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    Tesla Inc (TSLA)

    Q1 2024 Summary

    Published Jan 10, 2025, 5:10 PM UTC
    Initial Price$250.08January 1, 2024
    Final Price$175.22April 1, 2024
    Price Change$-74.86
    % Change-29.93%

    What went well

    • Elon Musk remains committed to Tesla and ensures that it will continue to be prosperous in the future.
    • Tesla expects higher sales in 2024 compared to last year, with improvements anticipated in Q2 due to resolved supply chain issues and a simplified sales process.
    • Tesla is progressing rapidly in AI and autonomy, planning to expand Full Self-Driving (FSD) to new markets, including China, positioning the company as an AI and robotics leader beyond just an automaker.

    What went wrong

    • Tesla's growth rate in 2024 is expected to be notably lower than in 2023, raising concerns about sustaining past growth levels.
    • Operational challenges, including supply constraints, factory attacks, and ramp-up issues with Model 3 and Cybertruck, could impact future deliveries and growth.
    • Elon Musk's multiple commitments across various companies may impact his focus on Tesla, raising concerns about leadership and execution in the coming years.

    Q&A Summary

    1. 2024 Sales Growth
      Q: Will Tesla's sales grow in 2024?
      A: Elon Musk affirmed that Tesla expects higher sales this year than last year, indicating confidence in continued growth despite market challenges.

    2. FSD Licensing to Other OEMs
      Q: How is FSD licensing progressing?
      A: Tesla is seeing progress in licensing Full Self-Driving (FSD) technology to other automakers. Elon Musk mentioned there's a good chance of signing deals this year, though integration into cars may take around 3 years due to OEMs' lengthy product cycles.

    3. Pricing Strategy and Free Cash Flow
      Q: Can Tesla lower prices and stay cash flow positive?
      A: Elon Musk stated Tesla can meaningfully lower prices while remaining free cash flow positive. The focus is on making cars more affordable without sacrificing profitability, ensuring a great product at a great price accessible to more people.

    4. Operating Expenses and Headcount Reduction
      Q: What are the impacts of headcount reductions?
      A: Tesla underwent company-wide headcount reductions to eliminate redundancies and inefficiencies, positioning for the next phase of growth. Management emphasized that they are not giving up any significant activities and expect to be stronger and more resilient moving forward.

    5. 4680 Battery Cell Production
      Q: What's the status of the 4680 cell ramp?
      A: Progress is being made on 4680 cells, with expectations to exceed supplier competitiveness by the end of the year. The ramp is aligned with Cybertruck production, and internal cell production serves as a hedge against supplier cost fluctuations.

    6. Elon Musk's Commitment
      Q: Will Elon Musk lessen his involvement with Tesla?
      A: Elon Musk affirmed that Tesla constitutes the majority of his work time and he works nearly every day. He intends to ensure Tesla's prosperity and does not expect to lessen his involvement over the next three years.

    7. Competition and Autonomy
      Q: How quickly can Chinese competitors copy Tesla's advancements?
      A: Elon Musk expressed that Tesla is doing better than competitors in China, emphasizing that Tesla should be viewed as an AI or robotics company, not just an automaker. He stated that if someone doesn't believe Tesla will solve autonomy, they shouldn't invest in the company.

    8. Expansion of FSD to New Markets
      Q: When will FSD launch in new geographies?
      A: Tesla plans to release FSD as a supervised autonomy system in any market where regulatory approval is granted, including China. The end-to-end neural network approach allows FSD to work well with minimal modifications in different countries.

    9. Utilizing Idle Compute Power
      Q: How will Tesla use idle compute power in cars?
      A: Tesla aims to utilize the idle compute capacity in its vehicles for distributed computing tasks, potentially offering significant computing power when cars are not in use. This approach is likened to Amazon Web Services leveraging excess capacity.

    10. Transferable Cost Reductions
      Q: Are cost reductions transferable to new products?
      A: Tesla's advancements in powertrains, batteries, and manufacturing are transferable to new vehicles. The engineering work on subsystems can be utilized to optimize both current and future products, maximizing cost savings and efficiency.

    11. Battery Cell Sales to Other Automakers
      Q: Will Tesla sell 4680 cells to other automakers?
      A: Elon Musk noted that orders for batteries from other automakers have declined dramatically, leading to excess capacity among suppliers. Tesla focuses on understanding the upstream supply chain to reduce overall costs but did not indicate plans to sell cells to competitors.

    12. Q1 Delivery Constraints
      Q: Did supply constraints impact Q1 deliveries?
      A: Management acknowledged that various factors impacted Q1 results, including seasonality, macroeconomic pressures, factory attacks, and ramping of new models like the Cybertruck and updated Model 3. They expressed confidence that these issues will not recur, expecting a better Q2.

    13. Distributed Inference Approach
      Q: What is Tesla unlocking with distributed inference?
      A: Tesla's distributed inference approach aims to fully utilize the computing power in cars when not driving, potentially solving scientific problems or other compute-intensive tasks. This leverages the cars' capabilities and Tesla's control over the systems.

    14. Farewell to Martin Viecha
      Q: What's the announcement about Martin Viecha?
      A: Martin Viecha announced he is stepping down from Investor Relations after seven years, expressing gratitude for his time at Tesla. Elon Musk thanked him for his contributions, acknowledging that his analysis of Tesla was the best he'd seen.

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