If you don’t want to read the whole call, you can find my BOLD highlights below…
(Tesla is a battleground stock and Elon Musk is a polarizing figure, so I’m leaving these quotes here without comment)…
“So in concluding, Tesla is focused on building the future of energy, transport, robotics and AI. And this is a time when others are just focused on managing around near-term trends…And if we execute on our objectives, and I think we will, my prediction is Tesla will become the most valuable company in the world and probably by a long shot.”
“I think we’ve made it very clear that the future is autonomous. I mean it’s going to be — I’ve actually said this many years ago, but that my strong belief and I believe that is panning out to be true, certainly, it’d be very obvious in retrospect, is that the future is autonomous electric vehicles. And nonautonomous gasoline vehicles in the future will be like riding a horse and using a flip bone. It’s not that there are no horses, yes, there are some horses, but they’re unusual. They’re niche. And so everything is going to be electric autonomous. I think that it should be, frankly, blindingly obvious at this point that, that is the future. So a lot of automotive companies or most of the automotive companies have not internalized this, which is surprising, because we’ve been shouting it from the rooftops for such a long time. And it will accrue to their detriments in the future. But all of our vehicles in the future will be autonomous. All the vehicles that we’ve really made, almost 7 million vehicles, the vast majority, are capable of autonomy. And we’re currently making on the order of 35,000 autonomous vehicles a week. Compare that to, say, Waymo’s entire fleet, they’ve less than 1,000 cars. We’re making 35,000 a week.”
“So to recap, as the automotive industry is seeing year-over-year declines in order volumes in Q3, Tesla, at the same time, has achieved record deliveries. In fact, I think if you look at EV companies worldwide, to the best of my knowledge, no EV company is even profitable. And to the best of my knowledge, there was no EV division of any company, of any existing auto company, that is profitable. So it is notable that Tesla is profitable despite a very challenging automotive environment, and this quarter actually is a record Q3 for us. So we produced our seventh million vehicle actually just yesterday, so congratulations to the teams that made it happen in Tesla. That’s a staggeringly immense amount of work to make 7 million cars. So let’s see, we also have the energy storage business growing like wildfire with strong demand for both Megapack and Powerwall.”
“So regarding the vehicle business, we are still on track to deliver our more affordable models starting in the first half of 2025. I think probably people are wondering, “Well, what should they assume for vehicle sales growth next year?” And at the risk of — to take a bit of risk here, I do want to give some rough estimate, which I think it’s 20% to 30% vehicle growth next year, notwithstanding negative external events, like if there’s some force majeure events, some big war breaks out or interest rates go sky high or something like that. We can’t overcome massive force majeure events, but I think, with our lower-cost vehicles, with the advent of autonomy, something like a 20% to 30% growth next year is my best guess.”
“And then Cybercab reaching volume production in ’26, I do feel confident of Cybercab reaching volume production in ’26, not just starting production but reaching volume production in ’26. And that should be substantial. But we’re aiming for at least 2 million units a year of Cybercab. That will be in more than 1 factory. But I think it’s at least 2 million units a year, maybe 4 million ultimately. So yes, these are just my best guesses. If you ask me my best guesses, those are my best guesses.”
“So I think if we execute well with 4680, the Tesla internally produced cell will be the most cost competitive cell in North America, a testament to the tremendous amount of hard work there done by the team. So that said, we’ll continue to buy a lot of cells from our competitors. I don’t intend for that to mean make cells just internally, so I don’t want to set off any alarm bells here. We’re obviously increasing substantially our vehicle output and our stationary storage output, so we need a lot of cells. And most of them will still come from suppliers. But I think it is some good news that the Tesla internal cell is tracking to be the most competitive in the U.S.”
“Version 13 of FSD is going out soon. I’m sure we’ll elaborate more on that later in the call. We expect to see roughly a five or sixfold improvement in miles between interventions compared to 12.5. And actually, looking at the year as a whole, the improvement in miles between interventions, we think, will be at least 3 orders of magnitude. So that’s a very dramatic improvement in the course of the year, and we expect that trend to continue next year. So the current internal expectation, internal expectation, for the Tesla FSD having longer miles between interventions and human is the second quarter of next year. It may end up being in the third quarter, but it seems extremely likely to be next year.”
“Miles between critical interventions, like you mentioned, Elon, we already made 100x improvement with 12.5 from the start of this year. And then with v13 release, we expect to be 1,000x from January of this year on the production release software.”
“Our internal estimate is Q2 of next year to be safer than human and then to continue with rapid improvements thereafter. A vast majority of humanity has no idea that Tesla cars drive themselves. So especially for something like a Model 3 or Model Y, it looks like a normal car. So you don’t expect a normal car to be able to be intelligent enough to drive itself. A Cybercab looks different. A Cybertruck looks different. But Model Y and Model 3, look, they’re good-looking cars but they look fairly normal. You don’t expect a fairly normal looking car to have the intelligence, enough AI to be able to drive itself, but it does. So we do want to expose that to more people. And so we’re doing — every time we have a significant improvement in the software, we’ll roll out another sort of 30-day trial so to encourage people to try it again. And we are seeing a significant improvement in adoption. So the take rate for FSD has improved substantially, especially after the 10/10 event. Yes. So there’s no need to wait for a robotaxi or a Cybercab to experience full autonomy. We expect to achieve that next year with our existing vehicle line.”
“And we do expect to roll out ride-hailing in California and Texas next year to the public. Now in California, there’s quite a long regulatory approval process. I think we should get approval next year, but it’s contingent upon regulatory approval. Texas is a lot faster, so we’ll definitely have it available in Texas and probably have it available in California, subject to regulatory approval, and maybe some other states actually next year as well, but at least in California and Texas. So I think that would be very exciting. That’s really a profound change. Tesla becomes more than a sort of vehicle and a battery manufacturing company at that point.”
“So we published our Q3 vehicle safety report, which shows 1 crash for every 7 million miles of autopilot. That compares to the U.S. average of 1 crash for roughly every 700,000 miles. So it’s currently showing a 10x safety improvement relative to the U.S. average. And we continue to expand our AI training capacity to accommodate the needs of both FSD and Optimus. We are currently not training compute constraint. Probably the biggest limiting factor is that the FSD is actually getting so good that it takes us a while to actually find mistakes. And when you start getting to where it can take 10,000 miles to find a mistake, it takes a while to actually figure out which it is. Is software ver A better than software ver B? It actually takes a while to figure it out because neither one of them makes the mistakes. They would take a long time to make mistakes. So it’s actually the single biggest limiting factor is how long does it take us to figure out which version is better. That’s sort of a high-class problem. Obviously, having a giant fleet is very helpful for breaking this out.”
“And then with Optimus, we showed a massive improvement in Optimus’ dexterity movement on October 10. And our next-gen hand and forearm, which is 22 degrees freedom, which is double the prior hand and forearm. It’s extremely human-like, and so it’s much better at tactile sensing. I feel confident in saying that we have the most advanced humanoid robot by a long shot. And we’re moreover the only company that really has all of the ingredients necessary to scale humanoid robots. Because the things that — what other companies are missing is that they’re missing the AI brain. They’re missing the ability to really scale to very high-volume production. So you’ve seen some impressive video demos, but they lack the localized AI and the ability to scale volume to very high numbers. As I’ve said on a few occasions before, I think Optimus will ultimately be the most valuable product. So I think it has a good chance of being the most valuable product ever made.”
“For the energy business, that’s doing extremely well. And the opportunity ahead is gigantic. The Lathrop Megapack factory reached 200 Megapacks a week, which is now a 40 gigawatt hour a year run rate. And we have a second factory in Shanghai that will begin with the 20 gigawatt hour year run rate in Q1 next year, so next quarter. And that will also scale up. It won’t be long before we’re shipping 100 gigawatt hours a year stationary storage at Tesla. And that will ultimately grow, I think, to multiple terawatt hours per year. It has to actually in order to have a sustainable energy future. If you’re not at the terawatt scale, you’re not really moving the needle. So if you look at our admittedly very complicated last master plan, which I think actually is too much detail, I’ll maybe ask Gaurav to analyze it and give us the TLDR on the last master plan. But we showed in that master plan that it is possible to take all of earth to a fully sustainable energy situation using sustainable energy, power generation and batteries and electric transport. And there are no fundamental material limitations, like there’s not some very rare material that we don’t have enough of. We actually have enough of raw materials to take all of human civilization, make it fully sustainable. And even if civilization dramatically increase its electricity usage, it would still be fully sustainable. One way to think of the progress of a civilization, this may sound a little esoteric but it is percentage completion of Kardashev scale. So in Kardashev scale, 1 would be using all the power of a planet. We’re currently less than 1% on Kardashev Level 1. Level 2 would be using all the power of the sun. And Level 3, all the power of the galaxy. So we have a long way to go, a long way to go. When you think in Kardashev terms, it becomes obvious that, by far, the biggest source of energy is the sun. Everything else is in the noise.”
“So in concluding, Tesla is focused on building the future of energy, transport, robotics and AI. And this is a time when others are just focused on managing around near-term trends…And if we execute on our objectives, and I think we will, my prediction is Tesla will become the most valuable company in the world and probably by a long shot.”
“Just coming back on automotive margins. I talked about what is happening. One other thing which I want to also share is that we will continue to keep whatever we can, like I said before, while squeezing out the cost. But this is something which we also are very capable of. I mean, just in Q3, we reached our lowest cost per vehicle, and that is a trend which we want to keep focused on.”
“One thing which I’d like to elaborate is that we’re being really judicious on our AI compute spend too and thinking how best we can utilize the existing infrastructure before making further investments. On the CapEx front, we had over $3.5 billion in the quarter. This was a sequential increase largely because of investments in AI compute. We now expect our CapEx for the year to be in excess of $11 billion.”
“We’re progressing something on the build of the semi factory in our gigafactory in Reno. We’ve released all our major capital expenditures for that program, and we’re on track to start pilot builds in the second half of next year, with production starting in the first half of 2026 and ramping really throughout the year to full production.”
“Any company that doesn’t adopt an electric semi will lose. It’s not a subjective thing.”
“I think we’ll keep expanding what is available in the car, on the screen and also improving like the browser. So like just generally, you can access anything you want in the car. In fact, for the Tesla, once you get to full autonomy, you actually want fully a system that can do anything. Like, if you want to browse the Internet, if you want to ask AI questions, if you want to watch a movie, if you want to play a video game, if you wanted to do some productivity thing, you can do anything you want in an autonomous vehicle because you don’t need to drive. So that’s why the Cybercab’s got a nice big screen and a great sound system. So you can watch a great movie with it. It’s like being in a personal movie theater.”
“I’m very excited about the Cybercab design and how we’re rethinking the design of a car for the Cybercab, designing it while also have volume production, and then design a machine that builds machine that I think is also revolutionary. There’s no other car company that’s even trying to do what we’re doing, like I haven’t even heard of it, actually. In fact, I’m certain there isn’t one. Like I think our new machine that builds the machine, it’s inherent, it’s designed to be like 5x better than a traditional factory, like in the cycle time.”
“But there are different problems. xAI is working on artificial general intelligence or artificial super intelligence. Tesla is trying to make autonomous cars and autonomous robots. They’re different problems…So I think xAI, it has been helpful to Tesla and will continue to be helpful to Tesla, but they are very different problems. I mean like what other car company has a world-class chip design team? Like zero. What other car company has a world-class AI team like Tesla does? Zero. Those are all startups that were created from scratch.”
Official press release: https://ir.tesla.com/press-release/tesla-third-quarter-2024-production-deliveries-and-deployments
FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY. The information provided here is for educational and information purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice.