TSLA Q2 FY2024

Q2 FY2024 Earnings Call

TSLA · Preprocessing Report

2024-07-24

Quality

100%

Turns

Speakers

Sections

Exchanges

452

Claims

Quality issues

[WARNING] speakers: no speaker with OPERATOR role

Entities by group 46

electric vehicle manufacturer 1

Teslacompany

company executives 2

Elon MuskpersonLars Moravyperson

equity analyst 2

Vaibhav TanejapersonWilliam Steinperson

autonomous driving software 4

Full Self-Driving (FSD)productV3technologyVersion 12.5technologyVersion 12.6technology

analysts 7

Colin LanganpersonPierre FerragupersonAlex PotterpersonDan LevypersonColin RuschpersonGeorge GianarikaspersonBen Kalloperson

autonomous ride-hailing service 1

Robotaxiproduct

humanoid robots 1

Optimusproduct

electric vehicles 3

Model 3productCybertruckproductModel Yproduct

AI research company 1

xAIcompany

ai computer 2

AI5productHardware 4product

ai accelerator 2

NVIDIA H100productB200product

energy storage systems 1

Megapackproduct

compute hardware 1

GPUtechnology

autonomous driving company 1

Waymocompany

automakers 1

GMcompany

manufacturing site 1

Giga Texascompany

investment firm 1

ARK Investcompany

earnings period 1

Q2 FY2024event

electric vehicle model 2

RoadsterproductYproduct

regulators 1

European Authoritiescompany

consumer marketplace 1

Airbnbcompany

ride-hailing service 1

Ubercompany

robot product version 1

Version 1product

safety standards 1

FMVSStechnology

Ungrouped 6

Inflation Reduction Act (IRA)otherOEMotherSouth ExtensionotherXcompanyShanghaiotherDonald Trumpperson

REPORTING 49PROJECTING 41POSITIONING 173EXPLANATORY 33ANALYST 67

Topics 83

fsd×51autonomy×20robotaxi×20energy×18robot×17artificial intelligence×14fleet×12gpu×11vehicle×10battery×10revenue×8storage×8compute×8regulation×8electric vehicle×7tariff×6autonomous driving×6grid×6recruiting×5ira×5

Themes 295

regulatory×12energy×8distributed×7deployment×6production ramp×4product unveil delay×3future×3licensing agreement×3approval×3policy impact×3investment thesis×3adoption×2software stack×2quarterly performance×2next phase×2musk appeal×2fleet scale×2licensing mechanics×2revenue timing×2licensing timeline×2disclosure timing×2shanghai strategy×2china to europe×2strategy×2europe imports×2generalized solution×2platform portability×2sunglasses fix×2autonomy vehicles×2instant×2hodgepodge solutions×2rising demand×2equipment×2company framing×2ira support×2competitive pressure×1competitor underperformance×1pricing competition×1short-term issue×1customer preference×1electrification shift×1record quarterly×1deployments×1profitability×1training and inference infrastructure×1more affordable launch×1core differentiator×1scale efficiency×1robotic stack×1ai strategy×1ai robotic strategy×1progress×1software rollout×1version 12.5×1highway stack age×1highway issue resolution×1system quality×1driver adoption×1customer demo×1usage retention×1product appeal×1demand outlook×1autonomy progression×1unsupervised transition×1texas expansion×1ai compute expansion×1factory tasks×1internal use×1internal testing×1customer rollout×1production version×1growth pace×1demand constrained×1output expansion×1across the board×1transportation and economy×1vehicle business and robotics×1unsupervised production scaling×1autonomous operation×1autonomy upside×1bullish estimate×1optimistic long-term outlook×1sequential change×1customer incentives×1financing impact×1program impacts persist×1competitive rates×1buying opportunity×1record quarter×1auto×1american-made×1localization×1pricing and value×1300-mile trims×1supercharging network and range anxiety×1pricing revision and production rates×1feature improvements driving vehicle sales×1per vehicle excluding cybertruck impact×1material downtrend×1cybertruck and model 3 ramp×1raw materials and finished goods×1near-term tariff and ramp pressure×1business results×1service and other×1reorg×1restructuring×1separate disclosure×1operating and excluding surcharges×1forward guidance×1ai infrastructure spend×1ai scaling capabilities×1quarterly profitability×1liquidity position×1employee appreciation×1strong opportunity×1commercialization concerns×1compute reallocation×1talent allocation concerns×1ai investment allocation×1historical reference×1time since article×1gpu testing constraint×1allocation decision×1capacity constraint×1data center storage×1south extension completion×1h100 deployment×1physical completion×1compute infrastructure×1company decision×1utilization constraint×1capacity expansion×1talent attraction×1agi talent×1candidate preference×1candidate retention×1tesla and optimus development×1broad spectrum×1not a single thing×1agi recruiting×1founding rationale×1new models×1cost reduction and product launches×1product launch×1limited variants×1variant strategy×1announcements×1osborne effect×1near-term impact×1mix shift toward energy and robotics×1automotive share decline×1long-term value×1utility evaluation×1consumer demand×1global demand implied×1industrial demand×1long-term demand estimate×1manufacturing strength×1real-world experience×1large-scale production readiness×1large-scale high-utility design×1autonomous transport and humanoid robots×1consumer access×1vision×1ai5 inference capability×1ai5 ramp×1autonomous operations×1fleet capacity×1terminology×1hardware stack×1speed to adoption×1camera-based system×1oem integration requirements×1connectivity requirements×1hardware requirements×1licensing volume timeline×1licensing disclosure×1licensing scale×1oem volume threshold×1in-house deployment×1low-cost center×1imports from china after tariffs×1imports from china into europe×1eu investigations×1information sharing with regulators×1right-hand-drive×1import rate×1vehicle trade flows×1import and export strategy×1specific regulations to watch×1fmvss compliance requirements×1nationwide no-boundary approach×1geofenced rollout×1high-density mapping×1system fragility×1scalability×1works anywhere×1safety validation×1regional gap×1road rules×1transportation operations×1federal rules×1road approval requirements×1location-agnostic×1global data training×1u.s.-specific×1u.s. data sourcing×1international assessment×1self-driving design×1pedal-less wheel-less cancellation×1design×1vehicle cancellation due to inability×1misleading explanation and market operation×1development lag×1pricing-driven take rate increase×1post-price-cut take rate increase×1take rate×1customer value×1customer delivery×1factory travel×1zero interventions×1driver monitoring×1driver sunglasses×1fsd usage×1fsd understanding×1service scale×1fleet infrastructure×1plan confirmation×1network usage×1vehicle summoning×124/7 operation×1customer fleet model×1vehicle sharing model×1vehicle utilization×1fleet sharing×1airbnb comparison×1owned vehicles×1uber comparison×1autonomous service×1purchase agreements×1third-party restriction×1scale-up path×1competitive scale×1concept×1active×1autonomy monetization×1pricing strategy amid tight supply×1geographic saturation and wholesale power markets×1market partnerships×1pipeline visibility×1contract lead time×1pricing leverage×1competition from chinese oems×1customer engagement to stay competitive×1market position×1fully integrated product value proposition×1product integration×1competitive edge×1cross-product use×1failed solutions drive return customers×1global saturation×1market saturation×1market expansion×1ai demand×1data center backup×14680 process technology×1supplier qualification×14680 rollout×1intellectual property×1ip stack×1supplier dispute×1underestimated demand×1higher energy output×1peak-to-trough variation×1reliability and blackout prevention×1power plant steady-state operation×1steady-state output×1audio connection×1policy risk×1ev support×1tax credit risk×1ira customer support×1production support for batteries×1impact on near-term profitability×1why it may not hurt×1current support received×1policy support×1company value driver×1business model×1cost assumptions×1manufacturing credits×1competitive advantage×1long-term advantage×1business size×1long-term strategy×1

Key Metrics 72

revenue×7demand×6capital expenditures×4fleet size×4valuation×3vehicle volume×3take rate×3financing rates×2tariffs×2cost×2deployment×2backlog×2restructuring charge×2units×2exports×2regulatory approval×2miles×2vehicles×2pipeline×2grid demand×2energy output×2profitability×2revenues×1deployments×1profits×1parameters×1miles between interventions×1production×1output×1deliveries×1revenue per unit×1regulatory credits×1gross margin×1regulatory credit demand×1range×1production rate×1vehicle sales×1cost per vehicle×1costs×1ramp×1results×1gigawatt-hour×1gross profit×1charge×1operating expenses×1free cash flow×1cash and investments×1compute systems×1headcount×1time×1sales×1value×1utility×1market cap×1operating hours×1computing capacity×1compute hours×1compute×1imports×1fmvss standards×1interventions×1lag×1network×1utilization×1price×1lead time×1pricing×1rollout×1energy generation×1blackouts×1production tax credit×1credits×1

Entities 731

Tesla×313Elon Musk×149Full Self-Driving (FSD)×46Vaibhav Taneja×44Robotaxi×19Optimus×18Inflation Reduction Act (IRA)×12William Stein×9Colin Langan×9Pierre Ferragu×8xAI×7Alex Potter×7Dan Levy×7OEM×6South Extension×5Colin Rusch×5Lars Moravy×5AI5×4Megapack×4GPU×4Waymo×4GM×4Giga Texas×3NVIDIA H100×3Model 3×3X×3George Gianarikas×3ARK Invest×2Q2 FY2024×2Cybertruck×2Ben Kallo×2Model Y×2European Authorities×2Airbnb×2Uber×2V3×1Hardware 4×1Version 1×1Roadster×1B200×1Shanghai×1FMVSS×1Version 12.5×1Version 12.6×1Donald Trump×1Y×1

Business Segments 237

Automotive×194Energy Generation And Storage×42Services And Other×1

Sectors 219

automotive×56energy storage×32robotics×26artificial intelligence×24autonomous vehicles×19software×10semiconductors×9battery×9electric vehicle×7financial services×4cloud computing×4power generation×4electric utilities×3industrial×2ride hailing×2aerospace×1marine×1supply chain×1construction×1data center×1manufacturing×1travel×1ride sharing×1

Regions 56

Europe×13China×11U.S.×10global×4Texas×3Shanghai×3world×2North America×2Berlin×2U.K.×2Earth×1Taiwan×1New York×1Boston×1

Metadata Distributions

Sentiment

positive 105negative 29neutral 229

Temporality

backward 52forward 82current 229

Certainty

definitive 51confident 104moderate 124tentative 72speculative 12

Magnitude

major 14moderate 225minor 124

Direction

improvement 20decline 4flat 1mixed 1none 337

Time Horizon

immediate 62near_term 129medium_term 39long_term 25unspecified 108

Verifiability

quantitative 46event 48qualitative 269

Analyst Intent

probing 26challenging 6confirming 5seeking_detail 26seeking_guidance 4

Speakers

Executives

EMElon MuskCEOLMLars MoravyexecutiveMIMikeexecutiveVTVaibhav TanejaCFO

Analysts

APAlex PotteranalystBKBen KalloanalystCLColin LangananalystCRColin RuschanalystDLDan LevyanalystPFPierre FerraguanalystGGGeorge GianarikasanalystWSWilliam Steinanalyst

Other

TATravis Axelrodir

Sections

Type	Label	Speaker
preamble	Preamble	Travis Axelrod
prepared_remarks	Prepared Remarks	Elon Musk, Vaibhav Taneja, Travis Axelrod
qa_session	Q&A Session	—
closing_remarks	Closing Remarks	Elon Musk, Travis Axelrod

Q&A Exchanges 8

#	Analyst	Firm	Turns
1	WSWilliam Stein	Truist	7
2	BKBen Kallo	Baird	5
3	APAlex Potter	Piper Sandler	5
4	DLDan Levy	Barclays	10
5	GGGeorge Gianarikas	Canaccord	8
6	PFPierre Ferragu	New Street	5
7	CRColin Rusch	Oppenheimer	11
8	CLColin Langan	Wells Fargo	6

Claim Taxonomy 363

REPORTING49

resultFinancial outcome for a completed period19

metricNon-financial quantitative fact11

operationalDiscrete completed event19

PROJECTING41

guidanceQuantitative expectation with number + time9

commitmentPromise with binary verifiable outcome26

targetLong-term aspirational quantitative goal6

POSITIONING173

strategyPriority, direction, or initiative125

competitiveCompany's position or advantages12

opportunityMarket condition framed as growth driver13

riskHeadwind, constraint, or uncertainty23

EXPLANATORY33

attributionWhy a specific outcome happened7

contextNon-company macro/industry fact26

FRAMING0

thesisFalsifiable belief about how the world works0

ANALYST67

questionInterrogative seeking information36

observationRestates a fact or data point18

concernFlags a risk or challenge11

estimateAnalyst's own projection or calculation1

sentimentOpinion, praise, or critique1

Field Guide

TopicWhat the claim is about — a short phrase used to group claims across quarters

ThemeBroad strategic dimension (e.g. profitability, innovation, market expansion)

MetricThe primary financial or operational metric referenced (e.g. revenue, gross margin)

TemporalityTime direction: backward (completed fact), forward (expectation), current (ongoing trend), timeless (universal truth)

VerifiabilityHow checkable: quantitative (contains a number), event (binary outcome), qualitative (subjective)

SentimentDirectional sentiment: positive, negative, neutral, or mixed

CertaintyHow hedged: definitive (fact) → confident → moderate → tentative → speculative

MagnitudeInvestment-thesis impact: major (concrete number + newsworthy), moderate (one of the two), minor (neither). Derived from Has Number and Newsworthy flags.

Has NumberWhether the claim contains a specific number or quantified result

NewsworthyWhether this would appear in a financial news headline

DirectionComparison direction: improvement, decline, flat, mixed, or none

Time HorizonHow far forward: immediate (current quarter), near_term (1-2 Qs), medium_term (1-3 yrs), long_term (3+ yrs), unspecified

Analyst IntentWhat the analyst seeks (Q&A only): probing, challenging, confirming, seeking_detail, seeking_guidance

EntitiesTyped named entities — each has a type: person, company, product, technology, event, or other

SegmentsBusiness segments referenced (e.g. Data Center, Gaming)

SectorsIndustry sectors (GICS/NAICS standard names) — excludes company division names

RegionsGeographic regions explicitly referenced

NumbersSpecific figures extracted from the claim text

TimeTime references anchoring the claim to a period

BoilerplateWhether the claim is boilerplate/formulaic language (dimmed in transcript)

FeaturesSix independent dimensions used to classify each executive claim: time_reference — when does this refer to? (completed: past fact, forward: expectation/plan, ongoing: present trend). content_nature — what type of information? (financial_figure: revenue/margin/EPS, quantitative_fact: non-financial number, named_event: launch/partnership/milestone, external_fact: market/industry info, company_framing: strategy/positioning). comparison_type — is a comparison being made? (vs_named: against a named alternative, superlative: best/first/only claim, none). company_valence — how does this affect the company? (tailwind: positive, headwind: negative, neutral). has_causal_link — does this explain why a business outcome happened? (true / false). reports_financial_outcome — does this report an actual financial result or projection? (true / false). For analyst claims, a single feature: analyst_action (asking, restating, challenging, projecting, evaluating). Together, these features determine the claim type.

Transcript

Preamble

Travis AxelrodirTesla

Good afternoon, everyone and welcome to Tesla's Second Quarter 2024 Q&A Webcast. My name is Travis Axelrod, Head of Investor Relations and I'm joined today by Elon Musk, Vaibhav Taneja, and a number of other executives. Our Q2 results were announced at about 3.00 p.m. Central Time and the Update Deck we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question-and-answer portion of today's call, please limit yourself to one question and one follow-up. Please use the raise hand button to join the question queue.

Before we jump into Q&A, Elon has some opening remarks. Elon?

Prepared Remarks

Elon MuskCEOTesla

Thank you. So to recap, we saw large adoption exploration in EVs, and then a bit of a hangover as others struggle to make compelling EVs. So there are quite a few competing electric vehicles that have entered the market. And mostly they've not done well, but they've discounted their EVs very substantially, which has made it a bit more difficult for Tesla. We don't see this as long-term issue, but really — fairly short-term. And we still obviously firmly believe that EVs are best for customers and that the world is headed for a fully electrified transport, not just the cars, but also aircrafts and boats. Despite many challenges the Tesla team did a great job executing and we did achieve record quarterly revenues. Energy storage deployments reached an all-time high in Q2, leading to record profits for the energy business. And we are investing in many future projects, including AI training and inference and great deal of infrastructure to support future products. We won't get too much into the product roadmap here, because that is reserved for product announcement events. But we are on track to deliver a more affordable model in the first half of next year. The big — really by far the biggest differentiator for Tesla is autonomy. In addition to that, we've scale economies and we're the most efficient electric vehicle producer in the world. So, this, anyway — while others are pursuing different parts of the AI robotic stack, we are pursuing all of them. This allows for better cost control, more scale, quicker time to market, and a superior product, applying not to — not just to autonomous vehicles, but to autonomous humanoid robots like Optimus. Regarding Full Self-Driving and Robotaxi, we've made a lot of progress with Full Self-Driving in Q2 and with version 12.5 beginning rollout, we think customers will experience a step change improvement in how well supervised full self-driving works. Version 12.5 has 5x the parameters of 12.4 and will finally merge the highway and city stacks. So the highway stack is still at this point is pretty old. So often the issues people encounter are on highway, but with 12.5, we are finally merged the two stacks. I still find that most people actually don't know how good the system is, and I would encourage anyone to understand the system better, to simply try it out and let the car drive you around. One of the things we're going to be doing just to make sure people actually understand the capabilities of the car is when delivering a new car and when picking up a car for service to just show people how to use it and just drive them around the block. Once people use it at all they tend to continue using it.

So it's very compelling. And then this I think will be a massive demand driver, even unsupervised full self-driving will be a massive demand driver. And as we increase the miles between intervention, it will transition from supervised full self-driving to unsupervised full self-driving, and we can unlock massive potential in [V3] (ph).

We postponed the sort of Robotaxi the sort of product unveil by a couple of months where it were — it shifted to 10/10 to the 10th October -end because I wanted to make some important changes that I think would improve the vehicle — sort of Robotaxi, the thing that we are — the main thing that we are going to show and we are also going to show off a couple of other things. So moving it back a few months allowed us to improve the Robotaxi as well as add in a couple other things for the product unveil. We're also nearing completion of the South expansion of Giga Texas, which will house our largest training cluster to date. So it will be an incremental for 50,000 H100s plus 20,000 of our hardware 4 AI5 Tesla AI computer. With Optimus, Optimus is already performing tasks in our factory.

And we expect to have Optimus production Version 1 in limited production starting early next year. This will be for Tesla consumption. It's just better for us to iron out the issues ourselves. But we expect to have several thousand Optimus robots produced and doing useful things by the end of next year in the Tesla factories.

And then in 2026, ramping up production quite a bit, and at that point we'll be providing Optimus robots to outside customers. That will be Production Version 2 of Optimus. For the energy business, this is growing faster than anything else. This is — we are really demand constrained rather than production constrained. So we are ramping up production in our U.S. factory as well as building the Megapack factory in China that should roughly double our output, maybe more than double — maybe triple potentially. So in conclusion, we are super excited about the progress across the board. We are changing the energy system, how people move around, how people approach the economy.

The undertaking is massive, but I think the future is incredibly bright. I really just can't emphasize just the importance of autonomy for the vehicle side and for Optimus. Although the numbers sound crazy, I think Tesla producing at volume with unsupervised FSD essentially enabling the fleet to operate like a giant autonomous fleet. And it takes the valuation, I think, to some pretty crazy number. ARK Invest thinks, on the order of $5 trillion, I think they are probably not wrong. And long-term Optimus, I think, it achieves a valuation several times that number. I want to thank the Tesla team for a strong execution and looking forward to exciting years ahead.

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Travis AxelrodirTesla

Great. Thank you very much, Elon, and Vaibhav has opening remarks as well.

#61

#62

Vaibhav TanejaCFOTesla

Thanks. As Elon mentioned, the Tesla team rose to the occasion yet again and delivered on all fronts with some notable records. In addition to those records, we saw our automotive deliveries go sequentially. I would like to thank the entire Tesla team for their efforts in delivering a great quarter.

On the auto business front, affordability remains a top of mind for customers, and in response in Q2, we offered attractive financing options to offset sustained high interest rates. These programs had an impact on revenue per unit in the quarter. These impacts will persist into Q3 as we have already launched similar programs. We are now offering extremely competitive financing rates in most parts of the world. This is the best time to buy a Tesla, I mean, if you are waiting on the sidelines, come out and get your car.

We had a record quarter on regulatory credits, revenues, and as well. On net, our auto margins remained flat sequentially. It is important to note that the demand for regulatory credits is dependent on other OEMs plans for the kind of vehicles they are manufacturing and selling as well as changes in regulations. We pride ourselves to be the company with the most American-made cars and are continuing our journey to further localize our supply chain, not just in the U.S., but in Europe and China as well for the respective factories. As always, our focus is on providing the most compelling products at a reasonable price. We have stepped up our efforts to provide more trims that have estimated range of more than 300 miles on a single charge. We believe this, along with the expansion of our supercharging network, is the right strategy to combat range anxiety.

Since the revision of FSD pricing in North America, we've seen production rates increase meaningfully and expect this to be a driver of vehicle sales as the feature set improves further. Cost per vehicle declined sequentially when we removed the impact of Cybertruck. While we are experiencing material costs trending down, note that there is latency on the cost side and such reductions would show up in the P&L when the vehicles built with these materials get delivered. Additionally, as we get into the second half of the year, it is important to note that we are still ramping Cybertruck and Model 3 and are also getting impacted by varying amounts of tariffs on both raw materials and finished goods. While our teams are working feverishly to offset these, unfortunately it may have an impact on the cost in the near-term.

We previously talked about the potential of the energy business and now feel excited that the foundation that was laid over time is bearing the expected results. Energy storage deployments more than doubled with contribution not just from Megapack, but also Powerwall, resulting in record revenues and profit for the energy business. Energy storage backlog is strong. As discussed before, deployments will fluctuate from period to period with some quarters seeing large increases and others seeing a decline. Recognition of storage gigawatt hours is dependent on a variety of factors, including logistics timing as we send units from a single factory to markets across the world, customer readiness and in case of EPC projects on construction activities. Moving on to the other parts of the business, service and other gross profits also improved sequentially from the improvement in service utilization and growth in our collision repair business. The impact of our recent reorg is reflected in restructuring other - on the income statement. Just to level set, this was about $622 million of charge, which got recorded in the period. And I want people to remember that we've called it out separately on the financials.

Sequentially, our operating expenses excluding surcharges reduced despite an increase in spend for AI-related activities and higher legal and other costs. On the CapEx front, while we saw a sequential decline in Q2, we still expect the year to be over $10 billion in CapEx as we increase our spend to bring a 50k GPU cluster online. This new cluster will immensely increase our capabilities to scale FSD and other AI initiatives. We reverted to positive free cash flow of $1.3 billion in Q2. This was despite restructuring payments being made in the quarter and we ended the quarter with over $30 billion of cash and investments. Once again, we've begun the journey towards the next phase for the company with the building blocks being placed. It will take some time, but will be a rewarding experience for everyone involved. Once again, I would like to thank the entire Tesla team for their efforts.

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Q&A Session

Q&A 1/8

Travis AxelrodirTesla

All right. Thanks very much. And now we will move on to analyst questions. The first question comes from Will Stein from Truist. Will, please go ahead and unmute yourself.

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William SteinanalystTruist

Great. Thanks so much for taking my question. And this relates a little bit to the last one that was asked.

Elon, I share your strong enthusiasm about AI and I recognize Tesla's opportunity to do some great things with the technology. But there are some concerns I have about Tesla's commercialization and that's what I'd like to ask about specifically. There were some news stories through the quarter that indicated that you redirected some AI compute systems that were destined for Tesla instead to xAI or perhaps it was to X, I'm not sure. And similarly, a few quarters ago, if you recall, I asked about your ability to hire engineers in this area, and you noted that there was a great desire for some of these engineers to work on projects that you were involved with, but some of them weren't at Tesla, they were instead at xAI or perhaps even X again. So the question is, when it comes to your capital investments, your AI R&D, your AI engineers, how do you make allocation decisions among these various ventures and how do you make Tesla owners comfortable that you're doing it in a way that really benefits them? Thank you.

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Elon MuskCEOTesla

Yes, I mean, I think you're referring to a very — like an old article, regarding GPUs. I think that's like 6 or 7 months old.

At Tesla, we had no place to try them on, so it would've been a waste of Tesla capital because we would just have to order H100 and have no place to try them on. So it was just — there was — this wasn't a, let's pick xAI of Tesla. There's — there was no — the Tesla data centers were full. There was no place to actually put them.

The — we've been working 24/7 to complete the South extension on the Tesla Giga factory in Texas. That South extension is what will house 50,000 H100s and we're beginning to move the H100 server racks into place there. But we really needed — we needed that to complete physically.

You can't just order compute — order GPUs and turn them on, you need a data center, it's not possible. So I want to be clear, that was in Tesla's interest, not contrary to Tesla's interest. Does Tesla no good to have GPUs that it can't turn on. That South extension is able to take GPUs, which is really just this week. We are moving the GPUs in there and we'll bring them online.

With regard to xAI, there are a few that only want to work on AGI. So what I was finding was that when trying to recruit people to Tesla, they were only interested in working on AGI and not on Tesla's specific problems and they want to start — do a start-up. So it was a case of either they go to a start-up or — and I am involved or they do a start-up and I am not involved. Those are the two choices. This wasn't they would come to Tesla. They were not going to come to Tesla under any circumstances. So, yes.

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Vaibhav TanejaCFOTesla

Yes, I mean, I would even add that AI is a broad spectrum and there are a lot of things which we are focused on full time driving as Tesla and also Optimus, but there's the other spectrum of AI which we're not working on, and that's the kind of work which other companies are trying to do in this case, xAI. So you have to keep that in mind that it's a broad spectrum. It's not just one specific thing.

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Elon MuskCEOTesla

Yes. And once again, I want to just repeat myself here. I tried to recruit them to Tesla, including to say like, you can work on AGI, I if you want and they refused. Only then was xAI created.

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William SteinanalystTruist

I really appreciate that clarification.

If I can ask one follow-up, it relates to the new vehicles that you're planning to introduce next year. I understand this is not the venue for product announcements, but when we think about the focus, I've heard on the one hand that the focus is on cost reduction. On the other hand, you also said that the Roadster would come out. Should we expect other maybe more limited variants like, similar to the cars that you make today, but with some changes or improvements or different, some other variability in the form factors. It should — we expect that to be a significant part of the strategy in the next year or two?

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Elon MuskCEOTesla

I don't want to get into details of product announcements. And we have to be careful of the Osborne effect here. So, if you start announcing some great thing, it affects our near-term sales. We're going to make great products in future just like we have in the past, end of story.

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Q&A 2/8

Travis AxelrodirTesla

Right. The next question comes from Ben Kallo from Baird. Ben, please go ahead and unmute yourself.

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Ben KalloanalystBaird

Hi. Thanks for taking my question.

When we think about revenue contribution and with energy growing so quickly and Optimus on the come, how do we think about the overall segments longer term? And then do you think that auto revenue will fall below 50% of your overall revenue? And then my follow-up is just on the last call you talked about, distributed compute on your new hardware. Could you just update us and talk a little bit more about that, the timeline for it and how you would reward customers for letting you use their compute power and their cars? Thanks.

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Elon MuskCEOTesla

Yes, I mean, as I've said a few times, I think the long-term value of Optimus will exceed that of everything else that Tesla combined. So, it's simply — just simply consider the usefulness utility of a humanoid robot that can do pretty much anything you ask of it. I think everyone on earth is going to want one. There's 8 billion people on earth, so it's 8 billion right there. Then you've got, all of the industrial uses, which is probably at least as much, if not way more. So I suspect that the long-term demand for general purpose humanoid robots is in excess of 20 billion units.

And Tesla is — that has the most advanced humanoid robot in the world, and is also very good at manufacturing, which these other companies are not. And we've got a lot of experience — with the most experienced with the world leaders in real world AI. So we have all of the ingredients. I think we are unique in having all of the ingredients necessary for large scale, high utility, generalized humanoid robots. That's why my rough estimate long-term is in accordance with the ARK [ph] Invest analysis of market cap on the order of $5 trillion for — maybe more for autonomous transport, and it's several times that number for general purpose humanoid robots.

I mean, at that point, I'm not sure what money even means, but in the benign AI scenario, we are headed for an age of abundance where there is no shortage of goods and services. Anyone can have pretty much anything they want. It's a wild — very wild future we're heading for.

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Ben KalloanalystBaird

On the distributed compute?

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Elon MuskCEOTesla

Yes, distributed compute, that seems like a pretty obvious thing to do. I think the — where this distributed compute becomes interesting is with our next generation Tesla AI truck, which is hardware viable or what we're calling AI5, which is — from the standpoint of inference capability comparable toB200 — and a bit of B200. And we are aiming to have that in production at the end of next year and scale production in '26.

So it just seemed like if you've got — even if you've got autonomous vehicles that are operating for 50 or 60 hours a week, there's a 168 hours in a week. So you have somewhere above I think a 100 [inaudible] net computing. I think we need a better word than GPU because GPU means graph express in unit. So there's a 100 hours plus per week of AI compute, AI advanced compute from the fleet, from the vehicles and probably some percentage from the humanoid robots that it would make sense to do distributed inference. And if you're — if there's a fleet of at some point a 100 million vehicles with AI5 and beyond, because you have AI 6 and 7 and whatnot, and there may be billions of humanoid robots that is just a staggering amount of inference compute or that could be used for general purposes at computing. It doesn't have to be used for, the humanoid robot or for the car. So I think, that's just — that — that's a pretty obvious thing to say, like, well, it's more useful than having to do nothing.

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Q&A 3/8

Travis AxelrodirTesla

All right. Thank you. The next question comes from Alex Potter from Piper Alex. Alex, please go ahead and unmute yourself.

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Alex PotteranalystPiper Sandler

Perfect. Thanks. I wanted to ask a question on FSD licensing. You mentioned that in passing previously, was just wondering if you can elaborate maybe on the mechanics of how that would work. I guess presumably this would not be some sort of simple plug and play proposition that presumably an OEM would need, I don't know, several years to develop its own vehicle platform that's based on FSD. I imagine they would need to adopt Tesla's electrical architecture, compute, sensor stack. So I, correct me if I'm sort of misunderstanding this, but if you had a cooperative agreement of some kind with another OEM, then presumably it would take you several years before you'd be able to recognize licensing revenue from that agreement. Is that the right way to think about that?

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Elon MuskCEOTesla

Yes. The OEMs not real fast. There's not really a sensor suite, it's just cameras. But they would have to integrate our AI computer and have cameras with a 360 degree view. And at least the gateway, like the what talks to the internet, and communicates with the Tesla system, what that you need kind of a gateway computer too. So it's really gateway computer with the cellular and Wi-Fi connectivity, the Tesla AI computer, and seven cameras, or not cameras, again, a 360 degree view. But this will — given the speed at which, the auto industry moves, it would be several years before you would see this in volume.

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Alex PotteranalystPiper Sandler

Okay, good. That's more or less what I expected.

So then the follow-up here is, if you did sign an FSD licensing agreement with another automaker, when do you think you would disclose that? Would you do it right when you signed the agreement or only after that multiple years has passed and the vehicle is ready to be rolled out? think it depends on the OEM. I guess we'd be happy either way. Yes, it depends on, what kind of arrangement we enter into. A lot of those things are, we are not resolved yet, so we'll make that determination as and when we get to that point.

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Elon MuskCEOTesla

And the kind of deals that are obviously relevant are only if, some OEM is willing to do this in a million cars a year or something significant. It's not — if it's like 10,000 or a 100,000 cars a year. We can just make that ourselves.

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Q&A 4/8

Travis AxelrodirTesla

All right, thank you. The next question comes from Dan Levy from Barclays. Dan, please go ahead and unmute yourself.

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Dan LevyanalystBarclays

Hi, good evening. Thanks for taking the questions. First, wanted to start with a question on Shanghai. You've leveraged Shanghai as an export center really due its low cost, and that makes sense. But maybe you can just give us a sense of, of how the strategy changes, if at all, given, the implementation of tariffs in Europe. Also to what extent, your import of batteries from China into the U.S., how that might change given the tariffs. Thank you.

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Elon MuskCEOTesla

Yes. I think I covered some part of it in my opening remarks, but just to give you a little bit more, just on the tariff side, the European authorities did sample certain other OEMs in the first round to establish the tariffs for cars being imported from China into Europe. While we were not picked up in our individual examination in the first round, they did pick us up in the second round. They visited our factory. They — we worked with them, provided them all the information.

As a result, we were adjusting our import strategy out of China into Europe. But — and one other thing to note is in Q2 itself, we started building right hand from model wise out of Berlin and we also delivered it in U.K. And we're adjusting as needed, but we will keep adjust. We're still importing Model 3s into Europe, out of Shanghai.

And we are still evaluating what is the best alternate manage all this just on the examination by the European authorities. Like I said, we cooperated with them. Well, we are confident that they, we should get a better rate than what they have imposed for now. But this is literally evolving and we are adjusting as fast as we can with this. It is — I would also add that, because of this, you've seen the impact that Berlin is doing more imports into places like Taiwan as well as, U.K I just mentioned. So it will keep changing and we will keep adapting as we go about it.

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Dan LevyanalystBarclays

Great. Thanks. Yes, thank you. As a follow-up, wanted to ask about the Robotaxi strategy and specifically the shareholder deck here notes that the release is going to be — one of the gating factors is regulatory approval. So maybe you could help us understand which regulations specifically are the ones that we should be looking for? Is it FMVSS, that's standard? And then to what extent does the strategy shift?

You've done with FSD more of a nationwide, no boundary approach. Is the Robotaxi approach one that's more geofenced, so to speak, and is more driven by a state by state approach?

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Elon MuskCEOTesla

I mean, our solution is a generalized solution like what everybody else has. They, if you see like Waymo has one of it, they have a very localized solution that requires high density mapping. It's not — it's quite fragile. So, their ability to expand rapidly is limited. Our solution is a general solution that works anywhere.

It would even work on a different earth. So if you're rendered a new Earth, it would work on a new earth.

So it's — there's this capability I think in our experience, once we demonstrate that something is safe enough or significantly safer than human. We are fine that regulators are supportive of deploying deployment of that capability. It's difficult to argue with if you — if you've got a large number of — yes, if you've got billions of miles that show that in the future unsupervised FSD is safer than human. What regulator could really stand in the way of that?

They would — they're morally obligated to approve. So I don't think regulatory approval will be a limiting factor. I should also say that the self-driving capabilities of this are deployed outside of North America are far behind that in, in North America. So with the — with Version 12.5, and maybe a 12.6, but pretty soon we will ask for regular regulatory approval of the Tesla supervised FSD in Europe, China, and other countries. And I, I think we're likely to receive that before the end of the year, which will be a helpful demand driver in those regions obviously.

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Travis AxelrodirTesla

Thank you. Just to …

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Elon MuskCEOTesla

Go ahead, Travis.

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Travis AxelrodirTesla

In terms of like, as Elon said, in terms of regulatory approval, the vehicles are governed by FMVSS in U.S., which is the same across all 50 states. The road rules are the same across all 50 states. So creating a generalized solution gives us the best opportunity to deploy in all 50 states, reasonably.

Of course there are state and even local and municipal level regulations that may apply to, being a transportation company or deploying taxes. But as far as getting the vehicle on the road, that's all federal and that's very much in line with what you was just suggesting about the data and the vehicle itself.

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Vaibhav TanejaCFOTesla

And to add to the technology point, the end-to-end network basically makes no assumption about the location. Like you could add data from different countries and it just like perform equally well there, just like almost like close to zero US specific, um, code in there. It's all just the data that comes from the U.S

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Elon MuskCEOTesla

Yes. To, to that end of the show, it's like, we can go as humans to other countries and drive with some reasonable amount of assessment in those countries.

And that's how you design the FSC software. Yes, exactly.

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Q&A 5/8

Travis AxelrodirTesla

Great. Thanks guys. The next question comes from George from Canaccord. George, please go ahead and unmute yourself.

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George GianarikasanalystCanaccord

Hi, everyone. Thank you for taking my questions. Maybe just to expand on the regulatory question for a second. And I could be comparing apples and oranges, but GM canceled their pedal less, wheel less vehicle. And according to the company this morning, their decision was driven by uncertainty about the regulatory environment. And from what we understand, and again, maybe I'm wrong here, but the Robotaxi that has been shown at least in images of the public is also pedal less and wheel less. Is there a different regulatory concern just if you deploy a vehicle like that that doesn't have pedal — pedals or a wheel, and that may not be different from just regular FSD on a traditional Tesla vehicle. Thank you.

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Elon MuskCEOTesla

Well, obviously the real reason that they cancel it is because GM can't make it work, not because the regulators, they're blaming regulators. That's misleading of them to do so, because Waymo is doing just fine in those markets. So it's just that their technology is not far.

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George GianarikasanalystCanaccord

Right. And maybe just as a follow-up, I think you mentioned, that FSD take rates were up materially after you reduced the price. Is there any way you can help us quantify what that means Exactly? Thank you.

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Vaibhav TanejaCFOTesla

Yes, we shared the [inaudible] that there we've seen a meaningful increase. I don't want to get into specific because we started from a low base and — but we are seeing encouraging results. And the key thing here is, like Elon said, you need to experience it because words can't describe it till the time we actually use it. And that's why we are trying to make sure that every time a car is getting delivered, people are being showed how this thing is working because when you see it working, you realize how great it is.

I mean, just to give you one example, so again, there's a bias example, but I have a more than 20 mile commute into the factory almost every day. I have zero interventions on the latest stack, and the card just literally drives me over. And especially with the latest version wherein, we are also tracking your eye movement, the steering wheel lag is almost not there as long as you're not wearing sunglasses.

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Elon MuskCEOTesla

Well, we are fixing the sunglasses thing. It's coming soon. So you will be able to drive — you'll be able to have sunglasses on and have the car drive.

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George GianarikasanalystCanaccord

Yes.

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Elon MuskCEOTesla

So — but there's number of times I've talked with smart people who like live in New York or maybe downtown Boston and don't ever drive and then ask me about FSD, I'm like, you can just get a car and try it. And if you're not doing that, you have no idea what's going on.

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Q&A 6/8

Travis AxelrodirTesla

Thank you. The next question comes from Pierre from New Street. Pierre, please unmute yourself.

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Pierre FerraguanalystNew Street

Hey, guys.

Thank you for taking my question. So it's on Robotaxi again, and I completely get it that with a universal solution, we will get like regulatory approval, we'll get there eventually clicking up miles and compute, et cetera. And my question is more, how you think about deployments, because I'm still like, I'm thinking once you have a car that can drive everywhere, that can replace me, it can replace a taxi, but then to do the right hailing service, you need a certain scale. And that means a lot of cars on the road and so you need an infrastructure to just maintain the cars, take care of them, et cetera. And so my question is, are you already working on that? Do you have already an idea of what, like your plan to deploy looks like? And is that like a test Tesla only plan or are you looking at partners, local partners, global partners to do that? And I'll have a quick follow-up.

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Elon MuskCEOTesla

Yes. This would just be the Tesla network. You just literally open the Tesla app and summon a car and resend a car to pick you up and take you somewhere. And you can — our — we'll have a fleet that's I don't know, on order of 7 million dedicated global autonomy soon. In the years come it'll be over 10 million, then over 20 million. This is immense scale. And the car is able to operate 24/7, unlike the human driver. So, the capability to — like, if there's this basically instant scale with a software update.

And now this is for a customer on fleet. So you can think of that as being a bit like Airbnb, like you can choose to allow your car to be used by the fleet, or cancel that and bring it back. It can be used by the fleet all the time. It can be used by the fleet some of the time, and then Tesla would take — would share on the revenue with the customer. But you can think of the giant fleet of Tesla vehicles as like a giant sort of Airbnb equivalent fleet, Airbnb on wheels.

The — I mean, then in addition we would make some number of cars for Tesla that would just be owned by Tesla and be added to the fleet. I guess that would be a bit more like Uber. But this would all be a Tesla network. And there's an important clause we've put in, in every Tesla purchase, which is that the Tesla vehicles can only be used in the Tesla fleet. They cannot be used by a third-party for autonomy.

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Pierre FerraguanalystNew Street

Okay. And do you think that scale is like progressively so you can start in a city with just a handful of cars and you grow the number of cars over time? Or do you think there is like a critical mass you need to get to, to be able to offer like a service that is of competitive quality compared to what like the — like Uber would be typically delivering already?

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Elon MuskCEOTesla

I guess I'm not — maybe I'm not conveying this correctly. The entire Tesla fleet basically becomes active. This is obviously maybe there's some number of people who don't want their car to own money, but I think most people will. It's instant scale.

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Q&A 7/8

Travis AxelrodirTesla

Thank you. Our next question comes from Colin from Oppenheimer. Colin, please unmute yourself.

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Colin RuschanalystOppenheimer

Sorry about that guys. I've got two questions around energy storage. With the tight supply and the stationary storage, can you talk about your pricing strategy and how you're thinking about saturation and given geographies given that some of these larger systems are starting to shift wholesale power markets in a pretty meaningful way quickly?

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Vaibhav TanejaCFOTesla

So, I mean, we are working with a large set of players in the market and our pipeline is actually pretty long. And there's actually very — there's actually long end in terms of where you enter into a contract where delivery started — starts happening. And so far we have good pricing leverage. And now Mike, chime in on this too.

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MikeexecutiveTesla

Yes, I mean there's a lot of competition from Chinese OEMs just like there is in the vehicle space.

So we're in close contact with our customers and making sure that we're remaining competitive in where they're needing to be competitive to, to secure contracts to sell power and energy in the markets. We had a really strong contracting quarter and continue to build our backlog for 2025 and 2026. So we feel pretty good about where we are in the market. We realize that competition is strong, but we have a pretty strong value proposition with offering a fully integrated product with our own power electronics and site level controls. So …

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Vaibhav TanejaCFOTesla

Yes, and again, the aspect which people miss do not fully understand is that there's also a whole software stack, which comes with from Megapack, right? And that is a unique proposition which we — which is only available to us, and we are using it with other stuff too, but that gives us a much more of an edge as compared to the competition.

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Elon MuskCEOTesla

Yes, we find customers that they can sort of put together a hodgepodge solution. And so, and then sometimes they'll pick that solution, and then that doesn't work. And then they come back to us.

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MikeexecutiveTesla

Yes, and we're not really seeing saturation for like, on a global scale. There's little pockets of saturation in different markets, but we're more seeing that there's markets opening up given demand on the grid just continues to increase more than anyone expects. So that just opens up markets, really across the world in different pockets.

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Vaibhav TanejaCFOTesla

Yes, I mean just even on the AI computer side, right? These GPUs are really powerful already and the amount of new pipeline, which we're getting for people for data center backup and things like that is increasing at a pretty large scale.

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Colin RuschanalystOppenheimer

Yes. Thanks. And then the follow-up here is 4680 process technology and the role to role process. There's some news around your equipment suppliers. Can you talk about how far along you are in, in potentially qualifying an incremental supplier around some of that, those critical process technology steps?

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Lars MoravyexecutiveTesla

Yes, I can talk about that. As you're probably referring to the lawsuit that we have with one of our suppliers, look, I don't think this is going to affect our ability to roll out 4680. We have very strong IP position in the technology and the majority of the equipment that we use is in-house designed and some of it's in-house build. And so we can take our IP stack and have someone else build it if we need to. So it's, that's not really a concern right now.

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Elon MuskCEOTesla

Yes. I, I think people don't understand just how much demand there will be for grid storage. They really just like the [inaudible] I think are underestimating this demand by probably orders magnitude.

So that the actual energy, total energy output of, say the U.S grid is if the power plants can operate a steady state is at least two to three times, the amount of energy it currently produces, because there are a huge gap. There's a huge difference in the — from peak to trough in terms of energy of power generation. So in order for a grid to not have blackouts, it must be able to support the load at the worst minute of the worst day of the year, the coldest or hottest day, which means that for the rest of the time, the rest of the year, it's got massive excess power generation capability, but it has no way to store that energy. Once you add battery packs, you can now run the power plants at steady state. Steady state means that basically any given grid anywhere in the world can produce in terms of cumulative energy in the course of the year, at least twice what it is currently producing in some cases, maybe three times.

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Q&A 8/8

Travis AxelrodirTesla

All right. Thank you, Elon. The next question comes from Colin Langan from Wells Fargo. Colin, please unmute yourself.

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Colin LangananalystWells Fargo

Oh, great. Thanks for taking my questions. Do you hear me?

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Travis AxelrodirTesla

Yes.

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Colin LangananalystWells Fargo

Yes. Sorry.

I guess when we are going to ask, if Trump wins, there's a higher chance that IRA could get cut. I think Elon, you had commented online that Tesla doesn't survive on EV subsidies. But when Tesla lose a lot of support if IRA goes away? I think model Y3 and Y get IRA help for customers, and I think your batteries get production tax credits. So, just one, can you clarify if the end, if IRA ends, would it be a negative for your profitability in the near-term? Why might it not be a negative? And then, any framing of the current support you get, IRA-related?

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Elon MuskCEOTesla

I guess that there would be like some impact, but I think it would be devastating for our competitors. But — and it would hurt Tesla slightly. But long-term probably actually helps Tesla would be my guess. Yes — but I've said this before on earnings calls, it — the value of Tesla overwhelmingly is autonomy. These other things are in the noise relative to autonomy. So I recommend anyone who doesn't believe that Tesla will solve vehicle autonomy should not hold Tesla stock. They should sell their Tesla stock. You should believe Tesla will solve autonomy, you should buy Tesla stock. And all these other questions are in the noise.

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Vaibhav TanejaCFOTesla

Yes, I mean, I'll add this just to clarify a few things that — at the end of the day, when we are looking at our business, we've always been looking at it whether or not IRA is there and we want our business to grow healthy without having any subsidies coming in, whichever way you look at it. And that's the way we have always modeled everything. And that is the way internally also even when we are looking at battery costs, yes, I —, there are manufacturing credits which we get, but we always drive ourselves to say, okay, what if there is no higher benefit and how do we operate in that kind of an environment?

And like Elon said, we definitely have a big advantage as compared to a competition on that front. We've delivered it and you can see it in the numbers over the years. Like, so there is you cannot ignore the fundamental size of the business. And then on top of it, once you add autonomy to it, like even said, it becomes meaningless to you think about the short-term.

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Closing Remarks

Travis AxelrodirTesla

Okay. I think that's unfortunately all the time we have for today. We appreciate all of your questions. We look forward to talking to you next quarter. Thank you very much and goodbye.

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Elon MuskCEOTesla

That's excellent.

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