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Elon Musk Thinking
Latest Interview of Elon Musk, Talking About Tesla!!!
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Latest Interview of Elon Musk, Talking About Tesla!!! #ElonMusk Follow me on X https://x.com/Astronautman627?t=RFQEunSF2NwRkCOBc6PkkQ&s=09
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- [00:00]
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- [01:01]
Elon Musk
On the order of 35,000 autonomous vehicles a week. If you compare that to say Waymo's entire fleet, if they have less than 1000 cars, we make 35k a week. The FSC is actually getting so good that it takes us a while to actually find mistakes. I feel confident saying that we have most advanced humanoid robot by long shot. And moreover, the only company that really has all of the ingredients necessary to scale humanoid robots. We have kind of ridiculous demand for the semi. The roaster is not. Not just the icing on the cake, it's the cherry on the icing on the cake. We think that we'll be able to have driverless Teslas doing paid rides next year. What other car company has a world class AI team like Tesla does? Zero. If you look at EV companies worldwide, to the best of my knowledge, no EV company is even profitable. And to the best of my knowledge, there was no EV division of any company of any existing auto company that is profitable. So it is notable that Tesla is profitable despite a very challenging automotive environment. And this quarter actually is a record Q3 for us. So we produced our 7th million vehicle actually just yesterday. So congratulations to the teams that made it happen at Tesla. That's staggeringly immense amount of work to make 7 million cars. So. And we also have energy storage. Business is growing like wildfire with strong demand for both Megapack and Powerwall. And as people know, on October 10th, we laid out a vision for an autonomous analytical future that I think is very compelling. You know, the Tesla team did a phenomenal job there with actually giving people an opportunity to experience the future where you have humanoid robots walking among the crowd not in the can video presentation or anything, but literally walking among the crowd serving drinks and whatnot. And we had 50 autonomous vehicles. There were no 20 cyber camps, but there were an additional 30 Model Y's operating fully autonomously the entire night carrying thousands with no incidents the entire night. Well those who went there with emphasizing that the cyber cap had no steering wheel or brake or accelerator pedals, meaning there was no way for anyone to intervene manually even if they wanted to. And the whole night went very smoothly. So regarding the vehicle business, we are still on track to deliver affordable models starting in the first half of 2025. This is I think probably people are wondering well what should they assume for vehicle sales growth next year? And at the risk of to take a bit of risk here, I do want to gives some rough estimate which is I think it's 20 to 30% vehicle growth next year notwithstanding negative external events like if there's some force majeure events like some big war breaks out or interest rates go sky high or something like that, then we can't overcome massive force mature events. But I think with our lower cost vehicles, with the advent of autonomy, something like a 20 to 30% growth next year is my best guess. And then Cybercamp reaching volume production in 26. We do feel confident of reaching volume production in 26. Not just starting production but reaching volume production at 26. That should be substantial growth. We're aiming for at least 2 million units a year of cyber camp. That'll be in more than one factory, but I think it's at least 2 million units a year, maybe 4 million ultimately. So yeah, these are just my best guesses. But if you ask me what my best guess is, those are my best guesses. The 46, the cell 4680 lines. The team is actually doing great work there. The 4680 is rapidly approaching the point where it is the most competitive cell. Think at the fully landed the cost of a, of a battery pack fully landed in the US net of incentives and duties. The 4680 is tracking to be the most competitive being lower cost pick and what are fully considered than any other alternative. We're not quite there yet, but we're close to being there which I think is extremely exciting and we've got several a lot of ideas to go well beyond that. So if I think there's. If we execute well the 46:8 will have the Tesla internally produced cell will be the most cost competitive cell in sibling North America. A testament to a tremendous amount of hard work there from by the team. So that's it. We'll continue to buy a lot of cells from our competitors. Our tendency is not to make, to provide, to make cells just internally. So I don't want to set off any alarm bells here. We're obviously increasing substantially our vehicle output and our stationary storage output. So we need a lot of cells and most of them will still come from suppliers. But I think it is some good news that the Tesla internal cell is likely is tracking to be the most competitive in the US So with respect to autonomy, as people are experiencing in the cars really from week to week, there are significant improvements in the miles between interventions. So with the new version 12.5, the release of full stop driving inside a truck, the combining the code into a single stack so that the city driving and the antenna highway driving are one stack which is a big improvement for the highway driving. So it's just all neural nets and the release of actually smart summon. We try to have a sense of humor here at desk. 12.5 version 13 of FSD is going out soon. Ashok will elaborate more on that later in the call. We expect to see roughly a five or six fold improvement in miles between interventions compared to 12.5. And actually looking at the year as a whole, the improvement in miles between interventions we think will bring at least three orders of magnitude. So that's a very dramatic improvement in the course of the year and we expect that trend to continue next year. The current has internal expectation for the Tesla FSD having longer miles between intervention than human is the second quarter of next year, which means it may end up being the third quarter, but it seems extremely likely to be next year. Do you want to. Yeah.
- [07:28]
Ashok Elluswamy
Mentioning miles between critical interventions. Like you mentioned Elon, we already made a 100x improvement with 12.5 from starting of this year. And then with V13 release we expect to be 1000x from the beginning from January of this year on my production release software. And this came in because of technology improvements going to end to end having higher frame rate partly also helped by hardware force more capabilities and we hope that et cetera by Q2 next year we should cross over the average human m critical intervention public collision. In that case, I mean that is.
- [08:08]
Elon Musk
Just our internal estimate. Yes, our Internal estimate is Q2 of next year to be safer than human and then to continue with rapid improvements thereafter. The vast majority of humanity has no idea that Tesla's comprise themselves. So especially for something like a Model 3 or Model Y, it looks like a normal car. So you don't expect a normal car to be able to be intelligent enough to drive itself. This Avocado looks different, Cybertruck looks different. But Model y and Model 3, they're good looking cars, but look fairly normal. You don't expect a fairly normal looking car to have the intelligence, enough AI to be able to drive itself, but it does. So we do want to expose that to more people. Every time we have a significant improvement in the software, we'll roll out another sort of 30 day trial to encourage people to try it again. And we are seeing a significant improvement in adoption. The take rate for FSC has improved substantially, especially after the 1010 event. Yeah. So there's no need to wait for robot taxi or cybercab for autonomy. We expect to achieve that next year with our existing vehicle item.
- [09:15]
Ashok Elluswamy
The car able to drive itself to the user within private parking lots. Currently it's speed limited, but then it's going to quickly be increased. We already had more than a million usage.
- [09:28]
Elon Musk
We have for Tesla employees in the Bay Area a ride handling capabilities so, so you can actually use with the development app you can request a ride and it'll take you anywhere in the Bay Area. We do have a safety driver for now, but the software required to do that we've developed. David, do you want to elaborate on that? Yeah, sure.
- [09:46]
David S.
David. We showed some screenshots of this in the Q1 shareholder deck. This is real. We've been testing it for part of the year. The building blocks that we needed to build this functionality and deliver it to production, we've been thinking about working on for years. It just so happens that we've used those building blocks to deliver great features for our customers in the meantime, such as sharing your profile, synchronizing it across cars so that every single car that you jump into, whether it's another car that you own or a car that somebody's loaned to you, or a rental car that you jump into, it looks exactly like yours. Everything's synchronized, seat mirror positions, media, navigation, everything the same. Just what you would expect from one of our robo taxis. We gave that functionality to our customers right now because we built it intending for it to be used in the future. We're releasing that functionality now. All the end cybersecurity that we knew we were going to need to deliver that functionality. Sending a navigation destination from your phone to the vehicle. You're doing that now with the ride Hailing app, but it's something that we've made available to customers for years. Seeing the progress On a route in the mobile app. That's something you'll need for the ride hailing app. But again we released it in the meantime, so it's not like we're just starting to think about this stuff right now while we're building out the early stages of our ride hailing network. We've been thinking about this for quite a long time and we're excited to.
- [11:03]
Elon Musk
Get the function out there. And we do expect to roll out ride hailing in California, Texas next year to the public. Not the California somewhat. There's quite a long regulatory approval process. I think we should get approval next year, but it's contingent upon regulatory approval. Texas is a lot faster. So I'd say we'll definitely have it available in Texas and probably have it available in California subject to regulatory approval and maybe some other states actually next year as well, but at least California and Texas. So I think that'd be very exciting. That's really a profound change. Tesla becomes more than a sort of vehicle and battery manufacturing company at that point. We published that Q3 vehicle safety report which shows warning path for every 7 million miles of autopilot that compressed the US average, one crash roughly every 700,000 miles. So it's currently showing a 10x safety improvement relative to the US average. And we continue to expand our AI training capacity to accommodate the needs of both FSD and Optimus. We are currently not training compute constraints. That's probably the big slimming factor is that the FSD is actually getting so good that it takes us a while to actually find mistakes. When you start getting to where it could take 10,000 miles to find a mistake, it takes a while to actually figure out which it is. Is this Software Bolt better than. Is Software Bolt A better than Software Bolt B? It actually takes a while to figure it out because neither one of them making mistakes. What takes a long time to make mistakes and how long does it take us to figure out which version is better? Sort of high class problem. Obviously having a giant fleet is very helpful for breaking this out. And then with Optimus we showed a massive improvement in Optimus's dexterity and movement on October 10th. And our next gen handed forearm which has 22 degrees of freedom double the prior hand and forearm is extremely human like also has much better attack sensing. I feel confident saying that we have the most advanced humanoid robot by long shot. And we're moreover the only company that really has all of the ingredients necessary to scale humanoid robots. Because the things that what other companies are missing is that they're missing the AI brain and they're missing the ability to really scale to very high volume production. So you sometimes see some impressive video demos. But what but they lack the localized AI and the way to scale volume to very high numbers. As I've said on a few occasions before, I think Optimus will ultimately be the most valuable part. It's a good chance of being the most valuable product ever made for the energy business. That's doing extremely well. The Lathrop megapack factory reached 200 megapacks a week, which is now 40 gigawatt gigawatt hour a year. And we have a second factory in Shanghai that will begin with a 20 gigawatt hour a year run rate. Q1 next year, so just next quarter. And that'll also scale up. It won't be long before we're shipping 100 gigawatt hours a year stationary storage at Tesla. And that'll ultimately grow, I think, to multiple terawatt hours per year. It has to actually, in order to have a sustainable energy future. If you're not at the terawatt scale, you're not really moving the needle. So if you look at our very complicated last master plan, which I think actually is too much detail, maybe I'll ask to analyze it, shorten it up, give us the TLDR on the last master plan. But we showed in that master plan that it is possible to take all of us to a fully sustainable energy situation using sustainable energy, power generation and batteries and electric transport. And there are no fundamental material limitations. Like there's not some very rare material that we don't have enough of on Earth. We actually have enough of the raw materials to take all of human civilization, make it fully sustainable. And even if civilization dramatically increased its electricity usage, it would still be fully sustainable. One way to think of the progress of a civilization is percentage completion of Kardashev scale. Kardashev scale one would be you're using all the power of a planet. We're currently less than 1% on Kardashian. Level one. Level two would be using all the power of the sun. And level three, all the power of the galaxy. Long way to go. When you think in Kardashian terms, it becomes obvious that the biggest source of energy is the sun. Everything else is in the noise. So in conclusion, Tesla is focused on building the future of energy transport, robotics and AI. And this is a time when others are just focused on managing around near term trends. We think what we're doing is the right approach. And if we execute on our objectives. I think we will Tesla. My prediction is Tesla will become the most valuable company in the world and probably by a long by a long shot. I want to thank the Tesla team once again for strong execution in a tough operating environment and we're looking forward to building an incredibly exciting future. Thank you. Great.
- [16:19]
Investor Relations Moderator
Thank you very much Elon. And Bob has some opening remarks as well.
- [16:22]
Zachary Kirkhorn
Yeah, thanks. Our Q3 results were overall positive and once again demonstrate the scale to which businesses evolved. With the generation of record operating cash flows of 6.3 billion, automotive revenues grew both quarter on quarter and year on year. While we had unit volume growth, we did experience reduction in ASBs primarily due to the impact of financing incentives. As a reminder, we are providing these incentives primarily using third party banks and financial institutions and recognize the cost of these incentives as an upfront reduction to revenue. We released FSD for Cybertruck and other features like actually smart servant like Tila talked about. In North America which contributed 326 million of revenues in the quarter, we continue to see elevated levels of regulatory credit sales with over 2 billion of revenues so far this year. China continues to outperform US and Europe by a factor of three. This gives a signal of what is to come. In other regions, as customers acceptance of EV grows, the focus remains on growing unit volume while avoiding a buildup of inventory. To support this strategy, we're continuing to offer extremely compelling vehicle financing options in every market. When you compare any vehicle in our lineup with other OEMs, we believe our vehicles provide much better value, particularly when you consider the safety features, performance and unparalleled software functionalities like David also talked about include also what Ashok had talked about around autonomy, music options, parental controls, and much more. While every vehicle in our lineup comes up with these capabilities, there is an awareness gap not just with buyers, but at times even with existing owners. We plan on making these more visible in our interactions with both existing and future customers. Automotive margins improved quarter over quarter as a result of FSD features release discussed before. Increase in our overall production and delivery volume, continued benefit from commodity pricing and more localized deliveries in region which resulted in lower freight and duties. Sustaining These margins in Q4, however, will be challenging given the current economic environment. Note that we are focused on the cost per vehicle and there are numerous work streams within the company to squeeze our costs without compromising on customer experience.
- [18:54]
Elon Musk
Yeah, something that's a helpful Hopefully a helpful macro trend is if there's a decline in interest rates. This has a massive effect on automotive demand. Vast majority of people Is the demand is driven by the monthly payment. Can they afford the monthly payment? So most likely we'll see continued decline in interest rates which helps with affordability vehicles.
- [19:18]
Zachary Kirkhorn
Yeah, I mean that is one trend which we observed in the industry that, you know, because of affordability being impacted because of interest rates, people are holding onto the cars longer, especially in the US and that is actually having an impact on the overall industry too. While we did see a decline in Q3, we expect to grow deployments sequentially in Q4 to end the year but more than double of last year. Energy margins in Q3 quarter record at more than 30%. This is a function of mix of projects being deployed in the quarter. Note that there will be fluctuation in margins as we manage through deployments and our inventory. Our pipeline and backlog continue to grow quarter over quarter as we fill our 2025 production slots and we are doing our best to keep up with the demand. Just coming back on automotive margins, I talked about what is happening. One other thing which I want to also share is that we will continue to keep whatever we can. Like I said before about squeezing out the cost, but this is something which we also are very capable of. I mean just in Q3 we reached our lowest cost per week. And that is a trend which we want to keep focus on then going on to service. Another, we continue to show improvements in Q3. This was a result of better performance both in our service business which includes collision part sales and merchandise and continued growth in supercharging. These fleet based revenues will continue to grow as the overall fleet size increases. Our operating expenses declined quarter over quarter in a year on year basis. This is partially due to the restructuring we undertook in Q2. Cost savings from these initiatives were partially offset by increase in costs related to our AI efforts. We've started using the GPU cluster based out of our factory in Austin ahead of schedule and are on Track to get 50k GPUs deployed in Texas by the end of this month. One thing which I'd like to elaborate is that we're being very judicious on our AI COMPUTE spend too and saying how best we can utilize the existing infrastructure before making further investments. On the CAPEX front, we had over three and a half billion in the quarter quarter. This was a sequential increase largely because of investments in AI compute. We now expect the CAPEX for the year to be in excess of 11 billion. We shared our vision for the future at the V Robot event at the beginning of the month. The Tesla team is hyper focused on delivering on that version. Now all efforts are underway to make it a reality. While we've achieved significant progress this year, it will take time to get this as we pioneer new and incredibly complex technologies and navigate a fragmented regulatory landscape. Future is incredibly bright and I want to thank the Tesla team once again for all their help.
- [22:10]
Investor Relations Moderator
Great, thank you very much, febob. Now we'll go to investor questions. The first one is, is Tesla still on track to deliver the more affordable model next year, as mentioned by Elon earlier? And how does it align with your AI product Roadmap?
- [22:24]
Gabe Klein
Our mission has always been to lower the cost of the, of our vehicles to increase the adoption of sustainable energy and transport. Part of that is lowering the cost for current vehicles, which is where all of the personally owned vehicles that we sell today come in. But the next stage in that really as it fits into AI Roadmap, is when we bring in Robo taxis, which lowers the initial cost of getting into an EV. And that's really where we see the marriage of EV roadmap and the AI roadmap.
- [22:49]
Elon Musk
I'll be like Woodworth incentives sub 30k, which is kind of a key threshold.
- [22:54]
Investor Relations Moderator
Great, thank you very much. Similar question next. When can we expect Tesla to give us the $25,000 non robot taxi regular car model?
- [23:04]
Elon Musk
We're not making it on Robo.
- [23:06]
Gabe Klein
Yeah, all our vehicles today are robotaxi.
- [23:08]
Elon Musk
I think we've made very clear that future is autonomous. I mean, it's going to be, and I actually said this many years ago, but that my strong belief, and I believe that is panning out to be true and it'll be very obvious in retrospect, is that the future is autonomous. Electric vehicles and non autonomous gasoline vehicles in the future will be like riding a horse and using a flip phone. It's not that there are no horses. Yeah, there are some horses, but they're unusual, they're niche and, you know, so everything's going to be electric, autonomous. I think this is blind. Like it should be frankly blindingly obvious at this point that that is the future. A lot of automotive companies, or most automotive companies have not, not internalized this, which is surprising because we've been shouting this from the rooftops for such a long time and it will accrue to their detriments in the future. But all of our vehicles in the future will be today. Yes, all the vehicles that we've really made, all the 7 million vehicles, the vast majority are capable of autonomy. You know, we're currently making on the order of 35,000 autonomous vehicles a week. If you compare that to say, Waymo's entire fleet, if they have less than 1,000 cars, we make 35k a week.
- [24:24]
Zachary Kirkhorn
Yeah. And our cars look normal.
- [24:27]
Elon Musk
They mostly look normal. The cybertruck looks abnormal. The Cyber Cab, we wanted to have something futuristic looking and I think it does look futuristic. It's worth noting with respect to the Cyber Cab, it's not especially, not just a revolution in vehicle design, but a revolution in vehicle manufacturing that is also coming with this. With the Cyber Cab, the cycle time, like the units per hour of the Cyber Cab line is like, this is just really something special. I mean, this is probably half order of magnitude better than other car manufacturing lines. Not in the same league is what I'm saying. Of the same. Like I said several years ago that maybe the hottest Tesla product copy will be the factory. Just like buy factory, reverse engineer factory. Yeah. So we're rapidly evolving factory technology. So anyway, there's like, basically I think having an irregular 25k model is pointless. It would be silly. Like it would be completely at us.
- [25:24]
Gabe Klein
With what we believe in autonomous world. What matters is the lowest cost per mile of efficiency of that vehicle. And that's what we've done with.
- [25:32]
Elon Musk
Yeah, with the rope taxi. Exactly. Autonomous. It's fully considered. Cost per mile is what matters. And if you try to make a car that is essentially a hybrid, manual, automatic car, it's not going to be as good as a dedicated autonomous car. A Cyber Cab is just not going to have steering wheels and pedals fully designed, optimized for autonomy. It'll cost on the order of cost, roughly 25k. So it is a 25k car and you can, you won't be able to buy one on an exclusive exclusively if you want. So just one, have steering, mobile phones if you don't need it.
- [26:07]
Investor Relations Moderator
Great, thank you very much. The next question is, what is Tesla doing to alleviate long wait times at service centers?
- [26:13]
Service Operations Representative
So we aim on solving problems at the source. So at the factory, before they can even affect our customers. We believe the best service is no service.
- [26:22]
Elon Musk
Don't even have them if the car doesn't break.
- [26:24]
Service Operations Representative
Yeah, exactly.
- [26:25]
Elon Musk
That's the best thing.
- [26:25]
Service Operations Representative
I don't see anyone with the Tesla shirt. You either do it, fix the issue upstream or do it remotely. Do it through software, maybe at work or at home and you know, car can be parked and we address and fix the issue. And we've partnered the field with service to make sure we're looking at the same issues. And Additionally, just in Q3 and Q4 of this year alone, we have opened and will open in total nearly 70 locations. And in North America, we significantly expand the size of each location and have doubled the size last year compared to this year.
- [26:56]
Elon Musk
Yeah, I think it was like actually a lot of merits are having large service centers because you can have specialization of labor, you can start, you can start to approach. Yeah, it should be more factory like where you can have dedicated lanes for particular types of service. And it's way easier for somebody to become expert in a few different types of repairs than in every repair.
- [27:16]
Service Operations Representative
Exactly. This has helped us with the base set of these heavy repairs, like clogging up a lane. There's dedicated lanes for different type of repairs. And so it's through bit matters and really treating it like a factory.
- [27:28]
Elon Musk
Yeah, this is, this is where Tesla structure. I think Tesla has a structural advantage relative to the rest of the auto industry because we make the cars and we service the cars. Whereas I think there's a bit of a conflict of interest with the dealer model and the traditional OEM and dealer model where the dealerships make most of their money on service. And so they obviously incented to reduce the servicing cost, whereas in our case, we are incented to reduce the servicing cost because we, we carry that servicing cost and we've got a good feedback loop without cars.
- [28:04]
Gabe Klein
The mass.
- [28:05]
Elon Musk
Exactly. Yeah.
- [28:07]
Service Operations Representative
With the factory, with the service leaders together and send factory people from the factories to the field and field to the factory to see it firsthand, provide suggestions for manufacturing as well as for engineering on design.
- [28:18]
Elon Musk
Yeah. So I view this as a structural, fundamental structural advantage of Tesla versus the rest of the auto industry.
- [28:25]
David S.
Also doing a bunch of work on the software side, not only to automate diagnostics, so identifying what needs to be.
- [28:31]
Elon Musk
Done to a car before it comes.
- [28:32]
David S.
Into service, but also automating all of the preparation work and aligning all the resources that are necessary in order for the car to be very efficiently worked on once it arrives. So the parts are there, like the lift is scheduled, the technician schedule, like everything's.
- [28:47]
Elon Musk
This is what's wrong with me. And tells us to tell the service center, the car, everything ready in advance. Yeah. Please fix me. And this is what's wrong.
- [28:54]
David S.
This is what they're recommending you now?
- [28:55]
Elon Musk
This is what I recommend. Yes.
- [28:57]
Service Operations Representative
Instead of customer trying to translate, the car is telling us directly and we're pulling that. Yeah.
- [29:01]
Elon Musk
You don't need, most of the time, you don't need to diagnose the car.
- [29:04]
Service Operations Representative
Exactly.
- [29:04]
Elon Musk
When it arrives. The car. Yeah. This Is like again a fundamental technology advantage and structural advantage compared to the rest of the auto industry. It's.
- [29:14]
Zachary Kirkhorn
Yeah, I think it's underappreciated as to what all we are able to do and that's why because like you said before, most of our cars except for Cyber Truck look the same.
- [29:24]
Elon Musk
Right.
- [29:24]
Zachary Kirkhorn
So people don't realize that it has so much capability.
- [29:28]
Elon Musk
Yeah, they look better than other cars but they're not like obviously like super futuristic. So.
- [29:34]
Investor Relations Moderator
Great, thank you very much. The next question is please provide an update on the semi. What will the next stage of growth look like and when will FSD be ready?
- [29:42]
Elon Musk
Sure.
- [29:43]
Gabe Klein
We posted in the earnings that we're progressing swiftly on the build of the semi factory in there in our gigafactory in Reno. We've released all our major capital expenditures for that program and we're on track to start pilot builds in the second half of next year. With production starting the first half of 2026 and ramping really throughout the year to full production semi, you know growth will largely depend on our customers adoption of the product.
- [30:05]
Elon Musk
Well, I don't think we're going to be demand limited, honestly. Yeah, which I was going to say.
- [30:07]
Gabe Klein
Which is like a no brainer for the semi because it's really a commodity of total cost of ownership.
- [30:13]
Elon Musk
Yes, exactly. We have kind of ridiculous demand for.
- [30:16]
Gabe Klein
The semi in that world where it's about how much do I spend to make good access points per mile.
- [30:21]
Elon Musk
It's a no brainer fundamentally if you've got a semi where the fully considered cost per mile per, per ton of transport is better than say a diesel truck. Any company that doesn't adopt an electric semi will, will lose. It's not a subjective thing, it's competitive. I mean we want the style, we want, we want to have a beautiful semi truck but frankly if we made an ocular semi truck it wouldn't matter.
- [30:43]
Gabe Klein
And this is proving so in our fleets and Pepsi's partner, in fact Pepsi actually said last week their drivers don't want to go back.
- [30:50]
Elon Musk
As soon as we give anyone the electric semi it's like that's the choice.
- [30:54]
Gabe Klein
It'S what they want to drive.
- [30:55]
Elon Musk
Yeah, yeah, yeah, that's like, like so the like the most senior like their top drivers will they get to drive the Tesla? It's the thing they want to drive. It's super fun to drive.
- [31:03]
Gabe Klein
It's also very easy to drive.
- [31:05]
Elon Musk
It's easy to drive and it holds ass. It's like fast, super fast. Maybe too fast. Well but I mean like you know like you've seen videos of where it says electric semi can go uphill speed. Yeah, because speeding fast, like the diesel truck.
- [31:19]
Gabe Klein
Or even cars.
- [31:20]
Elon Musk
Yeah, even cars. So like it's responsive, you floor it and the truck actually moved.
- [31:24]
Gabe Klein
And that's a benefit not only for the driver and for the goods, but also for safety in terms of other drivers on the road. You don't get stuck behind the semi. You're not like. Yeah, in a, in a slow down situation in the on ramp. I mean how that plays into, you know, fsd, which is the second part of the question. All of the semis have been since the couple hundred we've deployed already and the ones that we'll be building next year and throughout the hardware and the cameras necessary to deploy fsd. And we're currently training with that small fleet that we have. And as soon as the fleet is trained and the neural nets are up, you know, we'll get FSD onto that platform.
- [31:58]
Elon Musk
Yeah, I mean it'd be a massive improvement in driver fatigue, you know, because. And driver safety. We've got sort of the anti jackknifing software. You know, you don't have to worry about your brakes overheating if you go down a steep hill because the use regenerative like that, that energy goes back into the pack.
- [32:16]
Gabe Klein
Actually when we leave Reno sometimes it's.
- [32:18]
Elon Musk
Like radically better than a diesel semi. The drivers love it.
- [32:21]
Investor Relations Moderator
Great guys, thank you very much. Our next question is when will Tesla incorporate X and Grok in all of the Tesla vehicles?
- [32:28]
Elon Musk
I mean these are relatively small fry things, you know. But yeah, I think we'll keep expanding what is available in the car on the spot screen and also improving the browser. So just generally you can access anything you want in the car. In fact, for the Tesla, once you get to full autonomy, you actually want a system that can do anything. Like if you want to browse the Internet, if you want to ask AI questions, if you want to watch a movie, if you want to play a video game, if you want to do some productivity thing, you can do anything you want in an autonomous vehicle because you don't need to drive. So that's why the Cybercat's got a nice big screen and a great sound system so you can watch a great movie with. It's like doing like personal movie theater. Yeah, personal movie theater.
- [33:13]
David S.
This is why we've been building this functionality. Adding gaming to the car, adding movies and other media applications to the car, because that's what you're going to the cars that we build today.
- [33:21]
Elon Musk
There's some really fun games, by the way. If people haven't tried it, there's like Castle Doom Bad and Holotopia and a bunch of really fun games in the car.
- [33:29]
David S.
We're constantly looking at what features to add next, and we're paying attention to what. What's most commonly requested by our customers.
- [33:35]
Elon Musk
Yep. Plaincastle, Doombad. You want to regret.
- [33:37]
Investor Relations Moderator
Great. Thank you guys very much. The next question is Elon mentioned unsupervised FSD in California and Texas next year. Does that mean regulators have agreed to it in the entire state for existing hardware 3 and 4 vehicles?
- [33:49]
Gabe Klein
No.
- [33:49]
Elon Musk
As we said, as I said earlier, California loves regulation, but they have a pathway. Yeah, I mean, there's a pathway. Obviously Waymo operates in California, so there's a lot of forms and a lot of approvals that are required. I'd be shocked if we don't get approval next year, but it's just not something we totally control. But I think we will get approval next year in California and Texas, and towards the end of the year, it will branch out beyond California and Texas.
- [34:11]
Gabe Klein
I think it's important to reiterate this. Homologating or certifying a vehicle at the federal level in the US is done by meeting FMVSS regulations. All our vehicles today that are produced, that are tongues capable, meet all those regulations. The Cyber CAT will meet those regulations. And so the deployment of the vehicle to the road is not a limitation. What is the limitation is what you said at the state level, where they control autonomous vehicle deployment. Some states are relatively easy, as you mentioned, for Texas.
- [34:34]
Elon Musk
Yeah.
- [34:35]
Gabe Klein
And other ones have pathways like California, that may take a little longer. Other ones haven't set up anything yet. And so we will work through those state by state.
- [34:42]
Elon Musk
And I do think we should have a federal.
- [34:44]
Gabe Klein
I agree.
- [34:45]
Elon Musk
Autonomous vehicles should be approved. It should be possible, too.
- [34:48]
Gabe Klein
Congress, if you're listening, let's get a federal av.
- [34:51]
Elon Musk
This should be a federal. Federal approval process for autonomous vehicles. I mean, that's how the FMBSS is Federal Motor Vehicle.
- [34:58]
Gabe Klein
So, I mean, in 2017 and 18, that's when regulators started looking at it. And it's really kind of stalled since then, but we would appreciate and would support helping out with those regulators.
- [35:07]
Elon Musk
It really needs to be like a national approval is important. You know, there's a Department of Government Efficiency try to help make that happen. And for everyone, not just Tesla, but, you know, some things in the US are state by state regulated, like, for example, insurance. It's incredibly painful to do it state by state for 50 states and I think there should be a national approval process for autonomy.
- [35:27]
Investor Relations Moderator
Great, thanks guys. The next question is what is the plan for 2025?
- [35:31]
Zachary Kirkhorn
It is now. I mean basically we talked through this. There's a lot going on. You already mentioned that we're working on cheaper models to come out. I mean there work which the team is doing to get the factories ready today to try and make that happen.
- [35:45]
Elon Musk
Yeah, to make a lower cost car is insanely high. But like it is harder to get like 20% of the cost out of a car than it is to design the car and build the entire factory in the first place. It's like excruciating. And there's not a lot of movies made about the heroes who got 20% of the cost out of a car, but let me tell you, there should be. No, that is incredibly heroic.
- [36:10]
Service Operations Representative
It's little changes in. It's not like a silver.
- [36:12]
Elon Musk
It's like they should be. The heroes who got 20% cost out of a car is like damn, I respect for them. Like if you actually saw how hard, if people actually saw how hard it was to do that, you'd be like, whoa, that's damn hard.
- [36:25]
Gabe Klein
Just yesterday we were talking about potting.
- [36:27]
Elon Musk
I mean honestly, literally. Yeah, I mean there's a lot of, when I do call it sort of like getting cost out of things, it's kind of like, it's like Game of pennies. It's like Game of Thrones, but pennies. You know, first approximation you've got, if you've got 10,000 items in a car, very rough approximation and each of them costs $4, then you have a $40,000 car. So then if you want a $35,000 car, you've got to get 50 cents on average out of the 10,000 items.
- [36:53]
Gabe Klein
Every 10.
- [36:53]
Service Operations Representative
Every part.
- [36:54]
Elon Musk
Yeah, it's like, you know, and then obviously the best is you delete some parts. In fact we found be able to delete a lot of parts. I'm very, I'm very excited about the cyber capacity design. How we're rethinking the design of a car for the side of a cab, designing it for ultra high volume production and then designing a machine that builds the machine that is I think revolutionary. And there's no other car company that's even trying to do what we're doing. Like I've even heard of it actually. In fact I'm certain there isn't one five times better than traditional factory like.
- [37:29]
Gabe Klein
Recycle time and like part deletion. Which you're lumin. I don't think any other car company has the same level of like integration of thought that we have when it comes to like when you design a part from a white sheet of paper, who's going to make it, where is it going to be made, how's it going to be shipped, how's it going to be assembled into the vehicle? And like at any one point if something is done in a silo, it becomes a bottleneck of either cost or time or efficiency. But with the robotaxi, you know, the development like we've done a good job on combining all that and then like blowing up how it's made and saying it should be made this way and rethinking it all so that it's the most efficient factory possible. That shows in our big wheelchair capex efficiency when we deploy it shows in the number of parts, shows in the simplicity of vehicle, but also how it performs in terms of like end user state.
- [38:17]
Zachary Kirkhorn
Just on the energy front also in 25 we will have started manufacturing at the Megafactory Shanghai. We'll continue to increase our overall storage deployments with Powerwall 3. We plan to continue expanding our supercharging network. Getting more OEMs on our network cell ramp as Elon talked about, that would keep going and then we also will have our lithium refinery starting to produce.
- [38:42]
Elon Musk
Yeah, so many things. The crazy thing is Tesla's winning basically on almost every single thing we're doing. If we're not winning now, we're on track to one. In arenas where there are entire large companies that that's the only thing they do.
- [38:55]
Zachary Kirkhorn
I mean it's a company, there are multiple companies within the company.
- [38:58]
Elon Musk
Yeah, Tesla's like many companies that won. Yeah, fantastic.
- [39:01]
Investor Relations Moderator
Thank you guys.
- [39:02]
Elon Musk
Just a few more.
- [39:03]
Investor Relations Moderator
What is going on with the Tesla Roadster?
- [39:05]
Gabe Klein
Fun things.
- [39:05]
Elon Musk
Well I just like to thank our long suffering deposit holders of the Tesla Roadster. You know the reason it hasn't come out yet is because it is the Roadster is not just the icing on the cake, it's the carry on the icing on the cake. And so you know, our larger mission is to accelerate the progress towards a sustainable energy future. You know, try to do things that maximize the probability. The future is good for humanity and for Earth. And so that necessarily means that like the things like that are kind of like dessert. We'd like, we'd all love to work on the Tesla next gen. Tesla Rosary. Super. It is super fun and we are working on it but it has to come behind the things that have a more serious impact on the good of the world. So just thank you to all our long suffering Tesla Royster deposit holders and we are actually finally making progress on that and we're close to finalizing the design on that. It's really going to be something spectacular. A friend of mine, Peter Thiel, sometimes people think Peter Thiel and I arrivals, we're really good friends. To be clear, Peter was lamenting how the future doesn't have flying cars. Well, we'll see more to come.
- [40:17]
Investor Relations Moderator
Great, thank you very much. The next one is quite similar to other questions we've had, so I might combine it with the final question. So briefly, could you just detail how.
- [40:26]
Elon Musk
Robotechsi will roll out.
- [40:27]
Investor Relations Moderator
Will it start with a Tesla deployed fleet and then allow customers to add theirs on like a subscription model? And then will hardware 3 be capable 5 FSP?
- [40:35]
Ashok Elluswamy
Because regarding the hardware 3, what we saw with 12.5 was it was easier to make rapid progress with starting with hardware 4 and figuring out the solution, then backporting it to hardware 3 instead of directly working on hardware 3. Given that hardware 4 has more like fundamental hardware capabilities, I think that trend will continue into the next few quarters as well. But we first figured the solution rapidly with 4 and then backported write the kernels. It just takes longer to lot of those things because it's not fundamentally supported in the hardware and it's emulated. But yeah, it's initially working on hardware 4. Backporting it to hardware 3.
- [41:12]
Elon Musk
Yeah. So I guess the answer is we're not 100% sure. But short mentioned by some measures, hardware 4 has several times the capability of hardware 3. It's easier to get things to work with hardware 4 and then it takes a lot of effort to sort of squeeze that functionality into hardware 3. There is some chance that hardware 3 does not achieve the safety level that allows for unsupervised fsd. If that turns out to be the case, we will upgrade those who have bought hardware 3 FSD for free. And we have designed the system to be upgradable, you know, just to sort of switch out the computer type of thing. The cameras are capable. We don't actually know the answer to that, but if it does turn out, we'll make sure we take care of those who abort MSD on hardware 3.
- [41:57]
Investor Relations Moderator
Great. In the last few minutes that we have left, we will try to get in some analyst questions. The first question will be coming from Pierre Farragut at New Street. Pierre, please feel free to unmute yourself.
- [42:09]
Pierre Farragut
I was wondering about the compute. You're ramping up. You gave interesting statistics on how much you have and you said you don't feel your compute constraint. I was wondering how you are putting to work this additional compute. Is that a game for you of creating larger and larger models like next generation of models that are larger the way OpenAI go from GPT3 to GPT4? Or is that more like you're set on your model and you need to throw more and more compute to accelerate the pace of learning to improve reliability. And then I had a quick follow up real quick on your rollout in Texas and in California next year. The plan as you see today, is it to roll out like a fleet or two with cars that will start with like a supervisory, like some onboard supervision, someone sitting at the wheel just in case and removing the supervisors progressively, or are you aiming for going fully fledged without even a human supervisor when you get started?
- [43:12]
Elon Musk
Well, I guess we're going to answer the question. The nature of real world AI is different from say an LLM in that you have a massive amount of context. So that like case of Tesla 7 or 8 cameras, up to 9 if you include the internal camera, that. So you've got gigabytes of context and that is then distilled down into a small number of control outputs. Whereas it's like you don't really. It's very rare to have. In fact, I'm not sure any LLM out there can do gigabytes of context. And then you've got to then process that in the car with a very small amount of compute power. So it's all doable and it's happening, but it is a different problem than what say a Gemini or an OpenAI is doing. Now, part of the way you can make up for the fact that the inference computer is quite small is by spending a lot of effort on training, just like a human. The more you train on something, the less mental workload it takes when you do it. When the human starts driving, it absorbs your whole mind. But then as you train more and more on driving, get very good, then the driving camera becomes a background task. It only absorbs a small amount of your mental capacity because you have a lot of training. So we can make up for the fact that the inference computer is tiny compared to a 10 kilowatt bank of GPUs because we've got a few hundred watts of inference compute. We can make up that with heavy training. There's also vast amounts of data coming in and then sorting out what training is important. With the vast amounts of video data coming in, what is actually most important for training? That's also quite difficult. But as I said, we're not currently training compute constraint. You want to elaborate on that.
- [44:59]
Ashok Elluswamy
The training has more train larger models also to train quicker. But in the end, we still got to pick which models are performing better. So the validation effort to picking the models, because the miles per intervention is pretty large, we had to try a lot of miles to go in close loop. We do have simulation and other ways to get those metrics and those two help. But in the end, that's a big bottleneck. That's why we're not training compute constraint alone. And there's other axis of scaling as well, which is a data. Figuring out which data is more useful, that is an important task. And we're focusing on that.
- [45:29]
Elon Musk
Yeah.
- [45:31]
Gabe Klein
So as it relates to the second part of your question, Pierre, about safety drivers and rolling it out, each state has different requirements that you know in terms of how many miles and how much time you need to have a safety driver and not have a safety driver. We're going to follow all those. We're not going to violate whatever regulations are out there, but safety is a priority. The goal is obviously when we're ready and safety is there, we'll remove all the drivers from the rideshare permit.
- [45:53]
Elon Musk
We think that we'll be able to have driverless Teslas doing paid rides next year. Sometime next year. All right, thank you.
- [46:02]
Investor Relations Moderator
And our next question comes from Adam Jonas at Morgan Stanley. Adam, please feel free to unmute yourself.
- [46:09]
Zachary Kirkhorn
Okay, thanks everybody.
- [46:10]
Elon Musk
Just had a question about the relationship between Tesla and xai.
- [46:15]
Zachary Kirkhorn
Many investors are still not clear how the work at XAI is truly beneficial to Tesla.
- [46:21]
Elon Musk
Some even take the view that the two companies may be in competition with each other in terms of talent and tech and even your time.
- [46:27]
Service Operations Representative
Elon.
- [46:28]
Zachary Kirkhorn
So what's your message to investors on.
- [46:31]
Elon Musk
That relationship between TESLA and XAI and where do you see it going over time? Thanks. Well, I should say that XAI has been helpful to Tesla AI quite a few times in terms of things like scaling up training, just even recently in the last week or so, improvements in training where if you're doing a big training run and a node fails being able to continue training. But there are different problems. XAI is working on artificial general intelligence or artificial superintelligence. Tesla is trying to make autonomous cars and autonomous robots. They're different problems.
- [47:08]
Zachary Kirkhorn
Also, not all AI is equal. AI is a broad spectrum and we have our own Swim lanes. Yes. There are certain things which we can collaborate on if needed, but for the most part we're solving different issues.
- [47:22]
Elon Musk
Yeah. Tesla's focus on real world AI and saying earlier, it is quite a bit different from an element. You have massive context in the form of video and some amount of audio that's going to be distilled. Like with extremely efficient advanced compute. I do think Tesla is the most efficient, efficient in the world in terms of inference compute like, because out of necessity we have to, we have to be very good at efficient inference. We can't put 10 kilowatts of GPUs in a car. We've got a couple hundred watts. You know, it's pretty well designed Tesla AI chip, but it's still a couple hundred watts. But there are different problems. I mean, it's, you know, like the stuff that X had is like when it's running inference. I mean it's running inference like answering questions, answering Tesla questions on a 10 kilowatt rack. It's like, yeah, put that in a car, it's a different problem. No, exactly, But XAI is. Because I felt there wasn't a truth seeking digital superintelligence company out there. That's what it came down to, that they needed to be a truth seeking, like an AI company that is very rigorous about being truthful. I'm not saying XAI is perfect, but that is that, that is at least the aspiration. Even if something is politically incorrect, it should still be truthful. I think this is very important for AI safety. I think X AI has been helpful to Tesla and will continue to be helpful to Tesla, but they are very different problems.
- [48:52]
Investor Relations Moderator
Great.
- [48:53]
Elon Musk
What other car company has a world class chip design team? 0. What other car company has a world class AI team like Tesla does? 0. Those were all startups that were created from scratch.
- [49:04]
Investor Relations Moderator
Great, thank you, Ilan. And I think that's unfortunately all the time that we have for today. We appreciate all of your questions and we look forward to hearing you next quarter. Thank you very much and goodbye.