Things You Should Know about Tesla Earnings

Key Takeaways from Tesla's Conference Call

Challenging Quarter: Q1 was one of the toughest quarters in Tesla's history, marked by factory fires, Red Sea attacks, and challenges in ramping up the production of the Cybertruck. The team is optimistic that future quarters will show significant improvement.

Sales Growth: Elon Musk anticipates sales growth this year despite current challenges.

Acceleration of Low-Cost Vehicle Production: Plans are underway to accelerate the production of a low-cost vehicle, potentially as early as the end of 2024, with a more definite timeline set for early 2025.

GPU Installation for FSD Training: Approximately 35,000 H100 GPUs have been installed for training purposes, with expectations to increase this number to around 85,000 by the end of the year, thus removing constraints on FSD training.

Cost Savings from Layoffs: The recent layoffs, exceeding 10% of the workforce, are expected to save the company approximately $1 billion per year.

4680 Battery Production: Production of the 4680 battery has increased by 18-20% since Q4, and it is expected to quickly become cost-competitive with current battery suppliers.

Robotaxi and FSD Developments:

• FSD Version 12 has been deployed across approximately 1.8 million vehicles in North America. Over half of these vehicle owners are actively using FSD, contributing to over 300 billion miles driven under this system.
• The subscription price for FSD has been reduced to $99 per month to increase accessibility.
• Tesla plans to discuss its Robotaxi autonomous vehicle platform at the upcoming event on August 8.
• Regulatory pathways for Robotaxis and FSD are improving, with rapid approvals by state governments for street use.
• Tesla plans to operate some Robotaxis itself and will also allow Tesla car owners to operate their vehicles as part of the service.

Understanding FSD: Elon believes that the potential and direction of the company can only be fully understood by those who have used the latest version of FSD themselves.

Licensing FSD: Discussions are ongoing with a major automaker regarding FSD licensing, with other OEMs expressing significant interest, though integration is expected to take approximately three years.

FSD International Expansion: Approval for FSD in other markets is progressing, with specific openness noted from China.

Optimus Developments:

• The Optimus prototype can now complete factory tasks in a lab setting.
• Tesla expects initial factory deployment of Optimus by the end of 2024 and anticipates sales by the end of 2025.

Cybertruck Production: Cybertruck production is currently at 1,000 units per week, with ongoing challenges such as supplier inventory. Further ramp-ups are expected in the coming months.

Tesla Energy: Energy business margins reached a record 24.6%, with energy storage deployments expected to grow by at least 75% compared to 2023.

Elon’s Commitment: Tesla remains a major focus for Elon Musk, who has no plans to leave the company and aims for Tesla to be prospering when he eventually steps down. Elon sidestepped a question about his 25% ownership stake, highlighting that shareholders will have the opportunity to vote on relevant issues. He remains confident in Tesla's ability to achieve autonomy with or without his direct involvement.

Potential Buybacks: Tesla will consider stock buybacks once free cash flow improves.

Streamlined Purchasing Process: Elon is working to streamline the vehicle purchasing process, aiming to enable buyers to purchase a Tesla in under a minute.

Leadership Changes: IR head Martin Viecha is stepping down.