. Do they still count that? I guess is what I'm saying.

[00:23:37] If they did, it doesn't really matter. It's such a low number. I'm just curious now that I'm saying this stuff out loud, is that counted? Uh, basically they had sold 1.6 million cars last year. They have 1.7 million people subscribing, including myself at the moment. Uh, you know, that's not bad if people are holding on and he said the take rate is, is high,

[00:24:04] um, or the retention rate is, is high. I don't know exactly what that looks like in terms of numbers, but seems like it's pretty decent. Um, we'll have to see, I want to say Tesla was like in the 1.5 or 1.6 million before, uh, before this quarter. Um, I'll have to go back and look what they've said publicly, but it's growth.

[00:24:33] It's some growth. It's not like exponential growth, but you know, when you already have like Tesla already has a lot of hardware, three cars and a lot of hardware, four cars out there. So if they're able to convert those people, that's pretty decent money, you know, $99 a month. Um, 1 million peoples, $9 million or $99 million a month. That's pretty good. Pretty, pretty good.

[00:25:03] All right. We're going to move on to our say.com questions. First one's about the cyber cab and expansion. How does the cyber cab fleet scale past Austin and what's the regulatory path outside Texas given NHTSA's open safe review? Ashok, did you want to take that? Yeah, I'll start here. Uh, first of all, we launched cyber cab this quarter, which is very exciting. Um, we achieved that by mostly learning from data from the other vehicle platforms, uh,

[00:25:31] for example, model Y, model three, et cetera, all of the data helped make the cyber cab without requiring a ridiculous amount of vehicles to, uh, produce the data. Um, so we are seeing very good scaling, uh, in terms of cyber, cyber cabs, AI capabilities. Uh, we launched in Austin, but that's only because, you know, we had some cabs and we want to swarm Austin with cyber cabs everywhere. Uh, but there's no fundamental reason that we are limited to Austin. In fact, uh, next month we'll be launching in Dallas and then the same software just scaled

[00:26:00] to lots of other cities, uh, along with the model Y robot taxis. All right. Everybody remembered robot taxis go into Dallas next month. Let's all remember that because I want to check up on it. So, um, remember Dallas next month, robot taxis. Let's move on to our next question. Great. Thanks very much.

[00:26:25] Uh, the next question is what are your thoughts on crowdsourcing training data for optimists versus your internal optimist Academy approach? Is data currently the primary, primary bottleneck? I think you covered this quite a bit, but any other color there? Mostly, uh, talked about this already, but, um, it's, it's not crowdsourcing is, is, is, is not the issue of optimists. Um, there's a lot of things we have to get right about the, um, AI architecture, um, uh,

[00:26:55] that we're still working on. We're making good progress, uh, but, but, uh, but that, that needs to be sorted out. Um, and really in order for optimists to get the training data we need, we actually need to make a lot of OptiMai. So we need, we need to make, I think on the order of 10 or 20,000, um, bots and, and then have them do self-play and, and we're building up an optimist Academy where optimists can practice doing a very wide range of tasks.

[00:27:25] Um, and then we can use that data, uh, in, in, in sort of a flywheel to make it better and better at these various tasks. Um, the, you know, a big difference with optimists versus the cars is we don't, we don't have, um, this vast fleet of cars from which we can gather training data. So with optimists, we, we, we have to bootstrap it by, by making the robots, um, and, and having them do self-play, which is really how a human learns to navigate the world.

[00:27:55] You know, it's, that's, uh, you can, you can see this when you have a toddler or, and they grow up and they, they initially are sort of wobbly and they don't know how to do things. And they eventually they, um, you know, they learn to wipe their own ass, which is a big milestone. Um, as anyone's had kids knows, um, and, uh, and then they learn to read and, and do all sorts of things and, and be able to, to do, do these things. And they learn this by, by playing.

[00:28:24] Um, and we actually need optimists to play at scale in order to, uh, have it be really good at, at, uh, tasks in the real world and Ashok, you may want to add to that. Yeah. Um, like you mentioned, Ilan, for the car, we actually have the data from the cars embodiment itself, but for optimists, there's no exhaust laden for humans to get into and like make optimists into a puppet or something like that. Like we have to learn, uh, optimists has to learn by watching other people do tasks initially

[00:28:52] and then start practicing the task yourself. For example, you can imagine, for example, if you're watching a soccer game, just because you're watching, it doesn't mean you'll be good at soccer yourself. You've got to like start practicing and get good at the game and learn from the bot's own experience. And we are setting up this huge, uh, reinforcement learning cycle, uh, with initial base training done from humans to bootstrap and then put it on optimists and do a lot of self play, both in simulation and in the real world to learn on the embodiment of optimists itself.

[00:29:22] I think we're pretty close to having very good results in this big loop. Yeah, I think we may be ready to release like an optimist video, um, in a month or so. Um, I want to make sure that like when we release this video, that it's not like a canned demo that, um, you know, like when you see these robot humanoid robot, uh, demonstrations, some of them look very impressive, but they're, they're, they're not really using, uh, any kind of advanced AI or SI.

[00:29:50] I mean, they're, they're like pre-programmed deterministic tasks. Um, and if you, if you actually try to use that humanoid robot in the real world, you would have a lot of trouble. It wouldn't work basically. So I want to release a video that's where it's optimists doing things that, um, that are not pre-programmed. Um, and I, and I think that's, that, that, that would be, it's maybe a month or two for that, um, to, to have a demo that you can believe what you see type of thing.

[00:30:20] Um, and, and then, uh, there's, there's another milestone that's, I think important we want to get to, which is to, uh, integrate to our, the Tesla AI five, uh, chip into optimists, which if, if things go according to plan will be in approximately, uh, April of next year. Um, and that, that's a giant improvement in capability with an order of magnitude more, um, uh, sort of more operations per second.

[00:30:48] Like it's an order of magnitude more compute AI five versus AI four. Um, and that will, that will help optimists a lot because the, the degrees of freedom that a humanoid robot has to deal with are far greater than what a car has to deal with. So it is a bit of a struggle to squeeze, uh, the, you know, everything needed to operate with, uh, all the degrees of freedom of optimists, um, and, and, and the wide range of tasks. You know, can you think of like a humanoid robot is going to do like a thousand times

[00:31:17] more things than a car would do? Uh, that's some very big number basically. So, so I think the additional compute of AI five will, will make a big difference. Um, and that comes in, in, in, in hopefully in volume around April of next year. Um, and, uh, and that's why I think like all the pieces, like the, the, the refinements in the electromechanical dexterity, um, making sure optimists can operate for long periods

[00:31:43] of time without wearing out, um, you know, getting the AI software, right. Uh, and, and the AI five chip integrated, all of these things kind of come together. Um, that's why I think about a year from now is when it's something that would be that, that, that you could shift to customers. Um, and it would also be reaching scale in production. So that's, that's, that's probably the right timing to think about.

[00:32:09] Um, and in terms of the, the initial customers for optimists, I think it probably would be things that are industrial applications at first, um, things that are like, like, uh, dangerous, repetitive tasks, um, things that people really don't want to do. So, and, and, and that, that you want done basically 24 seven. So like around the clock stuff, that's going to be the highest value for optimists in the beginning.

[00:32:38] Um, as we scale production, of course, it would be something that people can buy, um, you know, for, for their home. Uh, but the initial high value use will be the highest value use I think will be, uh, kind of heavy industry, dangerous tasks, um, or things that may cause repetitive stress injuries. Um, and, and, and that need you want done, um, 24 seven. So that that's, yeah, the way, the way to think about it.

[00:33:09] I don't really have a lot to add to that, that I haven't already said. I would like to see this video though. Um, it is interesting to hear them talk about it. That's one of the things I like about Tesla's earnings calls over other companies earnings calls. Cause Tesla does kind of get into the nerdy stuff every now and again, they used to do that a lot more in the beginning. Um, they don't do it quite as much now, but they really get into it and they explain it.

[00:33:35] I think better than other companies do it in terms of, you know, like I, I had mentioned the robots at CES, what they could do was limited and yeah, it's a, it's a good demo. Like I, Rob Dunwood, my cohost on beyond the post. He's like, I don't, I don't like that we're teaching these things, how to do martial arts and kill us. Uh, if you ever want to hear Rob talk about it, you can hear it on the tech John or daily tech news show.

[00:34:06] Uh, cracks me up every single time, but, uh, yeah, I mean, these are also teeny tiny robots that you can knock over. I don't know how tall the optimist is exactly, but it looks like it's five eight ish. These were like five one, five two. They weren't very tall robots. But anyway, yeah, I mean, this is all cool. I, I, I, I want to live in a world of robots that, so I don't have to, you know, blow the

[00:34:34] leaves out of my backyard and I don't have to vacuum and mop my house and, you know, clean toilets and stuff like that and do other things. We're just a little bit away. That's all. But good answer. Interesting answer. I was actually going to cut it at first, but then I started listening to it more and I was like, you know what? This is pretty good. So let's go ahead and move on to the next essay.com question.

[00:35:01] And the next question is, when can we anticipate FSD unsupervised in customer cars? Ashok, did you want to kick that off? Yeah. Like I mentioned earlier, the software for CyberCaps and Model Y is the same, like, and pretty soon we'll be able to release the same software as part of the V15 release to customers. So the only additional requirement is to make sure that, you know, for example, the customer

[00:35:27] model-wise can be part of the geofences and the fleet management that Tesla has for it to be fully autonomous. We suspect somewhere around Q2 next year is when we can turn on some of the first customer vehicles to be part of the robotaxi fleet. Man, there's so many things we need to remember. Q2 2027, robotaxis. Are we going to see them? We'll see.

[00:35:53] So let's go ahead and, um, I don't know. It seems maybe with hardware for vehicles, it doesn't seem like that seems like it's early that date. Hopefully, like people who want to put their car in the robotaxi network and hopefully make a little bit of money, I'm all for it. But I think that'd be awesome. It doesn't, it just seems like so many more things needs to happen.

[00:36:22] Maybe a bunch of stuff will fall into place. All right, let's move on to our next question. When will the CyberCab be available for customer purchase slash ownership? Lars, did you want to kick this one off? Sure. Thanks, Travis. I think it builds a little bit on what Ashok just said. Um, but in short, we're trying to get CyberCabs to customers by the end of this year, 2026. Um, obviously we're producing them in our line in Texas, but all of those are currently going to our own internal robotaxi fleet.

[00:36:52] Um, and as Tesla grows, we'll mainly deliver fully designed autonomous vehicles to our customers. Um, and CyberCab will be the first. And so as we start small this year and we learn about all the things Ashok mentioned about delivery and ownership and fleet management of autonomous vehicles and customer hands, um, we'll continue to scale that. Uh, Neil, I don't know if there's anything you want to add to that. Um, no, I mean, CyberCab is primarily going to be something that is, um, offered as like transport as a service.

[00:37:21] Um, you know, whereas our other cars would be more, um, you know, the cars that you'd want to own like the three and the Y and whatnot and the roadster obviously. Uh, but you know, the vast majority of the CyberCab stuff will be, uh, essentially Tesla owned and, and transport as a service. I mean, if I had to guess the first customers will be all the people that signed up when CyberCab was launched, um, to say that they were interested in owning a CyberCab.

[00:37:50] I would like, I'd really like to know what the final numbers, like what the, what the revenue split is will end up being. I think I mentioned this yesterday on, on the last podcast, but when I took the Ohai Waymo is $5. I did mention that, but I don't think I mentioned how much the I-Pace ride was. The I-Pace ride was $7.50 something.

[00:38:16] Now all together that was $12 and is an extra $2 that big of a deal? No, but the Ohai, I was actually surprised. It was $5 flat. Pretty, pretty affordable. I would imagine that Tesla could do this pretty affordably too. I'm just concerned that if they're splitting the money, you know, if that Tesla's taking their share and their cut and you're putting your car, how much is left over for you? Is it worth it? And if it's not worth it, it's not the end of the world.

[00:38:45] But you know, there are folks who would like to do this and hopefully it works out financially for them. All right. Let's move on to our next say.com question. The next two questions are quite similar around unit economic costs. The first one is on per paid robo taxi mile.

[00:39:12] And the second one is cost per Optimus unit. And we already covered what are the first customer paying customer looks like. So VT, did you want to get into the unit economics question here? Yeah. So on the robot taxi side, you know, the main geographies where we are operating, we're already seeing utilization improving and, you know, week by week, as Elon was talking about, we look at the miles and how many paid rides are happening.

[00:39:42] So are we at our goal of 30 cents today? No. No. But do we see a path to get to that? Very. Yes, we do. And it's all about scaling operations. And what you'll see over the next few months is that today, CyberCab, which is the primary robot taxi product, is available only in Austin.

[00:40:08] But we do plan to bring it out in some other cities before the end of this year. And, you know, as we add more CyberCabs, you know, we are also learning from the operational experience of managing a fleet, pickup and drop off, you know, cleaning, all those things. So all those costs are being dialed in. And that's why, like I said before, we definitely see a path to get to our 30 cent target.

[00:40:36] But first of all, talk about ask a question and get an answer. I genuinely have not listened to this earnings call. So this is fantastic. 30 cents a mile. If that's what Tesla's shooting for, Tesla gets to keep that whole 30 cents. If you put your car on the network, let's say it's 30 cents a mile. Let's say Tesla takes 10 cents. So they get 10 cents a mile. You get 20 cents a mile.

[00:41:05] You have to drive 100 miles to make $20. And you actually have to, I'm sorry, to be more accurate, the car has to give rides for 100 miles before you make $20. Getting to the call, or not cost to the call. It's not a fire department.

[00:41:28] Getting to the customer and to the next customer, as far as I know, that's not going to be counted in the getting paid calculation. So only when somebody's in the car. That's how Uber does it anyway. Do these folks get paid?

[00:41:49] So in that, you would have to have, let's say, 500 miles driven in a day to make $100. 500 miles, 500 ride miles, like a customer actually in the car to make $100. And $100 is not nothing in a day. I mean, $100 is a lot of money. So don't get me wrong. I'm not poo-pooing $100.

[00:42:19] But it does seem like that's a lot of miles to make $100. But we'll see. Hopefully Tesla comes out with a very fair way of doing this. And I don't, I just can't see where Tesla's going to be like, you know, I don't see an option where Tesla's like, well, it's 30 cents if you get a Tesla. But it's 50 cents if you get, you know, Joe Bob's Cyber Cab. I just don't see that working out for Joe Bob very well.

[00:42:48] Even if you had to wait 10 extra minutes, you would probably go with the cheaper version. I guess it depends on how long the ride is to. I don't know. Hopefully Tesla's able to balance keeping things affordable for people because I think that's important. And I commend them for doing that. But also making it worth people's time and money to put on the car on the network. All right.

[00:43:17] The next thing that they talked about were kind of the economics of optimists. But we're not going to listen to that. We're going to move on to the next question. Which the next question is now by the analyst. So let's go ahead and hear what the analysts think. They are not going to talk about the SpaceX Tesla merger, by the way. Before they got to analyst questions, they said, we're just going to remind everybody we're not talking about this. So if you're expecting to hear that, you're not.

[00:43:48] All right. Let's get to the analyst question. The first question comes from Tom from RBC. Tom, please unmute yourself when you're ready. Yeah. Thanks for taking the question. It's on FSD. So the attach rate, I think according to my math, is like 30 to 40 percent in North America on a paid basis. It's becoming a flywheel, as he said, for more car sales. And the attach rate exceeds other automakers' subscription-based autonomy by a lot.

[00:44:16] I guess in a weird way, could you guys be a victim of your own success and seeing other car makers noting the success and trying to aggressively come up with similar L2 Plus type products, maybe partnering with NVIDIA or Qualcomm? And if that happens, could that be deflationary for FSD pricing?

[00:44:38] I think people take this thing very simply that, you know, if the software can be solved, it's not. Because, I mean, I'll let Ashok get into it, but basically it's a very hard problem. It's a super hard problem. Yeah, it's easy to get to the first 90 percent and make like a cool-looking demo. But when you get in the long tail of this problem, it's so long that people don't realize.

[00:45:08] Anyone with their same mind should not attempt to solve this problem. It's like so difficult and so long-tailed. And especially to get to a safety point where you can drive safely for millions of miles with no injuries and so on, that's going to be extremely hard. And as we release unsupervised FSD to the broader customer fleet, it's just going to be, I don't think anyone can match it in several years. And one other thing which I'll say, if it wasn't clear, that, you know, when,

[00:45:38] especially in our showrooms here in the U.S., customers are now coming in and saying, can we get into an FSD drive? They're not asking for 3Y or Cybertruck. They're saying, can we get an FSD drive? And that has become the key driver because what it does is it actually opens up a lot more flexibility

[00:46:01] for different parts of the population wherein they had issues driving conveniently before. Now they're getting their freedom back by being able to use FSD. And a lot of folks are just like, I mean, it's a game changer. I mean, if you haven't tried it, I keep saying it every time. If you do it, you won't be able to go back to driving any other car.

[00:46:34] In the short term, I would agree with this statement. In the long term, not really the case. I don't think FSD is easy. Don't get me wrong. It's clearly very difficult. Tesla's been working at it a long time. And it seems like they've worked the hardest on it and been the most consistent with it. But there are engineers that worked on FSD that are now working for other companies.

[00:46:59] That's not to say that they can use and steal Tesla's, you know, IP, because that would be wrong. But there are a lot of smart people out there. I think Tesla will continue to have the lead for a little bit, but not forever. And it seems like deflationary as it becomes more prevalent in vehicles. But I already talked about this. So let's move on to the next question.

[00:47:29] And then maybe just a follow-up on RoboTaxi. It does seem like you've kind of hit an inflection point here in Austin over the last month or so since you launched the CyberCab. So would you generally say the bottlenecks at this point to growth are more regulatory driven as you think about expanding into new geographies and that you've kind of gotten through most of the hurdles on the software side?

[00:47:55] It's kind of curious how you would generally kind of categorize some of those growth hurdles and some of the incremental regions you're planning on scaling into over the next few months. I think there are still certain software challenges which we are still working through. You know, Ashok talked about it. So maybe Ashok, maybe. I guess Simon, yeah. For example, we are like initially at the RoboTaxi service from 6 a.m. to 9 p.m.

[00:48:24] And then we expanded to 10 p.m., 11 p.m. Now it's going to be pretty soon 2 a.m. So we're slowly expanding the availability of RoboTaxi. And that is driven by the capability of the AI software. And we just want to make sure that there's not a single safety incident. That is our operating principle. And even if that's the slightest possible risk at all, we don't like take on that risk. And so we are very risk averse in that sense as in we want zero injuries or anything bad happening.

[00:48:54] And that is the driving principle. And we will see that over the rest of this year, we will unlock 24 across 7 operation, go to higher speed roads. And we think all of that is necessary to sort of scale and offer a great product to a lot of users. And that's why we wanted to both do the breadth first of doing multiple cities. We do six cities now. We are also doing the depth of like having a lot of vehicles in a single city, which is in Austin.

[00:49:20] And we'll expand to more weather conditions, day and night conditions, highways and high speeds. And all of that will be done hopefully by the end of this year, at which point you will see a lot more scaling, a lot more cities being covered by Robotaxi. So it's not purely regulatory or something like that. It is technology driven. But we do see that pretty quickly become regulatory, perhaps in Q1, Q2 timeframes. Interesting.

[00:49:48] So the problem isn't that at the moment, the regulatory side, although I'm sure that that will be a challenge. It's more that, you know, they're fine tuning the software side of things. And listen, I do not blame them. I do have a problem with them like being like, this is the best. Our software is not quite there yet. I have a problem with that, but it's not the end of the world.

[00:50:17] But I want them to make sure that the Robotaxi is safe. I want them to operate with care. I want them to make sure that they don't hurt anybody. I think this is great. So kudos for that answer. It's a good answer. All right, let's move on to our next question. We're getting close here to the end, folks. On Optimist, I know you mentioned that we could see a video soon. There's quite a bit of progress.

[00:50:46] But you're still making some refinements. And I guess just generally speaking, where do you see most of the design changes still happening going forward? Is it still the hand that's an issue? Anything you can call out there? Yeah, it's mostly the difficulty. I mean, Klaus, why don't you ask this question? So hand is one of the most challenging hardware areas, actually.

[00:51:12] Most of the electromechanical system, I would say, is relatively high confidence, meaning that it has converted to something that works decently well. The hand is, from an electromechanical point of view, more complicated than actuators for the locomotion system, for example.

[00:51:42] Also, there are some bespoke gears that are carrying a lot of burden for consumption and for reliability that we are developing still. And yeah, this would be the most... Yeah, it's mostly the hand. And just kind of the fine-tuning of the hand design and the fingers especially.

[00:52:10] It's a hard problem because humans have self-repair. Like our hands repair, our body repairs itself, but robots don't. So you have to... And our fingers are kind of squishy and have lots of sensors in our skin.

[00:52:26] It's hard to make a hand that can handle lots of wear and tear, but it's still squishy enough to pick up delicate objects and has all the sensors and doesn't damage the sensors when you do repeated actions. And there's a lot of little things that you realize actually what an incredible thing the human hand is at the end of the day. So it's mostly from an electromechanical standpoint, the hands.

[00:52:54] There are other things that are improving as well throughout the robot, but that's the main thing. And then, as I mentioned, upgrading the intelligence, the onboard intelligence of the robot with AI-5, which is a big step change in intelligence that will help a lot with the capabilities of Optimus.

[00:53:16] So I've said before that humanoid robots, biggest product on Earth, but its usefulness will be, you know, it's rough approximation. It's a multiple of the electromechanical dexterity, the AI software, and the AI chip hardware. And all three of those things are improving exponentially. I think we use that word a lot, but... And the value is, you know, roughly those three things multiplied by each other.

[00:53:46] And then the Optimus robots will build the future Optimus robots so you have a recursive function. So when you have a recursive multiplicative exponential, things will really grow extremely fast. They may start from a small base, but they're going to grow to crazy levels. And I think at some point there will be more humanoid robots on Earth than there are humans. I mean, it was a great question, and I think it was a great answer. No notes. Let's move on to the next one.

[00:54:15] Our next question is going to come from Pierre from New Street. Pierre, please unmute yourself. Thanks for taking the question, guys. I just want to come back. I'm really fascinated by 75% of US cars selling with FSD. And the interesting thing is that if you look at the car, they probably generate on sale,

[00:54:43] the day they sell like $7,000 of gross profit. But then, of course, FSD generates more than $1,000 a year. And so it makes like a minimum impact on numbers in the quarter of the car is sold. But over the lifetime of the car, it probably at least doubles the profit per car. And so the place where I want to get to is, am I looking at it the right way?

[00:55:10] And are you at some point going to disclose for us like the annual recurring revenues that FSD represents? And I did my own math and I'm thinking it's probably now approaching a billion dollars of AR. He's at the right order of magnitude. Yeah, I think the numbers which you shared are correct.

[00:55:33] And, you know, as it scales further, we will start sharing more metrics around FSD, not just the revenue, but also other key metrics around it. Okay. And as a quick follow-up, do you have like a good sense already? And can you tell us about like the retention rate?

[00:55:55] Like do how many people like three or six months down the line stick to the monthly subscription? And if you see the percentage of drivers falling off? Yeah, I mean, you know, like I said, we will share more metrics around churn rates and whatnot. But the reason we're not doing it at this stage is there are a lot of things which we're doing,

[00:56:23] especially with new countries being added that we offer free trials. And one thing which I'd also like to make sure it's clear, when I say in North America that more than 75% attached rate at the time of delivery, this is like every car which we're delivering comes with a month of free FSD subscription.

[00:56:46] And still people are signing up, even though they have that free available. Yeah, but I mean, how many people are hanging on? It could be a large number. It could be a decent number. I don't think you have to wait until everything gets approved in Europe to give that number. If you wanted to, you can say in North America, it's blank.

[00:57:14] They could say in Phoenix, it's blank. Like, you know, in some, you know, teeny tiny town in Alaska, it's blank. They could say that if they want to, but they don't have to. It's not, I don't know, not the end of the world, I guess. Let's getting close to the end, folks, getting close to the end. Let's go ahead and move on to our next one.

[00:57:41] And hopefully, by the way, hopefully they will share those numbers as to how many people drop off and how many people are continuing to pay for it. I think that's important to know, especially if a merger is coming up and that is going to be a big part of Tesla's revenue in the future. I think everybody knowing that, or not everybody, investors knowing that would be important. Okie doke, everybody.

[00:58:10] That is our Q3 2026 Tesla earnings call. It was, I think it was a good one. I especially like the second half. I learned quite a bit. And I do love it when Tesla execs, or just execs and engineers in general, talk about the tech. It's really interesting. So I thought this was a good episode. Not a good episode, a good earnings call.

[00:58:38] The episode, I'll leave up to you whether it's good or not. It might suck. Anyway, thank you everybody so much for listening. If you want to email me, it's Bodie, B-O-D-I-E at 918digital.com. I am on LinkedIn, which you can find me at 918digital. No, Bodie Grimm. That's my LinkedIn, B-O-D-I-E-G-R-I-M-M. If you want to support the show, you can do so at supportkilowatt.com.

[00:59:06] And yeah, I hope everybody is having a good week. News episode, probably a shorter news episode on Friday. And then hopefully we'll be able to ramp back into things starting next week with regular Tuesday through Friday episodes as well. We will definitely be covering Rivian and Lucid's earnings calls.

[00:59:31] I'm not 100% sure if we'll cover Ford or GM or, you know, Ram or Chrysler. I guess Stellantis is a starting call. We'll kind of see. We'll wait until they come out and hear what nuggets drop. If none of them are EV friendly, then we'll skip those ones. But definitely Lucid and Rivian. All right, everybody. Thanks so much for listening. I hope you all have a wonderful week or having a wonderful week.

[01:00:01] And I will talk to you soon.