Q4 FY2025 Earnings Call
TSLA · Preprocessing Report
2026-01-28
Quality
100%
28
Turns
10
Speakers
4
Sections
5
Exchanges
324
Claims
Quality issues

Entities by group 34

technology executives 2
Elon MuskpersonAndy Groveperson
humanoid robots 1
Optimusproduct
sell-side analysts 4
Emmanuel RosnerpersonDan LevipersonColin LanganpersonGeorge Gianarikasperson
passenger vehicle models 2
Model SproductModel Xproduct
AI model 1
Groktechnology
self-driving software 1
FSDtechnology
energy storage 3
MegaPackproductPowerwallproductMega Blockproduct
production programs 1
SXproduct
autonomous vehicles 1
CyberCabproduct
Ungrouped 18
TeslacompanyVaibhav TanejapersonQ4 2025eventxAIcompanyDXAIcompanyUnited StatesotherCapExotherMaestrootherMaster Plan FourotherAirbnbcompanyAI4productQ4 FY2025eventQ3 2025eventBitcointechnologyQ&AeventMorgan StanleycompanyTin ManotherIntelcompany
REPORTING 29PROJECTING 28POSITIONING 158EXPLANATORY 34ANALYST 19

Topics 72

optimus×19capex×15strategy×14robot×14ai×12xai×9investment×8battery×8robotaxi×8fleet×8energy×8fsd×6facility×6autonomy×5autonomous vehicle×5fabrication×5refinery×5mission×4capital×4solar×4

Themes 213

abundance×8investment×8lithium and cathode×6capital allocation×5autonomous×5capacity×5robot capability×3china competition×3robotics scaling×2future strategy×2production target×2regulatory approval×2optimus×2production ramp×2economic impact×2hard problems×2revenue growth×2guidance×2customer and investor support×2chip and solar cell manufacturing infrastructure×2funding×2memory efficiency×2intelligence density×2efficiency comparison×2ai chip dependency×2competition×2industry exposure×2outsourced construction×2robotics-driven income future×1safety and access×1long-term vision×1future vision×1strategic outlook×1autonomy and robotics expansion×1capital spending outlook×1long-term growth×1spending efficiency×1supply chain investment×1manufacturing expansion×1ai investment×1strategic investments×1program wind-down×1production wind-down×1vehicle support×1factory conversion×1self-driving and robotaxi×1software updates×1driverless ride launch×1paid rides×1no chase car×1driverless operation×1injury avoidance×1cautious approach×1growth pace×1owner participation×1owner lending program×1owner compensation×1owner-fleet model×1deployment regulation×1commercial rollout×1team performance×1growth rate×1manufacturing capacity×1growth outlook×1opportunity×1supply chain integration×1more details×1product unveiling×1product expectations×1production line expansion×1first principles×1supply chain constraint×1production delay risk×1manufacturing target×1general-purpose capability×1task learning×1video learning×1capability×1technological moves×1value creation×1easy problems×1company culture×1growth prospects×1q4 2025 outlook×1us auto demand shift×1international auto strength×1record deliveries by market×1larger year-end order pipeline×1availability by market×1record deployments×1automotive excluding credits×1automotive sequential change×1regional mix×1ramping at all factories×1global constraint×1nonstructural packs×1constraint resolution×1paid customer adoption×1customer mix×1subscription model×1subscription growth and margin pressure×1gross profit×1deployment outlook×1compression outlook×1margin decline×1cost pressure×1supercharging business×1business costs×1deployment and validation testing×1per mile metrics×1gross margin above 20.1%×1improvement×1sequential increase×1maestro charge probability×1ai and new product investment×1bitcoin mark-to-market impact×1foreign exchange headwind×1q4 2025 result×1below guidance×1ai compute and capacity×1robotaxi and humanoid expansion×1capital efficiency×1planned spending exclusions×1future updates on solar manufacturing and fab×12026 new phase×1historic change×1future abundance×1q&a×1allocation×1product line mix×1one-time increase×1ongoing spending level×1high spending impact×1financing for capex plan×1factory buildout×1ai scaling×1future buildout×1recurring spend×1infrastructure play×1infrastructure delay×1liquidity×1internal funding×1fleet financing×1bank financing×1fleet funding×1longer-tail funding×1debt financing×1collaboration×1ai collaboration×1in vehicles×1internal capability×1support×1strategic initiative×1strategic fit×1strategic rationale×1factory building×1rare earth ore×1rare earth supply×1refinery construction×1orchestration×1grok coordination×1refinery automation×1project plans×1fleet management×1ai chip supply constraints×1near-term procurement constraints×1product functionality workarounds×1constraint on ai efficiency×1functionality per gigabyte×1company position×1logic and memory×1supply risk×1us capacity×1supply disruption risk×1ai dependency×1steering wheels and pedals×1retrofit capability×1mobility limitation×1growth capacity×1supplier constraints×1china startups entering market×1competitive advantages and differentiation×1china scaling×1model improvement×1competitive challenge×1market underestimation×1competitive strength×1robot intelligence×1development challenges×1engineering difficulty×1ai and manufacturing scale×1humanoid production scaling×1technology development×1hardware synergies×1system efficiency×1company risk management×1risk perception×1management philosophy×1intel origin×1strategic mindset×1corporate culture×1artificial intelligence and robotics development×1supply security×1necessity×1in-house work×1required work×1advanced facility×1corpus christi facility×1new process×1austin facility×1facilities expansion×1previous remarks×1resilience×1

Key Metrics 42

capital expenditures×12capital expenditure×7margin×4gross profit×3revenue×3gross margin×3efficiency×3production×2gdp×2demand×2deployments×2paid customers×2net income×2capex×2vehicles×2growth rate×1manufacturing capacity×1growth×1grid capability×1production capacity×1units×1volume×1backlog×1cells×1net additions×1costs×1operating expenses×1spending×1free cash flow×1fleet size×1cash burn×1cash balance×1compute×1cash and investments×1capacity×1compute efficiency×1intelligence per gigabyte×1ram×1gigabyte×1intelligence density×1memory efficiency×1r&d spend×1

Entities 544

Tesla×233Elon Musk×131Vaibhav Taneja×58Optimus×36Q4 2025×11xAI×7Grok×7FSD×6Model S×4Model X×4Emmanuel Rosner×4DXAI×4SX×3United States×3MegaPack×3CapEx×3Dan Levi×3Colin Langan×3Andy Grove×3Maestro×2CyberCab×2Master Plan Four×2Airbnb×1AI4×1Q4 FY2025×1Q3 2025×1Powerwall×1Mega Block×1Bitcoin×1Q&A×1Morgan Stanley×1Tin Man×1George Gianarikas×1Intel×1

Business Segments 79

Automotive×58Energy Generation And Storage×18Services And Other×3

Sectors 157

robotics×46artificial intelligence×32semiconductors×18manufacturing×17automotive×16solar×8battery manufacturing×5chemicals×5energy storage×3financial services×2autonomous vehicles×1hospitality×1software×1cloud computing×1metals and mining×1

Regions 49

China×12US×6Austin×5Fremont×4U.S.×2Malaysia×2Norway×2Poland×2Saudi Arabia×2Taiwan×2global×2United States×2Corpus Christi×2APAC×1EMEA×1California×1America×1

Metadata Distributions

Sentiment
positive 63negative 31neutral 174
Temporality
backward 32forward 86current 150
Certainty
definitive 40confident 78moderate 107tentative 35speculative 8
Magnitude
major 18moderate 162minor 88
Direction
improvement 20decline 1flat 1mixed 1none 245
Time Horizon
immediate 34near_term 72medium_term 42long_term 17unspecified 103
Verifiability
quantitative 33event 28qualitative 207
Analyst Intent
probing 7challenging 1confirming 3seeking_detail 6seeking_guidance 2

Speakers

Executives
AEAshok ElluswamyexecutiveEMElon MuskCEOLMLars MoravyexecutiveVTVaibhav TanejaCFO
Analysts
ANAndrewanalystCLColin LangananalystDLDan LevianalystEREmmanuel RosneranalystGGGeorge Gianarikasanalyst
Other
TATravis Axelrodir

Sections

TypeLabelSpeaker
preamblePreambleTravis Axelrod
prepared_remarksPrepared RemarksElon Musk, Vaibhav Taneja, Travis Axelrod
qa_sessionQ&A Session—
closing_remarksClosing RemarksVaibhav Taneja, Travis Axelrod

Q&A Exchanges 5

#AnalystFirmTurns
1
EREmmanuel Rosner
Wolfe Research3
2
ANAndrew
Morgan Stanley6
3
DLDan Levi
Barclays3
4
GGGeorge Gianarikas
Canaccord3
5
CLColin Langan
Oppenheimer7

Claim Taxonomy 268

REPORTING29
resultFinancial outcome for a completed period19
metricNon-financial quantitative fact3
operationalDiscrete completed event7
PROJECTING28
guidanceQuantitative expectation with number + time6
commitmentPromise with binary verifiable outcome20
targetLong-term aspirational quantitative goal2
POSITIONING158
strategyPriority, direction, or initiative119
competitiveCompany's position or advantages13
opportunityMarket condition framed as growth driver6
riskHeadwind, constraint, or uncertainty20
EXPLANATORY34
attributionWhy a specific outcome happened5
contextNon-company macro/industry fact29
FRAMING0
thesisFalsifiable belief about how the world works0
ANALYST19
questionInterrogative seeking information11
observationRestates a fact or data point7
concernFlags a risk or challenge1
estimateAnalyst's own projection or calculation0
sentimentOpinion, praise, or critique0

Transcript

Preamble
TA
Travis AxelrodirTesla
Good afternoon, everyone, and welcome to Tesla's fourth quarter 2025 Q&A webcast. My name is Travis Axelrod of Investor Relations. I am joined today by Elon Musk, Vaibhav Taneja, and a number of other executives. Our Q4 results were announced at about 3 PM Central time in the update deck we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC.
During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please use the raise hand button to join the question queue.
Before we jump into Q&A, Elon has some opening remarks. Elon?
Prepared Remarks
EM
Elon MuskCEOTesla
Thanks, Travis. So I have updated the Tesla mission to amazing abundance, and this is intended to send a message of optimism about the future. I think we are most likely headed to an exciting, amazing era of abundance. I think with the advent or continued growth of AI and robotics, I think we actually are headed to a future of universal income, not universal basic income, but universal high income. There is going to be a lot of change along the way, but that is what I see as the most likely outcome. So I think it makes sense to update Tesla's mission to reflect that goal. Obviously, along that way, we are going to keep improving safety, driving down the cost of goods, and getting people access to anything they need without compromise.
Making sure that the environment is great, nature is great, and people can have whatever they want, which seems like probably the best future. Open to other ideas, but that sounds like the best future you could possibly imagine. I guess it would be that everyone can have whatever they want, including amazing medical care, but we still keep the beauty of nature and Earth. I think that's probably the best outcome.
We are seeing the first steps along that way this year for Tesla, post major steps. As we increase vehicle autonomy and begin to produce Optimus robots at scale, we are making very big investments. This is going to be a very big CapEx year, as we will get into. That is deliberate because we are making big investments for an epic future.
I think all these investments make a lot of sense. We will continue to make sure that when we do spend capital, it is spent very efficiently. But it's a lot of things, major investments in batteries and the entire supply chain of batteries. We are also going to be significant manufacturers of solar cells, and we are making massive investments in AI chips. I think these all make a ton of strategic sense.
I guess I have one, not exactly bad news, but it's time to bring the Model S and X programs to an end with an honorable discharge. We are really moving into a future that is based on autonomy. If you are interested in buying a Model S and X, now would be the time to order it because we expect to wind down S and X production next quarter. We will obviously continue to support the Model S and X programs for as long as people have the vehicles. But we are going to take the Model S and X production space at our Fremont factory and convert that into an Optimus factory with a long-term goal of having a million units a year of Optimus robots in the current SX space in Fremont. That is slightly sad, but it is time to bring the SX programs to an end and shift to an autonomous future. As my profile picture on X for a few months there, the future is autonomous. With respect to self-driving and robotaxi, people are obviously following with very close attention the progress of FSD, and you can experience it for yourself.
If you have a Tesla, you notice with every software update, the car gets better and better at autonomy. We were able to do our first rides with no safety monitor in the car in Austin. These are paid rides, randomly selected paid rides with no safety monitor. I think maybe as of yesterday or so, we actually do not even have a chase car or anything like that. These are just cars with no people in them and no one following the car in Austin.
We are obviously being very cautious about this because we want to have no injuries or serious accidents along the way. I think it makes sense to be very cautious. You will see the amount of autonomy increase dramatically, I think, every month, essentially. There will also be an opportunity, something we have talked about for a long time, for existing owners of Teslas to add or subtract their cars to the fleet, kind of like how Airbnb works where you can add or subtract your house to the Airbnb inventory. I think probably the value of the Tesla, the sort of partial people adding or subtracting the car to Tesla's autonomous fleet, is probably a little underweighted by a lot of people because we have millions of cars with AI4 that can do this. It might potentially provide an opportunity for a lot of customers to earn more lending their car to the fleet than their lease cost to Tesla. Which is kind of like you get paid to own a Tesla. It's quite a good scenario.
We expect to have fully autonomous vehicles in probably somewhere between a quarter and half of the United States by the end of the year, pending regulatory approval. A big factor would be if there's some kind of federal preemption for autonomous vehicles. In the absence of that, you have to go on a city-by-city or state-by-state basis. Nonetheless, even if it is city-by-city, state-by-state, we expect to be in dozens of major cities by the end of the year. With respect to energy, the Tesla energy team has done incredible work. The growth rate on that work is continuing to be very strong. We are building more manufacturing capacity and expect that energy will have very high growth for as far into the future as we can imagine. The solar opportunity is underestimated. We think the best way to add significant capability to the grid is solar and batteries on Earth and solar in space. That's why we are going to work towards getting 100 gigawatts a year of solar cell production integrating across the entire supply chain from raw materials all the way to finished solar panels. Maybe a bit more about Optimus. We will probably unveil Optimus 3 in a few months. I think it's going to be quite surprising to people. It's an incredibly capable robot. As I mentioned, we are replacing the SX line in Fremont with a million unit per year line of Optimus.
Now because it is a completely new supply chain, there's really nothing from the existing supply chains that exist in Optimus. Everything is designed from physics first principles. That means the normal S curve of manufacturing ramp will be longer for Optimus than it is for products that have at least some portion of an existing supply chain. When everything's new, the production rate will be proportionate to the least lucky, least confident part of the entire supply chain. If there's 10,000 things that need to go right, it only takes one to be slow to lag that. It will be a stretched-out S curve.
I'm confident that we'll get to a million units a year in Fremont of Optimus 3. This Optimus really will be a general-purpose robot that can learn by observing human behavior. You can demonstrate a task or verbally describe a task or show it a task. Even show it a video, it will be able to do that task. It's going to be a very capable robot.
I think long-term Optimus will have a very significant impact on the US GDP. It will actually move the needle on US GDP significantly. In conclusion, there are still obviously many who doubt our ambitions for creating amazing abundance. We are confident it can be done, and we are making the right moves technologically to ensure that it does.
Tesla has obviously never been a company to shy away from solving the hardest problems. I think that's kind of how you build value in a company is you solve hard problems. I don't know how you create value by solving easy problems. There's a lot of hard problems that the Tesla team is going to solve, but it's an incredibly talented, hardworking team. I'd like to thank everyone at Tesla for their incredible hard work. It's an honor to work with such a talented group. Thank you to everyone who is supporting this mission. The future is more exciting than you can imagine.
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TA
Travis AxelrodirTesla
Fantastic. Thank you so much, Elon. Next, we have some remarks from Vaibhav. Go ahead.
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VT
Vaibhav TanejaCFOTesla
Thanks, Travis. Q4 2025 was an interesting quarter in a couple of respects. On the autos front, while in Q3, we saw a surge in US demand before the higher consumer credit cliff, pulling in some demand from Q4. In other parts of the world, we saw an increase in demand leading to record deliveries in smaller countries like Malaysia, Norway, Poland, Saudi Arabia, and Taiwan. While continued strength in the rest of APAC and EMEA. We therefore ended 2025 with a bigger backlog than in recent years. Note that none of these countries have the latest version of FSD available yet. On the storage front, we hit yet another record in terms of deployments. I would like to thank our customers and Tesla for continuing this momentum. On the automotive margins front, automotive margins, excluding credits, improved sequentially from 15.4% to 17.9%. Automotive gross profit was flat sequentially despite 16% lower deliveries, primarily due to regional mix as we had proportionately more deliveries in APAC and EMEA. As we look to 2026, with the progress that has been made with autonomy, our focus is on ramping production at all our factories.
Our biggest constraint globally continues to be on the battery pack front. While our teams have been creative in trying to resolve the situation by now putting 4,680 cells in nonstructural packs, we continue to iterate improving things from here on. FSD adoption continued to improve in the quarter, reaching nearly 1,100,000 paid customers globally. Of these, nearly 70% were upfront purchases. It is important to note that beginning this quarter, we are transitioning fully to a subscription-based model for FSD. Therefore, net additions to this figure will primarily be via subscription model and, in the short term, will impact automotive margins. On the energy front, we achieved yet another record in terms of gross profit for the quarter and ended the year with nearly $12.8 billion in revenue, a 26.6% year-over-year growth.
This was the result of high deployments in all regions and continued strength in demand for both MegaPack and Powerwall. As we look at 2026, our backlog remains strong, well-diversified globally, and we expect increasing deployments with the launch of MegaPack 3 and Mega Block. However, we expect margin compression from the increased low-cost competition impacts to market from policy uncertainty, and the cost of tariffs. Services and others margin declined from 10.5% to 8.8% primarily from higher employee-related costs for service centers as we start preparing for the ramp in activity from the growth in the fleet size. We did see an improvement in margin from our supercharging business, which is included within services and other. Additionally, note that our robotaxi business-related costs, while not material, are also included within this. Given that we're still in the early phase of our fleet deployment, are still doing a lot of validation testing. The revenue and cost per mile metrics are not meaningful to discuss at the moment. On total gross margin front, we ended the quarter with over 20.1%, something which we haven't achieved for over the last two years.
This improvement came despite the impact of lower fixed cost absorption and the impact of tariffs, which were in excess of operating expenses increased sequentially $500 million in Q4, primarily from increased stock-based compensation for employees and as we started recording charges on for one operation Maestro under our 2025 CA performance award. That was deemed to be probable over the work term. Additionally, our spend on AI-related initiatives and new products like CyberCab, Semi, Optimus, and MegaPack, etcetera, continues to be at elevated levels and we expect this trend to continue for the full year 2026. Net income was negatively impacted from mark-to-market charges on a Bitcoin holding, which depreciated 23% as compared to the last quarter, and the impact of unfavorable impact of FX, primarily from our large intercompany borrowings.
On the free cash flow front, we ended up at $1.4 billion. We did end up CapEx being slightly below our previous guidance of $9 billion. But like, as Elon already mentioned, this year is going to be a huge investment year from a CapEx perspective. At the moment, we are expecting that CapEx would be in excess of $20 billion.
We will be paying for six factories, namely the refinery, LFP factories, CyberCab, Semi, a new mega factory, the Optimus factory. On top of it, we'll also be spending money for building our AI compute infrastructure and we'll continue investing in our existing factories to build more capacity. And then, you know, also the related infrastructure along with it. We'll also further expand our fleet of robotaxi and Optimus. While this may seem a lot, we believe this is the right strategy to position the company for the next era. We'll make such investments, as Elon mentioned, in a very capital-efficient manner. Note that this does not include potential investments in solar cell manufacturing or our tariff fab as we are still in the early phase and we plan to provide an update in future quarters. Starting not the next chapter, but a new book on the progression of this company. 2026 would be when all of this began. While at times it feels daunting, it is going to be the most exciting change in Tesla's history and we could not have even dreamed of embarking on this journey without the support of our customers and our investors. For again showing the confidence in us, let's get ready for a future of amazing abundance. Thanks.
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Q&A Session
Q&A 1/5
TA
Travis AxelrodirTesla
Awesome.
With that, we're going to move on to analyst questions. The first analyst is Emmanuel from Wolfe Research. Emmanuel, please feel free to unmute yourself.
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ER
Emmanuel RosneranalystWolfe Research
Great. Thank you so much. It's Emmanuel Rosner from Wolfe Research. My first question is on CapEx. You signal a pretty large increase to over $20 billion for this year. Was hoping to better understand where the investments are going. Any way to dimension for us which of the product line or technologies account for the bulk of the increase?
Also, do you view this as one-time in nature for 2026? Or how much of this is an ongoing level of high spending for a number of years? Finally, still on that level of spending, you're going to be burning cash. Should we think about cash balance or any other way to finance this?
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VT
Vaibhav TanejaCFOTesla
Yeah. So, Emmanuel, I tried to put this in my opening remarks too, but I'll try and go a little bit deeper. There's about six factories which we are starting production in this year. So there's a lot of cash CapEx which is going into that. Then as we are trying to scale Optimus, we need a lot more compute. We're putting more money towards compute as well.
And then for training. Training. Yeah. We're also going to be spending money to expand the capacity at our existing factories.
On top of it, just keep in mind that none of these numbers which I shared of $20 billion factors and anything to do with the solar fab or the semiconductor chip fab. Those would be, as Elon had mentioned, would come later on. Your second part of your question was, is this one-off or would we expect more? I think we're getting into this investment phase because we have big aspirations. You look at it, some of these aspirations are I call them infrastructure play. Especially if you have to do a chip fab and we have to do a solar cell manufacturing fab. Those are infrastructure plays. That funding takes a little bit longer. Your third part of your question was, how are we going to fund it? Initially, obviously, we have over $44 billion of cash and investments on the books. So we'll use our internal resources, but there are ways where we can fund it especially when we look at the robotaxi fleet because anytime you have a consistent stream of cash flow, you can go and get money from the banks. We have had conversations with banks about it. That is something how we're going to do it. On the infrastructure play side, like I said, we don't have a number yet. But given that it's an infrastructure play, it's a longer tail, we will have to look at a little bit more in terms of how we fund it. Whether it's through more debt or other means.
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Q&A 2/5
TA
Travis AxelrodirTesla
Great. Our next question comes from Andrew from Morgan Stanley. Andrew, please feel free to unmute yourself.
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AN
AndrewanalystMorgan Stanley
Great. Thanks so much for taking the question. I just want to start on the DXAI investment that you guys announced today. You talked about there being some collaboration between the companies. So just hoping to get more information or you're hoping you could shed more light on what that looks like and maybe how the work AI is doing can be leveraged at Tesla and vice versa.
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VT
Vaibhav TanejaCFOTesla
Yeah. I mean, if you looked at the disclosure, which we also put in there, we do talk about this is literally furtherance of our master plan four.
Even today, if you look at Tesla vehicles, we are using Grok in there. As we look at things whether we can do it ourselves, yes, there are a lot of things which we can do ourselves. But if there are things which XAI can help accelerate our progress, then why should we not do that? That is the reason why we've gone ahead with such an investment because this is part of the strategic initiative because as it is, if you remember, I talked about how many things which we are doing ourselves. If there are ways and means we can find efficient ways for others to help us, XAI literally fits into that mold. That's why we went ahead with it.
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EM
Elon MuskCEOTesla
We just had a lot of investors ask us to do this. There was a lot of investor but Tesla shareholders said, like, we should invest in XAI. So that's like we're just doing what shareholders would ask us to do pretty much.
But Grok will be, I think, very helpful in, say, maximizing the efficiency of the management of a large autonomous fleet. If you've got an autonomous fleet that's in the future, 10 million vehicles or tens of millions of vehicles, then optimizing the efficient use of that fleet, Grok will be way better than any heuristic solution. Or manually managed solution.
If you set up managing, say, a large team of Optimus robots to build a factory or build a refinery, you know, and say a rare hypothetical like a this is a hypothetical example. A rare earth ore refinery. Which we do desperately need in America. Then you'd say, well, what's going to organize the Optimus robots to build that ore refinery?
You kind of need an orchestra conductor. So then Grok would be kind of the orchestra conductor. For the Optimus robots to build the hypothetically, an it might not be hypothetical in the future.
I'm just saying it's not currently on our plans. But we do need a lot more ore refining capacity in the US. So then what's going to manage, let's say, a thousand Optimus robots?
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TA
Travis AxelrodirTesla
You're on mute right now, so I'm not sure if you're trying to ask a follow-up question.
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AN
AndrewanalystMorgan Stanley
Ready.
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Q&A 3/5
TA
Travis AxelrodirTesla
We're going to move on to the next question, which is coming from Dan Levi at Barclays. Dan, please feel free.
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Dan LevianalystBarclays
Great. Thank you. Elon, you talked about some of the constraints on memory. Given the very tight supply, are there any near-term constraints on procuring memory? If there are, to what extent could you look at modifying the functionality similar to what you did in '21 when we saw shortages on MCUs and maybe how are you thinking about bridging in the next few years?
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Elon MuskCEOTesla
Well, at Tesla, the Tesla AI is very compute efficient and very memory efficient.
I think one of the metrics I want you to consider for any given AI model is the intelligence per gigabyte. Especially when you're constrained on RAM. Having an AI that has very high intelligence density per gigabyte, you can say, like, for a given number of gigabytes, how much functionality can you get out of it? I actually think Tesla is ahead of the rest of the world in intelligence density of AI by an order of magnitude or more. This is going to sound like a pretty bold statement, but I kind of know what the intelligence efficiency of the big models are like Grok. The honest and a bunch of the other models. Tesla's AI is, in terms of memory efficiency, I think more than an order of magnitude better.
So that puts us in a pretty good position, actually, for scaling. We do think that there's we do have a solution for logic and memory for, let's say, the next roughly three years. But if you start going beyond three years, and we look at the scaling plans, and how many fabs are getting built, especially if you factor in geopolitical uncertainty, there's always risk that maybe those chips don't arrive that people were expecting to arrive. That's why I think we need to have more fab capacity in the US. Just in case. Chips don't stop arriving for any reason.
This is really existential for Tesla because if Optimus is completely useless without an AI chip. It's not like at least the cars we can put steering wheels and pedals in. Or retrofit them if need be. But Optimus is just a mannequin without, it's like the Tin Man or whatever The Wizard of Oz. But even worse, at least the Tin Man could walk. Optimus won't even be able to just sit there without an AI chip.
We've got a good solution for a significant scale through for the next roughly three years. Beyond that, we will be supplier limited and so we've got to figure out some game plan to not be supplier limited.
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Q&A 4/5
TA
Travis AxelrodirTesla
Great. Our next question is going to come from George at Canaccord. George, please feel free to unmute yourself.
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George GianarikasanalystCanaccord
Hi, everyone. Thank you for taking my question. There's been a surge of startups, particularly from China entering the humanoid market.
I'm wondering what the long-term competitive advantages that keep Tesla ahead are and how based on what you've seen will Optimus fundamentally differ from these competitors? Thank you.
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Elon MuskCEOTesla
Well, I do think that by far, the biggest competition for humanoid robots will be from China.
China is incredibly good at scaling manufacturing. Actually quite good at AI as you can see from the open-source, not the open-source, but the sort of I guess, some of them are open, actually. But, basically, the models that China's distributing for free are actually quite good and they keep getting better. China is very good at AI, very good at manufacturing, and will definitely be the toughest competition for Tesla.
To the best of our knowledge, we don't see any significant competitors outside of China. But China will definitely be tough competition. There's no two ways about it. I always think people sort of outside of China kind of underestimate China. China's next level. We think Optimus will be much more capable than any robot that we are aware of under development in China.
We think we'll be ahead in terms of the real-world intelligence, the electromechanical dexterity, especially the hand design, which is by far the hardest thing in the robot. In fact, I'd say there's really three hard things about humanoid robots. Building an incredible hand that has the same degrees of freedom and dexterity as a human hand is an incredibly difficult engineering challenge. Then there's the real-world AI and scaling production. Those are the three hardest problems by far for humanoid robots. I think Tesla is the only company that actually has all three of those components.
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Q&A 5/5
TA
Travis AxelrodirTesla
Great. Our last question is going to come from Colin at Oppenheimer. Colin, please feel free to unmute yourself.
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Colin LangananalystOppenheimer
Thanks so much. You talked a lot about the CapEx spend, but this is an incredibly ambitious technology development program that you're talking about. Can you talk a little bit about the R&D spend and how you're thinking about the synergies of the different components, particularly on the hardware side? If you think about batteries into and the memory and the efficiency of the system, and what sort of advantages you think you'll end up getting out of some of these purpose-built devices that you'll end up integrating into multiple end markets?
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Elon MuskCEOTesla
Well, really, all we're trying to do is make sure that we can scale to a very high volume with autonomous vehicles, with humanoid robots. And that we address geopolitical risk. Which I think there are so many companies out there that are asleep with the switch with regard to geopolitical risk.
They're like or they just have their head in the sand and hope nothing bad will happen. I'm way more paranoid than that. Always think of Andy Grove's famous statement, only the paranoid survive. Why did he come up with that statement at Intel? Let's think. I think there's a lot of wisdom in that statement. We're going to be paranoid. Make sure that we can continue to build batteries and robots and AI chips no matter what happens. Companies that don't do that, a bunch of them will cease to exist.
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Vaibhav TanejaCFOTesla
Yeah. Remember, all this comes out of necessity. It's not that we want to do it. It's just we have no choice.
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Elon MuskCEOTesla
Yeah.
We're building the most advanced lithium refinery in the world, by the way. It's not just like, our lithium refinery in Corpus Christi is not just a copy of what others have done. It's an entirely new process that is fundamentally more efficient and more advanced than anything else in the world. The same is true of our cathode refinery here in Austin.
We wish others would build this. Can other people please, for the love of God, help? In the name of all that is holy, can others please build this stuff? It's not the first time you host. Exactly.
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Vaibhav TanejaCFOTesla
This is not the first time you've said something like this.
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Elon MuskCEOTesla
Why do we have to build these things? Why can others not also please build these things? It's very hard to build these things. We build them out of desperation.
Not because nobody else is building lithium refineries and cathode refineries. We're pretty much the not just the largest, but also the only lithium refinery and cathode refinery in America. We're making moves to make sure that no matter what happens, Tesla will prosper.
Closing Remarks
TA
Travis AxelrodirTesla
Great. Unfortunately, that's all the time we have for Q&A today. We really appreciate everyone's questions, and we look forward to talking to you next quarter. Thank you very much, and goodbye.
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Vaibhav TanejaCFOTesla
Alright. Cool.
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