Q2 2024 Summary
Published Jan 10, 2025, 5:10 PM UTC- Tesla's energy business is growing rapidly, with energy storage deployments more than doubling, resulting in record revenues and profit for the energy business. The company is expanding production capacity to meet high demand, including building a Megapack factory in China.
- Unsupervised Full Self-Driving (FSD) is highly probable next year, according to Elon Musk. Achieving FSD autonomy is expected to massively increase Tesla's valuation, potentially to the order of $5 trillion.
- Tesla plans to begin production of its Optimus humanoid robot, with limited production starting early next year for internal use, and ramping up to provide robots to external customers by 2026. This could open up a significant new market for the company.
- Tesla has paused the development of Giga Mexico due to political uncertainties, including potential heavy tariffs on vehicles produced in Mexico if Trump wins the election. This could delay Tesla's expansion plans and affect future production capacity.
- Affordability concerns are impacting Tesla's margins, as the company is offering reduced financing options to offset sustained high interest rates, which has impacted revenue per unit in the quarter and will persist into Q3.
- Tariffs on raw materials and finished goods are increasing Tesla's costs, which may adversely affect profitability in the near term despite efforts to offset them.
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Autonomy as Tesla's Key Value Driver
Q: Would losing IRA subsidies impact Tesla's profitability?
A: Elon Musk stated that while losing subsidies might have some impact, it would devastate competitors. Tesla's value overwhelmingly comes from autonomy, which overshadows subsidies. He emphasized that those who don't believe in Tesla's ability to solve autonomy should not hold Tesla stock, and those who do should invest. -
FSD Licensing to Other OEMs
Q: How would FSD licensing to other automakers work?
A: Elon Musk explained that OEMs would need to integrate Tesla's AI computer and cameras for FSD, which would take several years due to the slow pace of the auto industry. Licensing agreements depend on the OEM, and deals are only relevant if they involve significant volumes, like 1 million cars per year. ** ** -
Robotaxi Strategy and Deployment
Q: How will Tesla deploy robotaxis given regulatory hurdles?
A: Tesla's general solution for FSD works anywhere without geo-fencing, unlike competitors. Elon Musk believes regulatory approval won't be a limiting factor once they demonstrate safety superior to humans. The entire Tesla fleet can become active instantly, allowing immediate scale-up via software update. ** ** -
AI Resource Allocation and XAI
Q: Are Tesla's AI resources diverted to XAI?
A: Elon Musk clarified that reports of redirecting AI compute to XAI are outdated. Tesla had no data center capacity at the time, so GPUs would have been wasted. Engineers interested in AGI refused to join Tesla, leading to the formation of XAI. Vaibhav Taneja added that AI is broad, and XAI works on areas Tesla isn't focusing on. -
Impact of Tariffs on Shanghai Exports
Q: How do European tariffs affect Shanghai exports?
A: Vaibhav Taneja stated that Tesla is adjusting its import strategy to Europe after authorities examined their factory. They have begun building right-hand drive Model Ys in Berlin for the UK and are still importing Model 3s from Shanghai. Tesla is confident they will secure better tariff rates but are adapting as needed. -
Energy Storage Pricing and Competition
Q: How is Tesla approaching energy storage pricing amid competition?
A: Tesla works closely with customers to remain competitive despite strong competition from Chinese OEMs. They had a strong contracting quarter and are building a backlog for 2025 and 2026. Their integrated Megapack, including a proprietary software stack, gives them an edge over competitors. ** ** -
Potential Removal of IRA Subsidies
Q: What if IRA subsidies are cut under a new administration?
A: Elon Musk believes losing subsidies might impact Tesla slightly but would devastate competitors. Tesla aims to grow without relying on subsidies, focusing on strong business fundamentals and autonomy, which would put them miles ahead. -
Optimus Robot and Future Revenue Segments
Q: How will Optimus and energy affect future revenue?
A: Elon Musk predicts the long-term value of Optimus will exceed everything else Tesla produces. He estimates demand for general-purpose humanoid robots to be over 20 billion units, with Tesla uniquely positioned due to its expertise in AI and manufacturing. -
FSD Take Rates After Price Reduction
Q: Can you quantify the increase in FSD take rates after price cuts?
A: Vaibhav Taneja noted a meaningful increase in FSD take rates from a low base, though specifics weren't provided. Emphasis is on customers experiencing FSD firsthand to appreciate its capabilities. -
4680 Battery Technology and Supplier Issues
Q: Will supplier lawsuits affect 4680 battery rollout?
A: Lars Moravy stated that legal issues with a supplier won't impact the 4680 rollout. Tesla has a strong IP position and designs much of the equipment in-house, allowing flexibility in manufacturing.