Tesla (TSLA) 7 Feb 182017 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Tesla, Inc. Fourth Quarter 2017 Financial Results Q&A Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. I would now like to turn the call over to Senior Director of Investor Relations, Mr. Viecha. Martin sir. ahead, go Please

is you, Andrew, fourth by Welcome Tesla's Doug afternoon, Musk, and XXXX Q&A good Field and quarter Ahuja, today Straubel, everyone. the webcast. line. JB to Deepak Thank on I'm Elon joined

at results the Pacific at Time X:XX XQ as link this update Our about we the letter PM announced were published same in webcast.

as events based our with forward-looking statements. During results make on predictions materially this a and our call, due Actual those recent business number and we outlook in of and could differ of filings expectations will our most SEC. or uncertainties, comments are today. mentioned discuss to the These including risks

call, limit of the one portion During up. yourself please question-and-answer question today's to follow and one

would like remarks. Elon? Elon some Q&A, opening have to to jump we Before

you. Thank

big Lot tremendous we was and mass-production first year Tesla. is We X, step challenges, vehicle, Tesla. think that of XXXX but Model obviously made change for launched which progress the So on for front. our huge it's a a I

We operation in the and performance and significantly. battery by battery is world's brought significant that a target into also that's largest battery exceeding Australia, largest its installed designed and margin,

and challenges X but than think. associated and deeper so the truck, of X. we exiting, Model believe sports to heavy-duty a which Semi, few maximum load expected, deliveries Model every were health in dimension. I which truck, on cars like S be, achieved Semi unveiled is with production level a will also also and We record there overall, we'd Roadster, of a Tesla we I next-gen gasoline the super we exceed than we And And while think, were ramp, swiftly deeper levels

suppliers, particularly contribution phenomenal who for Tesla. incredibly had to really be done. up I the think, I think, Model and midnight is it for lot year. very in the ramp. to taken of This they've a hard really and Tesla, to as proud X, suffered difficult. in I like they've was a their so and risks thank great like thank we've struggle And also very should everyone the of weekends XXXX And work everyone they've being, at year And And the balance, work on spent in I'd associated involved the to burned really, production. those our challenges oil, a with thank alongside shared us ramping want difficult the I'd

us difficult I'd with So like supporting thank Model for them time through this to X.

them your reservation holders, and As well, we're cars, our love working as to you're possibly to as and Model quickly X going customers we get to can. you

end X as the significant production for of Model Model production, QX. exponentially. continue by and weekly of progress we're rate March of the end is the you've every and X targeting we X,XXX X,XXX to in seen vehicles make a the by rising As day, And letter, production of quarter-over-quarter

error probably bars It's really small that scheme timing the think Roadster production. matter hopeful a quite on the if send really things. can the Model asteroid we I'm So in X time, of a belt, could we just that people of solve to are and grand

positive is that that per profitable. optimistic for we point certain, X,XXX expect with It's X will but no asterisk. Model cautiously operating we be to income GAAP I not I'm GAAP am year some production, in XXXX basis, profitable will be big actually quarterly be sustained of week and XXXX, begin optimistic At cautiously very a So us. to likely we on generating a operating

Thank you, let's the Elon. go Andrew, question. to first

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and months an or design six our months. It's work team. tackled new to maybe basically on we for X complexity, a what of a what an we we amazing. semi-automatic is expect we evolution of and effective. is do the of little, a smaller, to cycle ability to being nine to spec, stations line, that a do renewed that we've to four, which if single that line and is and equivalent had excellent that scale completion adapt they've to development nearing which design. a faith system the call six Grohmann quite that multiple levels, have Tesla three, normally progress that has we is the of system maybe done Zone Grohmann to Tesla be then would So, other a All some series automated to has remarkable. production my degree humanity kind current And for that of manned rapidly have for and by we be not people lines automated be XX-month the of led and small in and remarkably And performed been rapid they've try X It actually that people is so in by have

semi-automatic semi-automatic semi-manual, all automatic – the Our is of of lines now. line sort our right three exceeding

– something – you'd and quite is like we're is rapidly. additional that that? JB, So that to I there able on scale mean, color to

it. That's great Sure. summary a of

where the operations. people But machines, degree very said, production accurate. doing a much Elon lines as has performing are but are is have the really made moving semi-auto of these operation. These modules, that actually – manual the about of there not think we perhaps I that between still it's been automation are, are materials, the

It's not artisanal.

what This is the in in half part effectively last of been Exactly. year. has – quite the – ramping first first this

Yeah.

the gap effectively bridging to those lines, and semi-auto continuing as bring expand that, the is re-design that we're So, online. and full automation that we

providing probably you for that it's can see Yes, interested, are worth actually investors some it think I tours actually first-hand. so

what's firsthand part like, is think on. you it exactly understand going see of I it if you'll

just for kind it interested let's some – to hard because arrange think investors think some I to for I for can Otherwise, are feel really words so that are is. imagine. put what get tours of hard And you a that it's

also I want to just add.

portion complacency I say last this of maybe been teams, think huge of the of and this replaced from happened a of are Tesla end the a area. intense to by at different whole has teams, an and year fair targeted thoroughly there lot that initiatives focus team it's degree that at

a get the the question rate, opened of to of production it's a with, So, not of will question time. Elon as if matter we just it's

Absolutely. Yes.

just could line automated the fully What's run come the to with expecting you I are rate clarify. If when now semi-automation on? and

new it's in just granularity next within which quarter. automated terms landing probably coming the level in to lines that we the – up dive the Well, of a is landing productive at into this in sight be is starting not Gigafactory and of expect operation. do But what to from exactly

Okay.

Yes.

it's then next been expect in in it's the Germany. automated working to and We arrive – month new already – it's lines March,

question a It's of Gigafactory, the to works at over brought then whether of disassembled, be into Gigafactory. re-assembled to question transport, a brought the operation got not. or that's So, It's reassembly. just and and and it disassembly, not

Exactly.

So, yes.

we're expect That the plant, we next The Fremont that that's would to the X,XXX very sophisticated quite or there's least think the for so, more not We is at complex. it's aware one material us alleviating X,XXX So, that conveyance probably at so alleviate most to constraint, production sophisticated the and of a is roughly rate. with parts gets that software per – world, our unit in automated constraint what conveyance week that constraint. to be vehicle system.

in production to get next X,XXX the Fremont. the be would system that on to So conveyance constraint is

also to on be appears that So track.

So, around error each getting bars we week. like the unit smaller predictions are with passing feel the volume

question. to go let's next Andrew, the Okay.

comes Stanley. And right. Adam the from with Jonas All our next line of Morgan question

open. Your is now line

launch I seen thing life the everyone. on... the Falcon my Thanks, yesterday. I've landing want congrats twin also probably my for in That add to was ever sickest

Thanks.

yes, First Totally just it was – question's nutty. nutty. for

Yes. Nutty.

Deepak, for a you. question

of to some the negative you the simulating your with have trade helpful, even? analysts question, know again, but execution temporarily arrangements been somewhere to negative have suppliers CapEx. the clearly, who even X,XXX doing your run temporarily of Is maybe cap or in Or, cash cap, might possible? that's out working between working enough behind that, something of exceed operating when or flow that Given made something X,XXX you that kind that very cycle, that I are get that some modeling there's is you negative of

where present from It's look working going QX. by rate the gradual we a CapEx. at exponential operations situation of where quarter perspective. amplified not our of a but cycle production, getting our end given negative cash by to will to create The it which is our ramp got from – to started, We a at fairly from it's plans we X,XXX exceed it's flow full

a Okay. now succession. on that. up, raised Thanks your obviously And of long-term some attention just got long-term of compensation a Elon, for from plan and follow lot as however, confirming kind questions,

outside from the your to currently kind Thanks. do someone wanted you that? successor within ask, of Tesla do how the company, of see or Just CEO right company you see as now,

for company who design and to that who there's I there's role outside like CEO I think would to search role, inside I going that search no is title take focus a would on or on of foreseeable point But passive is on. doing not best. product going expect active that be and and some remain which Tesla. CEO with that would that want I the and which active There's the if even new spectacular and – me, future. engineering, what could at have really on somebody or development, for fine

are a at this there make So, time. plans change no to

Thanks.

Okay.

Next question, please.

All right.

the question Frank Our from line Tyler with of comes Baird. next

Your now line is sir. open,

do picture question, guys. you would mentioned target in you X there. And the that I building for should facility terms connect How of X today guess are that production we still taking was for looking where the Y? And need quarters the or the bigger ramping ago Model we out couple years, units then. to look this we had Y of year to for Model a million Elon, car what million to for from XXXX Thanks year? getting by a a few introduce in Hi. a

easy Y. we're of manufacture X taking to really I think to the Model designing good don't the and of Y. how gun saying Model to It's year of lot about those, do related learned instead be We difficult, end are to how we've we manufacture really. this I excited got make want to from some how a towards investments I'm or pretty lessons to design but plan. on capital Model going a jump something

three I But on pretty So, scalable that. – be late associated I the Model be details wait Y. half need six second Y. going to But to, really want QX, probably this to and investments as some pretty location plans it's of think I QX you year, to think it's with Model any to suspect, make are definitive think months going for we in announcing great really and going production before to the for capital we

play? And is that in still million X unit target

Yes.

we from an in Perfect. And the Tesla there? investments one up. the quick And follow say think guys just needed you and can years? Semi hit do think to what then annual How let's two should next run rate you four about

Well, Tesla Tesla years a I product at is for XX% few – four grow which scale. there's years. I a big think, rate growth a a between crazy and I've even average manufacturing think year, difference two of going at an complex average company roughly said, ago, is a to and

like people exponential, and you since it's an the becomes initial to a difference. four in much versus especially extrapolate easier it which appears becomes exponential an predictions the conservative productions then linear look is then where on if appears, and S-curve, to curves, when these two So, it takes a huge basis, they if predict, off the say naturally the straight-line have you But And are tend it exponential – beginning. and an exponential logarithmic. –

state far – the predict to the or that on exponential S-curve steady than to or log anywhere predict the easier of easier it's curve. So endpoint

– four take I units So expectation. Maybe the more, if that's a you is roughly year reasonable think. think, right years, I but number, right the XXX,XXX a

For Semi? the Tesla

Yes.

Perfect.

Yes.

the be to I last which able think exciting. pretty is that we we too, unveiled year might exceed specs

I history this not be to before, them. to Tesla have wasn't made I Rouge. of The because be really, will great Another what T lesson River productize the that in product, Model factory. long-term it (XX:XX) have heart. car, advantage. speculation a The not this really going take these meet but that could really car. T We'll the is comment and And Tesla's could that Model going the will exceed over made but going very going we're competitive simple – what the I but a we be was And to competitive these not obvious product. We're make factory. Rouge, comments, strength River is them, might to of kind anyone was the think car; Anybody that's to ultimate it's is a long-term

and But my all the the the opinion. factory is product and great that competitive a itself engineering great going So design, sustained sort products of stuff. in be has long-term vehicles the in the autonomy to advantage, that

Okay.

Next question, please.

our Sachs. from with And question of next line the comes Tamberrino David Goldman

Your line is now open.

the your why Great. hardware they radar of believe Thank current set would is you. to robustness to if Elon, lidar and on your response that's an Further, get generated. autonomous point plus obtain vehicle needed able you level of vehicle be do that missing the redundancy from of camera data plus cloud their your autonomous lidar noted What to and from really their bodies fully-validated required be need Most hardware? radar? of is to from system? strategy, the Tesla what that that is to competitors and that given you incremental regulatory only camera software they are hardware stack going the XD in your just able algorithms redundancy the

are near Well, should radar, say actually there of there's for sensor field. (XX:XX) forward first the ultrasonics and are Yes. cameras, I cameras, forward three systems. all, the there's redundant There

set near-field it's But is just human. road obvious also third it passive also stuff, pretty is system for as towards the optical. geared So, the think the is third – important is that for I

giving find in is maximum out does they it well. it order to my meaning you a which and which We having drive will solve companies what environment – We changing to the not extremely extremely a have must is point to get that point that the any in solve to cannot active solve image – just crutch of. optical local must to read recognition, well, optical optical, environment. lidar, which in at be At difficult image view, it's have the will signs; extremely well recognition. it passive very solved drive We passive in you able given

net sophisticated path XXX achieve active nanometer nanometer so I to of wavelength take doing hard advanced recognition, proton to the that a you sophisticated you you that And with capable radar and if in the of then goal getting If think increasingly going pick you're image silly, maximum. neural combine passively. is pretty generator, you're XXX that's since

you millimeters You would essentially the around is approximately to X And in frequencies occlusion dust, because of fog, penetrating. anything. do want active photon through generation see snow, rain, radar can that

system have would wavelength. unnecessary. of and proton expensive, find companies a ugly at So, wrong equipment, to makes disadvantage. it the which will active that puzzling an whole expensive I themselves it's They're find to in the think just bunch of they do most choose quite competitive And a I car going

look Now am I I quite In perhaps am not. wrong. I I'll But like certain which am case, that a fool.

And up, a Understood. were low margins. and trajectory company X Model for XQ if as S I the XXXX think XX% may, the saying the we the about talk can in follow I range. you was

took per it step the down another report think I today.

assuming through to from you at margin What's I'm recovery you're expansion? path here So can it's get to probably to frame the going us that how XX%. and

about and then reduction in the mix and S the manufacturing cost It's a option and a to XXXX also X combination level variety the have in we batteries, it's recovery very a robust a of seen road the gross map. the increasing margin good things. which higher a feel past, We we of of good of and content, larger have very

achieve S We X. efficiencies, to which manufacturing a lot continue of will and on occur

it. about good So, we really feel

around the this I and of this our X of Model maybe but year margin far on gross will year, XX%, X, and on plan – I not we – internal and somewhere of cash we but margin end the internal S XX% and then X maybe gross we the XX% it. not, to by S or don't year, meet end know, calls plan, XX% probably for behind end think a our and Yes, GAAP this towards the by not whether

Right. as a we get I plan. internal you the road good about Elon ahead. that work And sometimes really exactly. delayed, out an don't said, is, think feel get internal sense they But Things map, that's improvement this

Yes.

We to have that clear path a goal.

Yes.

Okay.

please. question, Next

line the question of next comes Nomura. with Romit Shah from Our

is line Your now open.

Thank Yes. and curious more the XXXX, take X you're S just to XXXXXs. XXXX you letter it XXX,XXX And like sounds by in I'm you. but the It that do than could from constrained what the see cells these in vehicles? would

Yeah.

ago it's And is but large this at the is while overall. we've JB. It's Well, module change to of few battery even the a course the supply just per XXXXX contemplated, pack XXX,XXX quite somewhat of something about cap of a months the and year, feel architecture didn't a on production and and our with really now expanding could expanding we're with other other investments. capabilities pretty that some was that and matches something consider, we in it happy Panasonic making the units right we but bets Japan balance our It's right that long-term supply risk.

like really to in to total supply It's cadence. the go capacity for in need you Yes. the move item, also order whole manufactured complex given any past chain

Exactly.

if of to the design more. be have going you'd There say, machines make require it's to redline. XX% everything or more in create gross (XX:XX), margin. manufacturing redesign time, XX% really or are S then machine and to investments go which make and okay, have affects over then X, to to Kind you have lines the negatively has you to So, new everyone want to to shift

year good a S (XX:XX). to and and just production we And of so for margin improving I want efficiency think and pretty the focus the gross on X, XXX,XXX feel we about

you. Thank

Okay. Yes, it makes sense.

X. course is. keeping on where of mean, the the majority are the I that's We really Model effort

Exactly. okay. Yes,

Okay.

forward thing timeframe, you would other that coast-to-coast little be give on upcoming something autonomous we're mentioned The color when bit was guys you customers? really looking like Could drive, which more available for a to.

meaning been address Yes, missed – I I've on front. to so because mark we the that this actually obviously

one place production, so have to very effectively drive, is or much Model done took that. but we brittle kind to it not required have on it too it the somewhat everything the much of make route, general game focus work But would X it else a Our solution. particular specialized that but for could would and second code coast-to-coast

okay, Then beat to European could holy champion, AlphaGo, will months coast-to-coast I world something lame than It'll that's at was a think could then timing-wise, could a be it making it of And kind true simultaneously. this driver. to front. is thrash able it, which So Like just pretty a world's that it experts. itself, made solution. the a self-driving. exponential going things I and probably we're about like repeat in on where the net well other drive any one – of it route, little of human those neural do not not better if also six think we learning they it's much but the how it's three would we it's pretty excited be Like that outside. could I that's really am which Go progress progress, from to much And Google even AlphaGo. the – seem like and observation generally you It driver, I be what able for It just lame That's progress, It's progress everyone cow, where a being AI driver. is something all could like with like at DeepMind then driver's mean, a wow. doesn't thrash against it's doesn't good. player good like months, to then world the seem feel it thrash AlphaZero, went my pretty been like kind that. doesn't much the suddenly champion, not this look beat seem did beat good say could champion, with stuff. the

immediately? is And there customers is lag? a it then Or for available

customers. Yes, available for something be that that's would

Great. Okay. Thank you.

(XX:XX).

Sure. Yes.

Yes.

Okay. Thanks.

Thank you very much.

Next question, please.

Brinkman line with Our JPMorgan. next question from Ryan comes of the

is Your line now open.

afternoon. Thanks for question. taking Good Hi. my

is gross production bottlenecks called the in are vehicle? the at Model by of implement start Reno, finding one module than place differently in solutions which now or last the plans, versus expensive production its line Model XX% put to the prior the margin margin ultimate battery about feel the Fremont manufacture one cost X original gross on that July? to any solution you X you potential your or in less to more or for unclog Do to you As

I think we feel about good that.

I of – of number we're I'm product I I long-term think Gigafactory, manufacturing of that which we much think probably dramatically. That's learning to about like of really pretty the better, able small a why productizing exceed a year, think next I Like far has understanding it carrier – we're huge Make are, We far efficient. probably. our is strength excited can manufacturing. manufacturing biggest look how probably (XX:XX) be improved the comparison. ways to about make said make like like think will potentially it by nuclear Tesla basically. plants, world's Echo more the

that's there's products' the go materials and cost labor the I simplicity and product by and that And there's to that. the improvements increases it cost If add cost itself. the savings where ways will directly small as some through ramp. the design of bill maybe be the overwhelmed mean, I some just finding we to we're in doesn't – simplifying embedded and CapEx opportunities. think in improve to is, Yes, are we incrementally

Okay.

Yeah.

Model on I Y. is the feel we optimistic really margin X line especially think Model gross and the for long-term bottom about potential

haven't view. currently seen changes our that We anything

of my Thanks. free are flow. the up, And the might focus point Roadster, you Model your thoughts also about guidance Model the from And for flows – and just That's letter curious at the truck, That's great. XXXX. invest Y? cash into to then income medium-term when follow I regard the yes. that prefer just less you see to in in cash I'm positive as generate with operating what some Is Semi quarterly then operating X turning helpful. very the a

like be which cash I maybe Model like we in is pretty five and We Yes. months But sense positive invest positive think flow now. cash in probably flow, four, – think to quarter, from makes it significant could yeah. Y third like

X, of of so. our future products, that, growth Future growth energy Model

Our see see – good we energy opportunities really products, yeah. are opportunities there. we The

Makes to good good business business case, invest. sense

more our sort realize that much or car produce for times maybe at Yes. meter faster they good fast. the That so I this It's second. sounds just gap, every gap including at bullish half interesting seconds. fastest are in, and potential we're no one is per so Walking think. a five a way car, that's there some went something, What grandma they But manufacturing. the industry XX meter actually sounds with think don't long fastest fast. And production with the that think only how they math line meter they're I X.X speed X-meter if than a of of speed car I production a walker Super the but (XX:XX). earnings manufacturing, X.X competitors can earth. like than really you but of improvement. of line a car – meters the exceed per factories on Like is like thinks car really on find just prior is good a through quite it fastest call, second,

That's interesting comment.

mean shouldn't kilometers moving Why speed. at an It's be miles XX factory, speed? the least that's an in that start XX it hour, aero maybe caring it be kilometers or at jogging the should hour. in limit, miles an about stuff or around hour, XX like, the I XX should call which drag companies

much. very you Thank Okay.

you. Thank

next go Let's question. the to

comes Bernstein. our right. from All with next of the And Toni line question Sacconaghi

Your line is now open.

Yes. Thank you.

in And us Is that a going expected You XX,XXX $X.X per slightly for tell What take XXXX where billion? of investments, have I the bit you to could mentioned commented And be will going on what in level exactly this I'm is higher that you the roughly, shareholder XXXX? than $X.X be? is billion. that capital Are capital including get to you more were also Y? it capacity? than to call full in like $X.X billion, if spending that, us the wondering So expenditures in XXXX. production follow-up, please. week exactly letter car to Model is Gigafactory in a the Elon, that

investment – Sure. in the biggest our mean, biggest on as completion in very breakdown, of X. I per front required still sort obviously have And significant XX,XXX of payments well putting plus the is place up production make we are our high investment of that our our to capacity that to for the phase X now in level, we the includes week. Model next as Model

than So and that's, many it's - all whether Way I storage, other it's the about, XX% energy the X, would is Model say, we than whether rest overall more XX%. is things more talked

Primarily energy Y storage. and

And service want service to infrastructure increase superchargers, the to then significantly centers, our we capacity. significantly our we supercharging spend, increase want stores, capacity,

Yeah.

all those pieces spend. then total of to up So the add

Yeah.

Just for minute. sort of Model on optimism Y to for give flavor some a

just I that Model – do And less something think might for of is I units a year, million. maybe X that Y to than like the Y, X something think, CapEx able that, CapEx be $X.X the Model million for we capacity Model like for think aim we'll alone. at I

improvements you Y promise, feel a – CapEx CapEx, of that's but improve Not the I level flavor factor just gut my give probably a on on So for probably manufacturing think by to my of optimism a Model we can X. front. on

helpful. Thank you. That's

XX,XXX get incremental lower margins going to or margins, you them negative, again, then, quarter didn't they're anticipated was a and going the breakeven. so are around week you had Model said still think But that QX originally I volumes going – the what for despite separately to fact next would all capital we So when equipment at than year to you question, there. of complete quarter. this greater that the volume to the X, would have be end gross to that is breakeven Obviously, the the you for that be thought than required second you're much expected X think suggesting and And XX% on you get my Model to have QX higher us is $X.X be billion are expenditures? that I to

was the with the (XX:XX). enthusiasm about margins appears guidance apparent you this that than near-term So gross can more around fact actually your trajectory it cautious help gross you reconcile in early have year the margin the

Did line? we lose just the

Can us? you hear

Hello?

can you. I hear Yes. Thank you.

week question, outflow, Model To finish equipment next that your while of or happening will still no, and There's verify of as test be will the cash lot and in first our always lag Yes. concluded per capacity to continue Always. a investments we XX,XXX in it. a X have off year. thought year, sort further we of Yes. next

now steeper ramp well what And margin, were we months the are here. our then, as the continue that'll know, six targeting, XXXX, a by X gross XXXX. later. point So at and terms in were expectations than of much Model that's in you hitting We projecting end earlier off of one X,XXX

So at that have inefficiencies. just we'll slower ramp, we know

the actually of of that hitting, cars. capacity, full all and it's It's we're the simple, temporary. while as have We not depreciation operating equipment, sort pretty are and costs only many producing

Yeah. Yeah.

doesn't anything imply It fundamental.

Exactly. Yeah.

massive – is machine load that target and X,XXX XX% where then things able remaining production you a dramatically. fix or machine XX% a production it but is as isn't, production machine, and the machine, get volume. problem you're that small the volume on a And that XX% of improve you've got got of a the smaller XX% this most of – to you've like or – unit that then production I capacity, overall way mean to at chain supply production on when So then as

Right.

let's car a It's a like use – having at gasoline sort its operating of of analogy. that's a fraction

car four-cylinder operating a okay, it's on like actually. like, cylinder, machine it's a got Yeah. (XX:XX) big You one just

Okay. you much. very Thank

to question. next go the Let's

line question comes the of Jefferies. next from Houchois with Philippe Our

is now line open. Your

Are have Good electric supercapacitor non-related surge thought about you storing be expect trucks, Yes. or or considering you and technology as an the earnings, Musk, of of In to Semi. application too application industrially what as slowing I the of viable? to truck, – Mr. that Semi down in I of that much the to energy the absorb. Thanks braking in or the past, on slightly Particularly for general make your have kind truck is a the implications the would that taking question. would battery for way in energy the a the energy. a for generating about afternoon. heavy spoken supercapacitor

fan science being the needed. good will – which I energy, you There's rapid think just ages mean able ago, be you not range, degree in once point capacitors. physical and so power is – an – of capacitors this I applied big a to needed I for capacitors, the acceleration absorbing certain then energy I going ratio, amount a do power need to don't to do for Yeah. of control braking. and a was automatically you lithium-ion have basically is have that a I'm think Ph.D chemistry so at huge

– performance high energy Yeah. It's intuitive definitely truck most heavy than actually – products. is vehicles. maybe battery in this discharge JB the our less energy than cases is rate demand in generally It's in the power the also not on but the less even of to

you have Elon power, As with a of need. end actually of energy, you a you lot more lot said, so you than up

for the cars the periods to But remarkably Yeah. It's extract course exit, to seconds, seconds extract way – just parking over, lithium-ion than – getting their in is the wind have several ion it works as start right takes a is surface. of migration them a out. less cars cells, of ion the the from you is on once lot, because certainly sort very lithium-ion but if good for from like high power surface. migration the chemistry say, And able for a lithium-ion short power the of all time while lot you're And essentially way of lot, in actually you several can power using minute. or sustained deep the the the parking power that outer you parking the then for you're front have from

you. Thank

Thank very you much.

Let's go to the next question.

Our of comes next question Brian Johnson Barclays. the from line with

now Your line open. is

because Could title was maybe yourself like I manufacturing to us follow as process really little the would the believe well level? kind does talk on Toyota. of you the into what particular, from place. which humans? to machine, came which of managerial But you up? extreme, or around a the to comment you're a culture, the not some able Or in in be at about discussion bit Foxconn launch about benchmark a give processes, a three as ramp seems in Toyota XXXX roadblocks build I some building the about much new there, factory, so machine question its talk, the to the up Field other on the goal against Mr. of first putting the know example for robots to MIT a How to book replace I'd more four product months managerial you Yes. about

product cannot ramp pretty new months. Toyota a sure in up Well, I'm three

at In XXX% about spent Tesla. Deepak before certain fact, I'm Ford years many that. joining

take from new when to six with come Toyota including all months companies Generally, up an year they Yes. anywhere a product.

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platform, major it's X as all an or a we've S new It's a so done. not Model that

So it is longer.

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Yes.

managing Okay. But differences in are be within to way factory? then the the though going the what that you're

really the vertically is difference integrated as as a a quite The most factory thinking fundamental about product, product.

engineering as problem well. as technical treating It's it an and of a more

Yes.

of... Instead

Right, which Production is System. the Toyota

so. think don't We Yeah.

robotics, it's extremely the really is think lens chain. They're operational generally supply terms an of of great flows at a and that deep materials being this think optimized lean technical really in problem, process. at more looking of approach, I a it different managing the it, and automation, but I from

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still have lot ship large You Model still tiny with say, would that has scheduled of workers, to of upgrades. crashes weird. Model But like That repaired, just It's people, the a the technology there's organization service car. are maintenance, S, and be like has that there lot a the with a we have actually you S. people it's have break, that in that not be need people you things don't

we Tesla it. lot factory, people has have factory the of a you – So people few expect but that very in the around

operations the the with this unique. Model I in – many is have degree their we simpler from And dramatically the even also development is that worked is huge in car already and to have Model integrated which is we X than S people product think forward have degree Model development built. a and a manufacturers with build Doug who that manufacturing they've volume which the X career – anything step say

products. manufacturing simple capability go Elon Model our forward, to of mentioned So as from is Y, going we part a our come make big how we

may You want...

the the in manage interim? people you do How

Ford didn't and Apple. come then Ford Yeah. Apple from He and Foxconn. Doug – from came then

processing and model of scale orders very ours. achieved The of in below whose fundamentally manual ramps An was very Foxconn very simplicity ways. is many different quick at was product what through iPad complicated center our is is than high product also where less screen a magnitude

kind a the extremely different end one. of product then ramp that manual to of the magnitude is very the it's up have very order and life product and new in So a building you it's terms and quickly, bring a you're of that of because way

Okay. Thanks.

to search his for I well going to and forgot service is report company. me. wish mention be group is in we service sales departing one are our Actually, to forward, him sales future and the plans having John will no career. There replacement. heading thing And McNeill, who is up a We directly the

Okay.

Let's question. the go next to

question comes the John line Our America. of from with of Murphy next Bank

Your line is now open.

to up the Good the afternoon. Model of production follow on X. Shockingly, want I

production there incremental capacity, is there like like the ramping production inside that running? hurdles seems that's here. you're the two those here you're in Fremont GM your you're solved there's higher that factory? enough Or up much going you'll with Fremont I'm problems Do how sounds done be there what topic hot It (XX:XX). up. ramp as that outside in on and So any to you have were once the and understand a facing Toyota issues from remain step potentially are experience density the if we confident think of be might but curious that X up Gigafactory you the contingency just once than in to also, confident and those even Model producing get sort is process the you out can then other of trying about something just that that might are that you a XX,XXX, to that kinks is be And discovered? worked X,XXX out, get can come of as

all of level there's parts is think warehouse on to which there an artificial significance There's is the that creating The created significance. where we I'm automated two are conveyance, being the automated up the then stored to to only the aware and an transferred actually, then being Fremont to and raised line are the system line, sort floor way levels. conveyance of production are The system really conveyance, XX,XXX most parts really the two we I the of can a actually vehicles set automatically out that a without all that in of on things Fremont way is the mezzanine. conveyance The brings then buildings And the ground of parts basically on up the – week that bottom factory any varying that from significant new significant, existing the kind get parts space. the without constraints coming module lines. and are floor the – in the is system parts conveyance of actually ground

to and integrated We south to paint, I It's actually rate. north as do mean, the and combined and spent XXX,XXX vertically than relatively vehicle S paint bring lot produced paint a to CapEx, which to like shop, on is be we're paint approximately north can than we're way in GM we XXX,XXX more the XX% XXX,XXX facilities. X; up achieve confident so XX% using which a X will Toyota X the bring X. up same were we more well. per and with would year X, south small But for we upgraded S what and less need paint, S, we

right? Literally and figuratively,

Yeah.

you're on you get look As at what in definitively the its (XX:XX) here, we're Or looking plant? we though, product and capacity, out new plant? facility? of think about we million-unit's could about Or at talking Y more that, as limit really Elon, that Model a based that

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You are on (XX:XX) a vacation.

So to repeat want don't we that.

Okay.

(XX:XX)

And then if I...

within how Elon delivery eventually that we to that as but the line, The that can months, material solve how both quickly, many be trucks production material we X three may We'll in very lines, get material starts flow for limit Model mentioned, develop how get the to become the we density to high (XX:XX). line. limit and velocity

use Look, that. Hyperloop the we for

Yes. Actually...

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achievable. to automated should Model get things to got be we X and the where easy they're almost I we mean an things more from we where factory. But GM or a sub-systems to can increasingly XX% can Fremont. that XXX,XXX XXX,XXX, then These see I conveyance X, tunnel, are like plant. seems than doable. be XXX,XXX Toyota path to of but there do transport do, and get can difficult, it'll a sub-systems seats all just maybe say pretty And which have so S the So out and production build

one Deepak? Deepak. Apologies, in sneak I Can for

kind some you repeatable, and the throw say not I You but did might the think in quarter. capital got great with stones working be of us might it in did I a job door. you of and mean, the it cash

like at capital as you do think, the of the you the I mean, inflow? the good you inflows. pretty are look it's here. ZEV and customer So we negative I do how this up think working from think and I cash in were cash it and benefit as future as you'll large two, the working And mean, well? is was forward? repeatable some going get credits, ramp those that's this done is just deposits repeatable those then apparently How work benefit really capital, also

Yeah.

and are repeat not QX, as forward. working that X those be the will significantly capital. finished itself as a was you've which of of going impact S Some on Customer deposits And out. not goods in huge reduced repeatable. not We well, may inventory pointed

working we'll continues, repeatable. we And continue to needs extra However, keep as and cash, very to which tight capital the Model receivables for to cash essentially X our being ramp we the are us do be create manage for make sure on else negative everything efficient. accounts that, will controls

Okay. Thank much. very you

to Okay. able to we're be not very much. going But to everybody. get Unfortunately, Thank last one please. maybe you question,

Edge. of James with from comes question last line the Albertine Our Consumer

is now open. Your line

lot sort should, the years it think and hearing we of is asked of so and you topic updatability wondering, Model as after just customers. quarters Thank to were as more in. or sneaking get a existing these pre-Model the A over-the-air it of S several X I'm reasons you, about I demand ago, kind believe maybe appreciate rolling why vehicles. but me were Great. is high you one had X many remains out of of the doesn't production much been we software questions

of and you imagine the that color we're ownership. sort future I you're level in margins, you sort seeing in And S if that of the give Model earning of would customer for the vehicles the are some those wondering – uptake us some not X Just can but on seeing. what upfront of potentially assets are

you seeing that, there little So on be about elaborate little of could a trends or talk kind helpful. if a that you're what would

I advanced and – we standards particularly human, will to need for capability can out we better would to the get than hardware to solvable may capable than also a if The it's like additional we the But it which more turns regulators self-driving of better for swap be the that of current need be doing computer, think believe minor self-driving. the to Yes, X item the X, something some and computer meet probably full like And biggest anything ultrasonics with Hardware cameras as and eight computing software is right, computer we S we with regulatory is self-driving, upgrading think do if full but people X, times standard think with the that. you five hardware. improved compute Hardware or and capability expense get to human is that is full out capable the type be easy the purely capability, that. of self-driving, of it I the so be relatively

think probably I So opportunity. that's biggest the

all And take along Autopilot not lines, customers same tool. our the enhanced

Yeah.

uptick we more, people see on that. as hear even can And an

your all it's point. but around to So Autopilot,

cost definitely available, a and than then increment. $X,XXX that's And upgrades. we that's software exactly. sort driving margin. potentially think require – And $X,XXX more hardware is product zero Yes, semi-automated of full that's XXX% the that's assuming self-driving doesn't of when marginal a And with probably provided any

something I think like or maybe that. increment $X,XXX

in kind percentage to that look opting upgrading just are like could the provide of or of you what any get of today the there of over Is data can terms business of magnitude, time? sense us though in, a consumers order that

– Yes, that's well...

people at this in many are opting time. Not

it, doesn't people an the self-driving essentially, are For the actually work, buying it future. it full on option on since working in

Right.

operate There's expect or where its not, vehicles. shared that's autonomy places like Uber in there's can fleet of or mentioned Tesla people you So a a their where opt Airbnb, kind shared and we where also Tesla's car also as kind Lyft own things not operate have of prior like enough can fleet combination fleet and to (XX:XX:XX) sharing trailer. then of at enter a like a I that guess, your I

So that's pretty a significant opportunity.

Thank Understood. you again.

Okay.

much, all great and that's today. we questions, your and talking to the very look think we to you have in forward unfortunately the good-bye. I Appreciate all next you Thank time quarter.

you gentlemen, This the participating for program. today's thank conclude in does and Ladies conference.

a You wonderful may all have disconnect. day. Everyone,