00:00Heat
00:09[music] Heat
00:19[music] >> [music] [music] >> Heat
00:36Heat
00:38[music] >> [music] [music] >> Heat
00:57Heat
01:03Heat
01:10Heat
01:17[music] [music] [music] >> [music] [music] >> Hey, hey, hey, hey, hey, hey, hey, hey
01:47[music] Heat
02:08Heat
02:11[music] Heat
02:15Heat
02:23[music] [music] Heat
02:38[music] [music] [music] Heat
03:00[music] Heat
03:03Heat
03:06N
03:09[music] Heat
03:14[music] Heat
03:27[music] [music] >> [music] [music] [music] >> Heat up here
03:59[music] Heat
04:02Heat
04:05N
04:08[music] Heat
04:21Heat
04:34[music] [music] >> [music] [music] >> Heat
04:40Hey, heat
04:47Hey, heat
04:50Heat
04:54Heat
04:57N
05:01[music] Heat
05:04Heat
05:13[music] Heat
05:14Heat
05:21[music] >> [music] >> Heat
05:38Heat
05:43[music] >> [music] >> Good afternoon, everyone, and welcome to Tesla's second quarter 2026 Q&A webcast
06:02My name is Travis Axrod, Head of Investor Relations, and I’m joined today by Elon Musk, Vivek Taneja, and a number of other executives
06:09Our Q2 results were announced at about 3 p.m
06:12Central Time in the update deck we published at the same link as this webcast
06:16During this call, we will discuss our business outlook and make forward-looking statements
06:21These comments are based on our predictions and expectations as of today
06:25Actual 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
06:35During the question-and-answer portion of today’s call, please limit yourself to one question and one follow-up
06:38Please use the raise hand button
06:40To join the question queue
06:43Before we jump into Q&A, Elon has some opening remarks
06:45Elon
06:47[clears throat] >> Uh, thank you
06:49So, yeah, it's been a great quarter
06:51We achieved a record Q2 delivery count
06:54Um, Model Y, I believe, is now, I think, the best-selling car of any kind in the world and is setting records across the board
07:02So, its popularity is increasing tremendously
07:05And we're seeing in, uh, in locations that have FSD approved, we're seeing a very high tick rate of FSD
07:13And, in fact, I think for a lot of people, they're actually buying Tesla Full Self-Driving with a car attached, as opposed to a car with FSD
07:24They're coming into our stores, uh, in the US, and saying they want the Full Self-Driving
07:28And, and uh, with whatever car it comes with, essentially
07:33So, uh, clearly, this is a significant, uh, demand driver, and as we get approval for FSD and in different countries, I think we'll see a similar uptick in demand
07:48Um, so, um, yeah, it's looking very good on that front
07:53The energy at your business is also growing incredibly fast, and I think it will be crucial for the scale-up of artificial intelligence data centers
08:04Um, we're investing a lot in growing the core business and really preparing for the future
08:13So, this is a massive CapEx year, but I'm confident that all the things we're investing in are what will yield incredible returns, really, I think
08:27The best capital expenditure returns that we've ever seen
08:30And just the, you know, Tesla team has performed incredibly well
08:36The Semi has started production, and we also have started production and ramping in, well, we will soon stop production of the Optimus
08:52We have started production with the Tesla Semi-truck
08:54We will soon stop production of the Mega Pack 3
08:56We've started production with the lithium refinery, the cathode refinery
08:58We also have, we're scaling up battery cell production, and we're also preparing to do a massive solar cell and panel production
09:13Actually, this is going all the way from silicon refinement to producing the final solar modules
09:17Solar cells, and then the deployment of solar because there's going to be a tremendous need for electricity in the future due to electrification of transport and AI, obviously
09:34So, we're working on what we believe is the most ambitious buildout of advanced infrastructure manufacturing capacity ever in history
09:40It's a big deal
09:43So, with RoboTaxi, our goals are very ambitious for RoboTaxi, but we do need to be cautious about causing any accidents or harm to anyone
09:56Although there are, I think, 30,000 to 40,000 automotive deaths per year in the United States alone, most of those do not generate any press when they occur; you know, there you never really hear about them
10:09About almost any of those
10:12But if we injure even one person, it'll be worldwide headline news
10:17And regulators will immediately clamp down on our activities
10:22So, and we don't want to injure anyone
10:24We're going as fast as humanly possible in scaling Robo-Taxi, but while trying to ensure that we do not harm anyone at all, and ideally, do not even run over a pet
10:39So, that’s really the constraint: we want to grow as fast as possible with Robo-Taxi without harm to anyone
10:51We’re providing live updates for the Robo-Taxi launch as we open up in the city
10:57We immediately post those on X
10:59So, if you just follow the Tesla account on X, we’ll keep you informed as we scale
11:04To new cities
11:07Um, we've opened up in a number of cities in Florida and in Texas, uh, and obviously in the Bay Area
11:16So, we'll continue to scale very, very rapidly, with more than 10% growth per week in terms of miles driven
11:27So, it's a very high compound growth rate
11:32So, let's see
11:36Optimus
11:40Um, you know, as you've heard me say before, I think Optimus will be the biggest product ever, but it is a very complex problem to solve
11:44Um, it's one of the hardest things to solve—to create an autonomous humanoid robot that can perform tasks just by asking it to do something or showing it a video
11:59It can do the task without any programming
12:01Um, no one's..
12:03Achieved this
12:05Um, and there are many challenges in the electromechanical design of the robot to achieve sufficient dexterity, reliability, and long wear and tear
12:22Meaning it needs to be out in the field and not break down
12:26Otherwise, you've got a 70 kg robot that just flops over, and you have to carry it like a body—you know, no wheels
12:36So, and we don't want Optimus to go haywire
12:40Um, so, it's a lot of work to scale and get the design right, and to scale production
12:51And I really want to emphasize here that the production scaling challenge is very, very substantial
12:59This is going to be the hardest product to..
13:02Scale manufacturing that we've ever made at Tesla because everything on the robot is new, and the difficulty of scaling the production ramp is proportionate to the newness of the parts in the robot
13:14It's, and you know, at least with electric cars, the non-electric powertrain portions of the cars had an existing supply chain
13:25So you could go to existing suppliers for wheels, side mirrors, windshield glass, and that kind of thing, body panels
13:35But with Optimus, there is no supply chain
13:39So, we've had to build up a supply chain in its entirety, or in-house, for production
13:44We've actually in-house a tremendous amount
13:48The Optimus production line that we..
13:52Building out in Fremont, in place of what used to be the Model S and X production, it looks incredible
13:58I mean, it's quite stunning to see
14:00So, I just want to make sure to calibrate people correctly
14:08It’s the typical S-curve of manufacturing ramp-up, but the initial portion of the X-curve will be quite flat and long because of the newness of the parts in the robot
14:33You've probably seen many impressive demonstrations of robots on the internet, but those demonstrations you're seeing are pre-programmed or remotely controlled
14:40There is no humanoid robot that is actually able to perform generalized tasks — Optimus
14:49It will be the first one that is capable of doing that, where it's not just a demo, but genuinely useful in day-to-day life
15:00So, and Optimus is designed to have full human dexterity, with a hand that has the same level of dexterity, if not higher, than a human hand
15:08And the human hand is an incredible, incredible thing
15:12The more you study the human hand, the more amazing you realize how it works
15:16Hands are more than just opposable thumbs; the nuances of how human hands operate are astonishing
15:28The closer you look, the more amazed you become
15:29And Optimus will have that capability, combining human and then superhuman dexterity
15:36So, it's really going to be..
15:40Quite something
15:51Um, let's see
16:03Terrafab, um, you know, the Terrafab, we expect to announce the location soon, um, and provide more details about our plans in that regard, which, but we'll leave that to the product launch announcement rather than try to squeeze it into an earnings call because I think this is a very big announcement, and it deserves to have its own day in the spotlight and not be squeezed into an earnings call
16:14But I do think Terrafab is going to be an amazing initiative and a necessary one, and one without which we will be constrained in our ability to scale Optimus production because we simply won't have enough AI chips
16:32So, it's crucial to solve that, and we..
16:34We'll have to solve memory, logic, and packaging issues in order to scale Optimus
16:45But anyway, like I said, we'll leave that to its own announcement
16:48We've placed equipment orders for our development fab in Austin
16:53That development fab, I think, is pretty cool because it’s intended to have lithography, mask production, logic, memory, packaging, and chip testing all under one roof
17:10This allows for a very fast iterative cycle and the ability to try out new chip designs very quickly and see if they work
17:19I don't think such a building exists anywhere on Earth
17:24So, this is really going to be super helpful as we pursue some exciting, adventurous, high-risk, high-payoff bets on AI chips
17:35Focus, like I said, mainly on Optimus, on how do we make Optimus as useful as possible
17:45Then we have Digital Optimus, which is basically driving a computer screen
17:58I guess you could call it computer use or something like that, but driving a computer screen in the same way that you drive a car
17:59For the car, it's sort of pixels in or photons in, and controls out
18:06The same thing is true for Optimus and Digital Optimus: it's photons in, controls out
18:10So, we feel confident we can adapt the same Tesla AI technology that we developed for self-driving cars to have a self-driving computer screen or self-driving computer, essentially
18:25So, the self-driving computer, where..
18:30The Tesla, um, the very low-cost Tesla AI4 computer can handle all of the short-term tasks
18:38They're doing real-time video control of the computer screen
18:43Uh, so it's not like screenshots type of thing; it's real-time video at a high frame rate
18:48And this Digital Optimist will be important, obviously, for physical Optimist because physical Optimist needs to be able to operate computers, like it can't come up to a touchscreen and not know what to do
19:04It's got to have a generalized touchscreen and computer use capability
19:11Um, so that's looking promising
19:13And, um, this is in partnership with SpaceX
19:18SpaceX is Brock's sort of the big model that is kind of like the manager of Digital Optimist
19:23And um, and kind of tells Digital Optimus what to do
19:29Uh, it provides it with a series of tasks, and then Digital Optimus goes and does those tasks
19:37Um, so, um, we're also building out a MegaPod design that has Tesla AI4 computers with x86 processors
19:50This is a pairing, an x86 computer with the Tesla AI4 computer in a box
20:02And it's kind of just Digital Optimus in a box
20:04Um, and in a MegaPod, you know, kind of like the Mega packaging
20:13And so, where we put just a large number of AI4 plus x86 combos in a giant box, essentially
20:26Um, and these boxes can be placed anywhere in the country or outside the country
20:31Um, and this allows us to scale AI compute using this aggregated electricity
20:38Production
20:42So you, because there are lots of places all around the world, including at our Superchargers
20:45I think we've got something like seven gigawatts of power at our Superchargers and growing
20:50And we can place Megapods at many of these Superchargers and have distributed power for AI
21:00So I think that could be quite a big deal
21:06 In conclusion, we're very excited about our autonomy and robotics roadmap
21:09There's so much amazing stuff coming
21:14It's, like I said, hard to squeeze into an earnings call, but we'll have a lot of product announcements
21:18 This is going to be a great year for Tesla, I think one of our best years ever
21:26And I believe next year will be even better
21:30Even better
21:34So, in conclusion, I want to thank the Tesla team for their excellent execution and all of our supporters for joining us on this journey
21:36Thank you
21:38 >> Great
21:40Uh, thanks so much, Elon
21:42Uh, and now, Veov has some opening remarks
21:45 >> Thanks, Travis
21:48So, Q2 continued the trend that we saw at the end of Q1, a resurgence in demand for vehicles across the globe
21:52We achieved record Q2 deliveries worldwide with sequential growth across the Americas, APAC, and EMEA of 60%, 27%, and 12%, respectively
21:59Additionally, the Model Y set records in several key markets, including the Netherlands, Australia, and New Zealand
22:10The efforts of the Tesla team to create compelling products at a reasonable price with the The capabilities of autonomous driving are coming to fruition
22:18We exited Q2 with our largest order backlog since 2023
22:23We are therefore focused on increasing production at all our factories to meet this growing demand
22:33Production growth will be limited by our supply chain
22:35This includes not just batteries but also electronic components
22:40We've been here before, and, as always, our Tesla team is working actively to unblock the obstacles ahead by securing strategic deals with suppliers
22:51 Like Elon mentioned, one of the key factors for growth in vehicle demand has been FSD
22:56Our sales data suggests that one of the main reasons people are coming and looking at the car is because of FSD
23:03In Q2, we had in North America about..
23:0955% of our deliveries had FSD subscription at the time of delivery enabled
23:16Overall, FSD attach rates continue to improve, reaching nearly 1.5 million paid subscription customers globally, of which 55% are upfront purchases and the remaining 45% are subscriptions
23:28We expect that the bulk of the growth in FSD monetization will come from subscriptions, as we've removed the purchase option in most markets
23:40Automotive margins, excluding regulatory credits, declined sequentially from 19.2% to 16.3%
23:47As a reminder, we had highlighted in Q1 that we had a $230 million benefit from warranty resets and some tariff relief, which did not repeat in Q2
24:02Controlling for the impact of those benefits from the prior quarter, Our automotive gross margins, excluding credits, would have been approximately flat
24:10This demonstrates the effective pricing and cost management carried out by the Tesla team as we continue to drive demand
24:20Commodity price increases and interest rate changes all continue to add to our costs
24:26Note that interest rate subvention costs are recognized upfront as revenue offset
24:31So, as interest rates have risen this year, the cost of subventions has risen along with them, which has had a negative impact on automotive margins
24:41As we have previously noted, the energy business is inherently lumpy
24:49Deployments are tied to customer timelines and largely out of our control
24:54In Q2, we deployed 13.5 gigawatt-hours of energy storage, a 53% increase
24:58Sequential increase and the second-largest quarter for the energy business
25:02Despite this growth, energy gross margins declined from 39.5% to 20.4%
25:08This margin decline was a result of several dynamics
25:14First, there was a warranty true-up in the quarter of about 240 million dollars related to Tesla vendor cell issues for our legacy deployments
25:24Also, the tariff benefits we recognized in Q1 of more than 200 million dollars did not repeat
25:33And lastly, we had previously guided that ASPs for industrial storage are coming down amidst growing competition
25:38Long-term, we believe the energy business should normalize at a gross margin rate in the mid to low 20% range
25:48Our order backlog for this business is robust, and we are doing our best to..
25:54Builds are based on both existing demand and future demand we expect from data center growth and overall electrification of the economy
26:00Service and other margins improved sequentially from 9.2% to 14.1%, an all-time high
26:08This was mainly driven by an uptick in volume and better cost management of our vehicle fleet that supports businesses such as used cars, supercharging, service centers, and insurance
26:22While marginal today, this also includes deliberate investments we are making in infrastructure that will help scale robotaxi in the future
26:33We continue to grow the Tesla robotaxi fleet and have expanded to a total of seven markets in the US
26:41We expect the ramp of the fleet to accelerate
26:43Throughout the year, along with expansion into new US markets
26:46As previously guided, operating expenses increased sequentially
26:49The increase came primarily from significant research and development activities, including pre-production ramp-up costs for new products like the Semi truck, Optimus, Cyberquad, and other AI initiatives, as well as the appreciation for additional compute capacity that we brought online
27:09Additionally, we had charges related to litigation expenses in the quarter
27:17Note that we are in a big investment cycle and expect our operating expenses, largely driven by R&D, to continue to grow in 2026 and beyond
27:27Net income was positively impacted by a mark-to-market gain of 1 billion on our..
27:34SpaceX holdings, which was offset by losses on FX of approximately 300 million dollars and on Bitcoin of about 100 million dollars
27:42As previously guided, our free cash flow ended up being negative for the quarter
27:49The main reason for this is that capex more than doubled sequentially, and we expect it to increase further in the second half of 2026
28:00We continue to expect that capex for this year will be more than 25 billion dollars
28:07Capex will grow over the next two or three years as we expand our robotaxi fleet, increase our production capacity for Optimus, make investments in semiconductor fabrication, install solar manufacturing capacity, and AI compute infrastructure
28:22In addition to all the other expansions we will undertake
28:28Other manufacturing for automotive, in addition to using our cash for such investments, we are being opportunistic in securing certain debt facilities that will give us the capacity to borrow up to 30 billion dollars to help accelerate such investments
28:43We believe this is the right strategy to position the company for the next era, and we'll always make such investments in a very capital-efficient manner
28:51The path to amazing abundance is ever challenging and requires making bold bets
28:55Our progress will not be linear
29:00The future is going to be great, and we are ready to rise to the occasion
29:06I would like to end by thanking the Tesla team, our customers, investors, and suppliers for their confidence in us
29:13Thank you very much
29:20As everyone on the call may have noticed, we've already covered several of the say.com questions in the opening remarks, including Optimus production, Terra AI, and Digital Optimus
29:27Ashoke is joining us today, our VP of AI, and he's going to cover questions related to RoboTaxi
29:31Ashoke, >> thank you, Travis
29:35Many of the questions on say.com relate to RoboTaxi deployment and scaling
29:39So, we thought we'd provide a comprehensive view of where we are now and where we are going in the future
29:46First of all, I'd like to state that the RoboTaxi program has been operating extremely well, especially in terms of safety
29:54The program has had an impeccable safety record
29:56We We have driven more than 380,000 miles of unsupervised robotaxi, now across six cities in two different states
30:02We have had zero notable incidents
30:09Any reports have been of other actors impacting us when we were stationary
30:15Again, I’d like to emphasize how safe the operation has been so far: zero notable incidents over 380,000 miles
30:22Historically, the so-called experts have always claimed that you need LiDAR, radars, HD maps, and the entire kitchen sink to drive safely
30:32Here, we show that such is not true
30:34You can have safe, comfortable, and affordable autonomy with just cameras
30:39This record should be a huge validation of Tesla’s entire AI approach
30:44Second, I’d like to discuss scaling
30:47We started the robotaxi..
30:51program roughly a year ago in Austin
30:54We had safety monitors in the passenger seats of the cars back then
30:58Around the end of last year, we had the first fully unsupervised Robotaxi in Austin
31:03Since the beginning of this year, we have grown at double-digit growth rates in the number of unsupervised miles that the fleet drives every week
31:13I repeat, we have grown at such a high compounding rate on a week-over-week basis over the last several months
31:20Not only that, we expect to continue growing at such a large rate throughout the rest of this year
31:27The other thing to note is that expanding to new cities has been relatively less effort on our front
31:32We expect that the time to launch in a new city will continue to trend downward
31:38Zero towards an end where we operate in entire states as a whole instead of going by city by city
31:45Such growth was only possible because we have a world-class engineering team at the forefront of AI development here at Tesla
31:53The currently operating robotaxi fleet is already running early versions of the V15 Full Self-Driving software that we had referred to in the past for V15
32:03We had planned roughly about seven major improvement tracks, and they're all happening in parallel
32:13The early V15 builds that are running on robots have already merged around 40% of those tracks, and that's what's running in the fleet right now
32:19As we continue to complete our work on V15, we will see that the car is going to be ridiculously..
32:25Safe and capable
32:31We're already seeing internal signs that all of these bets we have made for technology improvements are continuing to work
32:36Uh, and we expect that the payoff uh will be huge, and that's what will help us sustain the same growth rate uh through the rest of this year and beyond
32:49Finally, regarding the Cybertruck, first of all, it's a phenomenal product
32:55Anyone who rides in it instantly falls in love with the experience
32:59We have aligned our manufacturing targets to roughly match the projected growth rate of the unassisted miles
33:05The same V15 drivetrain that powers the Model Y and other platforms will also work on Cybertrucks
33:10In conclusion, robo-taxi growth so far has been..
33:13Literally exponential, while keeping an impeccable safety record
33:18Our technology bets are paying off, helping us sustain the exponential growth for the foreseeable future, and the Cybertruck is going to be awesome
33:22>> That's great
33:25Uh, thanks so much, Ashoke
33:29Um, and there was one remaining question on data collection for Optimus training
33:35Would you mind covering that as well? >> Yep
33:37Um, regarding Optimus, especially Gen 3, Optimus has been designed to not just match the appearance of human beings but also the functionality and dexterity of humans
33:47One of the main reasons for this approach is that having the human form factor and function allows us to learn from humans on how to perform a wide variety
33:57This opens up the entire world to provide data for training Optimus
34:02Just like FSD, we have access to a broad fleet of humans providing us data from all the workers at our factory
34:09Optimus can learn quite a bit from observing them perform their tasks at the factories
34:14We also have a dedicated data collection team who can provide a relatively small but high-quality amount of demonstrations for post-training of these models
34:25This is all on top of any training we can do off the entire internet of data that shows demonstrations of people performing various tasks, both in industrial and home settings
34:40The second flywheel is when we have a large number of Optimus robots practicing their..
34:46Tasks in what we call the Optimus Academy
34:50The data from the bots experiencing the tasks themselves will be invaluable and help us close any minor form factor gaps that may exist between the bot and humans
35:00This is also when the reinforcement learning loop kicks in, where the bot initially attempts some tasks, fails sometimes, learns from both the successes and failures of those tasks, and eventually learns to master those tasks at perhaps a superhuman level
35:15Our AI strategy for Optimus is aligned with the same end-to-end strategy that drives Full Self-Driving (FSD), Pixels, and Controls
35:22And just like FSD, we expect it to work broadly
35:26In FSD, you can get in the car, type in an address, and then hit start, and it's like… It handles all of the driving from park to park
35:35And the same thing is going to be true for Optimus as well
35:37You're going to just ask it to do anything, and then it will perform the entire task on its own without you having to do anything along the way
35:44And it's the same team that produced FSD, you know, the V12, V13, V14, and now V15 software that now works on Optimus as well
35:50Hence, I'm very confident that Optimus will be an extremely capable robot
35:52 >> Uh, great
35:54Thank you so much, Ashok
35:56Um, so that covers the Q&A questions
36:00Now we will move over to analyst questions
36:02The first question comes from Tom from RBC
36:04Um, Tom, please feel free to unmute yourself when you're ready
36:09Tom, you're still on mute
36:13So, please
36:17Unmute yourself and go ahead and ask your question
36:22All right, we're not getting any audio from Tom at the moment, so we will try to move on to Andrew, and we'll add Tom back to the queue to come in next
36:39Um, so, Andrew, as soon as you can, please unmute yourself and ask your question
36:44 Hey, can you hear me? >> Yes, we can
36:50 >> Awesome
36:55Thanks so much for taking the question
37:01So, maybe just to start out on Optimus, Elon, you mentioned that, you know, there's really no supply chain today for Optimus, so you've had to mostly insource a lot of that yourself
37:09I'm just curious, as you've gone through this exercise, are you seeing any suppliers willing to invest alongside you to set up? Domestic manufacturing to potentially help you scale more quickly in the US
37:22You know, asking that in the context of, obviously, you want to control your own destiny to some extent and ramp as quickly as possible, but from an investment cycle standpoint, it might be more capital-efficient to have some partners help you along the way
37:38So, I’m just curious how you’re thinking about that and some of the dialogue you’ve had with potentially some external suppliers
37:44>> Elon, you may be on mute right now
37:46We can’t hear you
37:47>> Sorry
37:49Yeah, our supplies have been great, and they have made, and are making, tremendous investments in support of… Optimus and RoboTaxi and whatnot
38:07Um, you know, Samsung and TSMC in particular are building fabs—TSMC in Arizona and Samsung in Texas—and putting in tens of billions of dollars to build AI compute for Optimus and RoboTaxi
38:26Um, Panasonic has also invested many billions in increasing battery cell production
38:32Um, oh, I'm a little, I'm a little, I'm a little under the weather here
38:43I'm a bit ill, so I sound a little off
38:46I'm kind of struggling with some, I'm a little bit ill today
38:50So, um, yeah, but our partners have been great, and I'd like to thank them for their support, their investment, and their hard work
38:58>> Great
38:59Thanks
39:01Thanks for that
39:02And maybe just as a >> So, sorry, Andrew
39:04We're going to have Kin hop in here for additional color briefly
39:10>> Yeah, [clears throat], just to add to Elon's point that the Samsung fab that’s going to be pretty significantly dedicated to future projects is a massive investment—multi-billion dollar
39:18We're seeing the same level of investment going into memory and also new specificities like metal injection molded parts, flexible printed circuits, and all sorts of nonlinear technologies that are more focused on robotics as opposed to the traditional vehicle supply chain
39:33We've had, and in certain cases where we don't find a great partner, we’ve never hesitated from in-sourcing it
39:42We have a very capable manufacturing engineering team and a design team that helps us scale those things
39:47>> Yeah, I'd actually also like to thank Micron for giving us memory allocation
39:50They’re going to make some very tough decisions on memory allocation, and we really appreciate Micron making room for Tesla in the years to come, and giving us actually very significant allocation on reasonable terms, given the pretty insane pricing of memory these days
40:08>> Great
40:10Really appreciate that color
40:12And maybe just my follow-up on RoboTaxis, you guys gave a lot of great, you know, information in your prepared remarks, but you know, there seem to be some evolving regulations at..
40:26The state-level potentially around sensor requirements
40:28So, I'm just curious, as you think about your own rollout, what do you want to see or what do you need to see from regulators to ensure that, you know, obviously some regulation might be good, but you don't want it to be overregulated
40:43So, what are you expecting to see? What do you want to see to make sure that this is done in a proper way? And we've got Lars on the line
40:49Um, Lars, if you wouldn't mind covering this one if you can
40:55>> Yeah, sure
41:02Um, I mean, I think you know we talk about regulation, particularly in the US, we've made a lot of headway, um, and you know, just good initiatives from the federal government in terms of the FMVSS rules, moving toward
41:08You know, acceptance and adoption of purely built autonomous vehicles, and I really appreciate the support from Nitsa on that
41:17When it comes to state-to-state level, obviously the stuff in New Jersey, you know, is a little bit disheartening
41:24I think ultimately, as Elon Musk said in his opening remarks, we really focus on the performance of the vehicle, and ultimately that's what's going to drive regulators and the public to adopt it
41:36You know, I think the best regulations are those that provide companies and innovators with a goal or a task and allow us to figure out the solution
41:48And when we see regulations that provide a solution before identifying the problem, we really don't, you know, appreciate it
41:53Those
41:58But, as Tesla always has and will continue to do, we'll let our performance speak for itself
42:03And I think a show has played that out really clearly, and that will be the foundation of our expansion moving forward
42:09>> Great, thanks for the questions
42:10>> Uh, thanks so much
42:13We're going to try Tom again from RBC
42:17Uh, Tom, can you unmute and try to speak, please? Unfortunately, Tom, we see you unmuted, but we're not hearing you
42:25So, we're going to have to send you back into the queue
42:33Next is Alex from Bank of America
42:35Alex, as soon as you can, please unmute yourself
42:37>> Hey, uh, thanks for the questions here
42:40Just a few follow-ups on Robo-Taxi, actually
42:42I guess what… Milestone should investors be watching from here that would cause you to accelerate your fleet scaling or market deployments? You know, is it the further safety validation like miles driven per incident or something else? And then, um, would you ever consider third-party distribution partnerships, such as with ride-share providers, to increase utilization, or is the plan for now to keep the robo-taxi fully vertically integrated? Thanks
43:13Yeah, I mean, we expect to be vertically integrated with the robo-taxi, as we are in the rest of our business
43:26Um, so I, I don't think we're going to have any demand challenges with the robo-taxi
43:30So, this is, um, the economics will be so compelling that I, I think we will really have a lot more
43:37The desire to use the service is higher than, you know, like, I think demand will strip our ability to service the demand
43:43Um, and so, obviously, you just—you can just go vertical in that situation
43:50So, it's really just about going through what we call the “march of nines” of reliability, where you need, like, how many nines of reliability you need to scale
44:04You know, ideally, you want 99.9999 percent reliability
44:06Um, and so, that's the—it's just the mines of reliability that I think are the only thing really constraining our growth in rolling out
44:12Great
44:18Uh, thanks, Elon
44:25Uh, the next question is going to come from Colin at Wells Fargo
44:31Uh, Colin, please unmute yourself when you're ready
44:32>> Oh, great
44:34Thanks for taking my questions
44:36There's been a lot of chatter about SpaceX and Tesla combining in some way
44:44I mean, a lot of collaboration already today
44:46Elon, do you see synergies eventually from combining the companies? Does that make sense from your perspective over time? >> Well, I mean, as you can tell from all the many collaborations on so many fronts with SpaceX and, you know, and there’s a lot—there’s more and more overlap
45:06Um, especially with Starship, that’s really going to be, you know, a gigantic project
45:13Um, so, but obviously, you know, we can't talk about, you know, combining [clears throat] companies and that kind of thing on a call
45:25It's got to be done with the appropriate process
45:26And with that, I'll turn it over to Brandon, our General Counsel
45:28>> Yeah
45:30No, thanks, Elon
45:32And that's exactly right
45:35We continue to benefit from our relationship with SpaceX, and they've been a great partner
45:37We have numerous beneficial transactions with them, and earlier this year, we deepened our relationship through an investment and a framework agreement
45:45This will allow us to continue working with them on projects that Elon mentioned, like TerraLab and Digital Optics
45:50[clears throat] >> Yeah
45:52And there are many other things, too
45:54Obviously, you've got Grok in the car
45:58Um, and um, so, and Grok helping to drive digital
46:05Optimus
46:12Um, you've also got Starlink being integrated into the Cybertruck and Sonic will be integrated into all of our vehicles, at least for markets where Starlink is active, because for a robo-taxi situation, you need to have coverage everywhere
46:19There are many, many places, even in Silicon Valley, where the cellular coverage is terrible or sometimes non-existent, which is surprising for Silicon Valley
46:31But I know, when I drive to work, in those first 10 to 15 minutes, I can't actually make any calls because the cell connectivity is so bad
46:45So we can't have robo-taxis getting stuck in these like Bermuda triangles of lack of cellular connectivity
46:50So, Starlink with its ability to… Connectivity anywhere is actually quite important
46:55Um, so we don't have, you know, car RoboTaxis missing in action
47:02Um, and then, obviously, if people are sitting in the car, they're going to want to do high productivity stuff or entertainment
47:11And with Starlink, you can watch full 4K live sports in the car, with very low cost per gigabyte of data, as that's really not feasible via the cellular system
47:23And I think there are many other situations
47:29>> Yeah
47:35I mean, I would say, think of it like, uh, Ashok was mentioning about CyberCab, right? That the experience is great in a world when you don't have to focus on driving
47:41You have all the play, all the time in the car to do
47:44Whether it's a conference call, watching a movie, or anything
47:49That's why, if you look at the Cyberquad design, it has a big screen, and you know we've started doing Cyberquad rights in our factory in Austin
47:56When you go through that experience, I mean, soon customers will be able to do it in the not-too-distant future, and then you'll understand why that connectivity becomes so important
48:07>> Great
48:18And then Colin, do you have a follow-up? Yeah, just to follow up on RoboTaxi, you know, if I look at the launches, it's been—you've been adding cities, but the number of units is still, you know, based on media reports, sort of in the dozens as opposed to hundreds
48:29You know, why not just scale up? Austin or one or two cities before adding more cities, and sort of what do you need to do to get higher volume numbers in a major city? What are the roadblocks to adding more vehicles on the ground? >> Yeah, the reason we have been expanding across different cities instead of just focusing on a single city is that we want to ensure that our system is very versatile
48:41It is a general one
48:53We just want to, you know, both proud of ourselves and to others, show that it is working across many different cities without too much effort per city
49:04Uh, and that's what we see internally
49:06Uh, and then, as Iron mentioned earlier, the growth rate has been literally exponential
49:10It’s in the..
49:12The early part of the exponential is why it's hard for others to comprehend in terms of miles versus the vehicles, since these vehicles operating the robotaxi fleet drive basically continuously, as opposed to human drivers who use vehicles for maybe a couple of hours a day or so
49:28These vehicles are in mostly continuous operation, which means that even for a few vehicles, you can get a lot of miles out of them
49:37That’s why we are tracking the number of unsupervised miles or simply the number of vehicles, and so on, and we want to operate in a very efficient fleet
49:45All of the work that goes into efficiency makes it even better, allowing us to get a lot of miles per vehicle
49:51In the fleet
49:57>> Yeah
50:03And just to add further to this, I'm like, what do you think of it? We're trying to scale this, and we're trying to make sure that there are different kinks, which would be there, and there are things not just on the software front but also on the operation front, which we're also trying to tackle
50:09So that's why we're trying to have a broader footprint to try and make sure before we go really high in terms of deployment that we are able to sort these things out in a smaller fleet in a controlled manner
50:22>> Yeah
50:24One of the things for Cybertruck should be noted is because it is a new vehicle chassis, we need to accumulate driving data that is specific to the Cybertruck before we can put a lot of them on the road
50:38Uh, so unlike Say Model 3, Model Y, and our other vehicles, where we've got a lot of vehicles on the road—millions of vehicles on the road
50:48We don't have that for the Cybertruck
50:51So, we actually have to accumulate miles with sold Cybertrucks that are retrofitted with steering wheels and brake acceleration and braking paddles, that kind of thing, to calibrate the Cybertruck chassis
51:04So, you'll see, as we are confident about that, the number of Cybertrucks and cities will increase dramatically
51:14 >> Great
51:16Our next question
51:18Oh yeah, go ahead
51:20 >> I can just add one thought here
51:28The other reason I want to point out is that transportation, like TCO (Total Cost of Ownership), regulatory situations, are different in each city
51:33By city and state, there is not a federal framework to do that
51:38So, the reason we're expanding city by city is to make sure that we're meeting all of those requirements one at a time, and we're satisfying all of the requests of each individual city in every way we can
51:54We have to expand to each city to meet those requirements, and we will continue to do so
51:58To all of what Ashok, Vibhav, and Ashok said, we will follow up on the skilling
52:01>> Thanks, Lars
52:04The next question is from Walt from Lightshed
52:06Uh, Walt, please unmute yourself
52:08>> Thanks
52:09Just a quick follow-up to that Lars comment
52:11I mean, the NITS administrator, Jonathan Marson, was just on CNBC
52:16You know, he already, you know..
52:21I was trying to get rid of the pedal and said, I forget his exact term, but it seemed like he wanted to get rid of the steering wheel
52:27It seemed like that would be a gating factor, but are there other things that you need at the federal level to really unlock your ability to ramp Cybertruck capabilities? >> Um, I mean, the short answer is no
52:38I think we have a great relationship with Nitin and, and, you know, Director Morrison, especially
52:46Uh, and I think they're just following through with what, um, you know, the public wants and the world knows is coming, and they're trying to stay ahead of it and make sure that, you know, they're doing the right things in place
53:00So, um, you know, we've..
53:02We've been open and honest with them for the last couple of years about what our plans were and what we're doing
53:08And, you know, we don't want to say we're in lockstep, but I feel like we have a partner there, and we're working together on it
53:14>> Got it
53:17And then just Elon, kind of a roadmap question, I guess
53:20Um, Starlink obviously is integrated into the Cybertruck, and you guys just talked about the connectivity for watching movies, but what about the flip side of that? Can these Cybertrucks become remote hotspots for Starlink Mobile? And then, similarly, a roadmap question on the Semi — you know, when do you anticipate looking at autonomy for the Semi, because that seems like a pretty sizable market as well in terms of..
53:44Autonomous trucking and the need for it given what's going on in our country right now
53:47>> Yeah, absolutely
53:50As you allude to, there is a really serious shortage of truckers
53:53Um, so there just aren't enough people who want to drive trucks, which are crucial for transport throughout America
54:01Um, so an autonomous semi-truck is actually going to be very important to address the shortage of truck drivers
54:11Um, and obviously, it will be great for improving safety and making it easier on truck drivers to have a self-driving semi
54:19I think it will dramatically improve safety and comfort for truck drivers who use the Tesla Semi
54:29Um, the, you know, since the..
54:34The units—the total number of units of the Tesla Semi—is still low and will continue to be a very small percentage, even by the end of this year, of our total vehicle fleet
54:49It makes sense for us to focus our efforts on our high-volume vehicles, so Model 3 and Model Y, and to solve self-driving for those, really getting to the point where it's a generalized, unsupervised self-driving system for those vehicles and Cybertruck
55:03We expect to get self-driving working on the Tesla Semi, probably around the end of this year or early next year
55:15But we don't want it to be a distraction on our overall march toward achieving safe, reliable self-driving
55:29Self-driving on the Tesla Cybertruck, that's uh, so it's uh taking a bit of a backseat for the next six months or so for autonomous semi, but it will be, you know, it will definitely be working next year and in time for the scale-up to high production of the Tesla Semi for communications
55:56Yeah, I think there's an interesting angle there where, um, you could use the Starlink terminals that are in the Tesla cars as, um, [clears throat] like sort of cell towers, I suppose, or connectivity towers, basically, for providing relays on the ground to, um, cell phones and to, um, anyone who would like Wi-Fi, basically
56:26Um, but yeah, I mean, this is a different subject, but obviously we could do that with the..
56:39Stationary stalling terminals too
56:41>> All right
56:43Um, our next question is going to come from Will at Truist
56:45Uh, Will, please unmute yourself
56:47>> Great
56:49Thanks so much for taking my question
56:52Um, Elon, you teased us a little bit about, um, the supply chain relative to Optimus, highlighting how difficult it's going to be, but we'd be really interested to understand what your propensity is to manufacture semis for this yourselves
57:08When we think about microprocessors, microcontrollers, actuators, and other semiconductors that are going to be used, it occurs to me that you have many that are commercially available
57:21You have the option to design some but have them made at third parties
57:25Fabs
57:29You also have the option potentially to design and make them yourself
57:33What should we think about your propensity to source these components in these different manners? You're talking about making microcontrollers and small, like the various computers that are in the car that operate, you know, like the steering system and the braking system
57:53>> I'm talking about for Optimus, not for
57:54>> Yeah, Optimus has a lot of really specialized power electronics and circuit boards
58:02It's all Tesla design and development
58:04But it is fabricated by suppliers for Optimus, which will be built in Austin
58:14That will be a much more vertically integrated supply system
58:20For Rockimus 4, and that would, you know, aim to have an order of magnitude more production of Optimus 4 than Optimus 3
58:38So, sort of aspirationally, 10 million units a year versus a million units a year of Optimus 3
58:45Um, [clears throat], but with all the caveats, which is insanely difficult to scale production
58:49Um, and, yeah, Optimus 4 will be much more vertically integrated, so probably doing a lot of the PCV work in-house for that
59:01As a follow-up, well, first maybe you could talk about the timing as to when Optimus 4 should start production, but the actual follow-up I wanted to ask was the plan to upgrade Hardware 3 to Hardware 4 in..
59:22In order to, uh, be able to process, um, I suppose it's version 15 of the FSD and future versions of FSD
59:29Is that still the plan to do hardware upgrades on the cars? >> I think it’s going to make sense to upgrade all cars that have less than hardware 4, basically, or any cars that have cameras, because otherwise it probably requires too many modifications
59:55But anything that's set up for cameras, it'll be financially sensible at some point to upgrade them
59:58And I think we’d want to upgrade them to the next generation of, you know, like the next-generation AI board
01:00:06So it would be either, um, like we have an upgraded AI 4 chip, which is sort of a medium or moderate upgrade
01:00:17Improvements over AI4 probably reach production around the middle of next year
01:00:21Um, and then there's also AI5, which hopefully will be in volume production around the same time next year
01:00:32Um, AI5 will initially go into Optimus
01:00:36Um, and we're actually making very good progress
01:00:38So, the Tesla chip team is really doing great work and making incredibly fast progress on AI5, and I'm very excited about the design of the Tesla AI6 chip
01:00:52I think it's going to be the best edge computing chip in the world
01:00:57Um, and if somebody has a better one, I’d like to meet that person and shake their hand, because the AI6 chip is just so good
01:01:07Um, so I think we're doing really well on the chip front
01:01:09Yeah, and again, I'd like to thank our suppliers, TSMC, Samsung, and Micron for the support
01:01:15 >> Great
01:01:20Uh, we are coming up on the hour, but we're going to try to squeeze in Dan
01:01:26So, uh, from Barclays, uh, Dan, please unmute yourself
01:01:28 >> Uh, great
01:01:30Thank you
01:01:32I appreciate it
01:01:34Um, I'd like to ask about the pace and path of CapEx
01:01:36Elon, in the past you've said that, you know, you'll spend as much as you can, but really, efficiency seems like the gating factor
01:01:49So, to what extent right now in this CapEx cycle is your pace of CapEx effectively capped simply because spending any more would be done in an inefficient manner? And to what extent is the pace of CapEx really the primary determinant right now in… Unlocking the different supply constraints that you have? >> Yeah, it's a good question
01:02:12Um, I’ve actually, you know, my, my, what I’ve asked the Tesla team to do is, like, really, we should be spending on CapEx as fast as we can, without it being too wasteful
01:02:27So, I’m not trying to aim for some extremely high efficiency in capital spend because that would slow things down
01:02:36Um, so it’s a balance between, like, how much capital efficiency versus time
01:02:42Um, so if we can be okay with being a little less capital efficient if we get things done sooner, because that’s actually going to be the higher MPV outcome for the company
01:02:48Um, so, overall, I..
01:02:54Pretty happy with how things are going
01:03:01I mean, we're doing an incredible amount of construction and production growth in so many different arenas simultaneously
01:03:10I don't think there's ever been a company that has done this on such a scale
01:03:15Maybe proportionately back when Henry Ford made the Model T, or during World War II when companies scaled up weapons production or mass-produced tanks, but I think probably this is the fastest industrial scale-up since World War II in America
01:03:34>> Yeah
01:03:38And I will just add a little bit on that
01:03:41Basically, if you look at it, all our spend on CAPEX is focused on building productive assets
01:03:51We're basically scaling..
01:04:02Factories, whether it's Optimus, whether it's Cybertruck, whether it's LFP factory, which went into operation earlier this year, or the semi factory, or even putting in a semiconductor fab in there, as well as, you know, we are trying to get a lot of solar manufacturing in the US
01:04:12In fact, >> yeah, yeah, this is underrated, by the way
01:04:15Please go ahead
01:04:19Yeah, I was going to say, yeah, basically, you know, the amount of solar manufacturing which happens in the US, we're just going to multiply it with an order of magnitude, and none of these things are easy, right? Because what you have to do is, in order to build a factory, you have to start from ground zero
01:04:42So, just so you know, again, I don't think we have shared this, we end up being the general
01:04:47Contractor for almost all our construction facilities because we are doing that much construction
01:04:52And >> so, going back to what Elon was saying, we're going at a very rapid scale
01:04:55And yes, uh, you know, this means that we are doing a lot of things all at the same time, and that's why you know we just have to go as fast as we can to make things work in the real world
01:05:13>> Yeah, our CapEx efficiency, I think, is offscale
01:05:14Great
01:05:16>> All righty
01:05:17And then Dan, yeah
01:05:18Did you have a follow-up that we can wrap up with? >> Yeah, maybe just a quick question on energy storage, which, uh, you know, I think is a key topic here
01:05:30Maybe you can just address, you know, to what extent is energy storage going to be supply constrained for the..
01:05:38Foreseeable future? And then just to what extent are the deployments right now the typical peak shaving that you'd see at utilities versus, you've talked about in some of your materials, for battery storage addressing the quality of power issue for data centers, given the sharp fluctuations in power use? Where do you have an advantage, given software and power electronics? So, just what is that demand curve right now between data centers versus broader peak shaving for utilities? Well, it's still mostly not just peak shaving, but also grid balancing
01:06:10So, it's not just like the facts are on briefly, but for balancing power from wind and solar generation
01:06:17Batteries are awesome
01:06:25Um, I mean, the solar battery combination will be how the vast majority of energy in the world is produced in the future
01:06:33Um, that's already, of course, how all of the Starlink satellites are powered—with solar panels and batteries
01:06:39So, and you can just think of Earth like a giant satellite
01:06:44Um, there's far more power available from the sun than anything else by far
01:06:50Um, and we think power constraints are going to be a major issue already for AI, you know, just turning on the AI computers
01:06:57AI compute demand is so high that um, people are having, even the hyperscalers are having trouble turning on their AI compute and finding
01:07:09The power and then, um, smoothing the power with, uh, you know, especially for the training runs where the power cycles dramatically, um, in a very short period of time
01:07:21You can have, during a training run, the power consumption drop by, you know, 70% for 100 milliseconds
01:07:29Um, and you really need fast-acting advanced power electronics to be able to, um, smooth out these massive, the massive, massive changes in power, um, especially during their training runs
01:07:43So, um, that's why SpaceX has bought so many Megapacks for the data centers
01:07:51It's actually, um, um, mostly for smoothing out the power for the training runs
01:07:58Um, but it will also be useful for, um, being able to, to have more power from the grid by, uh, you know
01:08:07If you tell utilities that they can, um, you know, that they will not need to supply power during the, you know, the worst hours of the worst days of the year because the batteries can handle it, then that makes it much easier for them to, um, to give you power
01:08:30In fact, I mean, the probably the best way to scale total energy production in the United States is simply using batteries because there's, I think, around 1.2 or 1.3 terawatts of power production in the US, but the average power usage is only half a terawatt
01:08:46So, you've got two and a half times as much power generation as the average usage
01:08:54Um, that means you could potentially double the energy capacity for the United States just with batteries
01:08:58Really, we see demand for Megapack being very, very high in the future
01:09:02>> All righty
01:09:07That is all the time we have for today for Q&A
01:09:11We appreciate everyone's questions, and we look forward to talking to you next quarter
01:09:15Thank you very much
01:09:19>> Thanks, everyone
01:09:23>> [music] [music] >> Heat
01:09:25Heat
01:09:26[music]
