Tesla (TSLA) 27 Apr 212021 Q1 Earnings call transcript

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Tesla First Quarter 2021 Results and Q&A Webcast. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. now Viecha, conference Relations. Senior would speaker to I Martin today, Director Instructions] hand over the your [Operator of Investor

you, webcast. afternoon, first good Kirkhorn and by Carmen, welcome of Zachary Thank Tesla’s other number to executives. Elon everyone. Musk; quarter am I And Q&A a joined today XXXX and

deck webcast. announced the same at were results p.m. QX published about X Pacific as we this Time Our at and the update link

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

portion one today’s yourself Q&A, [Operator of follow up. Elon limit please Elon? question remarks. But opening one question-and-answer before jump to Instructions] call, has During we into and the some

Great. you. Thank

quarter and non-GAAP achieved was Tesla on a levels. QX for income net $X So surpassed the first record XXXX many time. deliveries billion production, record in

We a real demand of our and we seen the customer in best vehicles ever is electric have acceptance seen. shift have

an exceeded the demand to So in in in reduction are we first QX. increase in the that saw this quarter used seeing demand normal demand seasonal and in is we -- a reduction

became Model world. the X the So best-selling mid-sized in premier sedan

production sedan just for by kind in half X factories. any exceeded into and BMW was Model this best-selling the of It’s Series time the two longest only In and luxury fact, best-selling the with three-and-a Tesla should I The X premium years the say, is been world. sedan.

is and best-selling year. year. any world, per million think, in kind Model couple $X.X the we past roughly of will probably, remarkable. the the -- be in next Y, its Model For to million of combustion Model Model it When selling In be or rate X annualized engine quite so vehicle translates car we think $X.XX competitors, delivered which quarters, I Xs, comes to this Y an of out

certain to quite more next Model is its but that the truck progress. of XXX% Full world. I the best-selling it’s in of that Then year, I’d think say great is not Self-Driving, the is any I that of or I So car technical Y am of Full likely than XXXX not and definitely Self-Driving This make the with problems kind regard -- great think, one hardest in one likely. no necessary AI, designed real-world watts. ever on the to -- very small of solve of small have maybe but exists order watts has fairly a existed. part basically order a we solve we need artificial or that efficient computer a intelligence, that’s nonetheless, in artificial compressed computer XX that XX it, simply to significant And really, using intelligence. that to a pretty computer, of I sort And that into

of a one rid in And this if the good. think a than This not making was is some XX,XXX to is -- harder or was shortfalls of going into you were with really of the it getting but this this much So smaller that. like a say, server is fit screen. I something -- to use, computers the for vision, questions. we radar, of elimination in last finally are Radar up

can pure my the safer car solution. person. than mind This with vision is -- different focal it’s dramatically just in having and than question We looking make like better and your size back actually like of and head best at head the eyes eight it speed work a at the You eyes processing forward. human. -- vision There’s no yeah it that that super average works It’s need of works, three it the cameras. a when to a distances your is is having because on human

So, but massive fundamental dataset. And so, to we a some real-world intelligence. artificial basically hard and is have yeah, also solving vision quite this solve because are actually solving about is We AI. the something problem having to this key

little kayak having million weight a rare are world just a the data the well car. cars A with on kayak things has sort of at in many ignore of example look car actual this of the from the or and in data very car sort example. that yet one an is of road car, a the where truck situations, over the carrying truck So, weird front so front road. the on must kayak just dangling car a corner-case a a This is like like from the and the collecting roof a with a --

it’s that quite am tricky. I highly So get confident will this we done. really But

this will QX see yes, think continue quarter in QX. So, a that I bit to we and little

But Insane of the had scaling that, in range supply addition quite have most life Tesla. over driving shortage. So about -- This we that huge some the difficult for in production a -- COVID of quarantine restrictions. China, parts. ever we engineers we because difficulties example, with parts supply because QX the get is unable had then chip the to were there problem. the are with was -- chains to critical of chain difficulty Obviously, a experienced in whole of challenges we upset

factory was worldwide our that in drive meant that. which dependent made Tesla Nevada taking in on units So

very And situation. so I thought that was challenging a

many But think I particular just problem. are of are that mostly challenges. two we those of out

dealing team chain of the with an supply job So really severe shortages. incredible did

So actually level the more got S battery [inaudible]. ensuring little Model which drive S respect new was more it as a it that resembled program, version S interior revised call issues factory expected new Model system. and the has and with Paladium pack new and electronics and new was the new has more of lot units super a are hard, There and of just encountered internal developing that a infotainment which quite X, the safe Model was the high-station X, were and there or to challenges than Plaid in

a we get just the are making we up to the [Audio took of it we do is But So cars slowly months. we ensure to in Model the the production for to quite that development probably trying S/X safe. battery and past are But that Gap] new and the stacking of bit expect to delivering the few Then, S refinements them ramp next just built. yard month. have in start them car

for be then the X and in fairly in volume to So in QX -- delivering S high the production start well. of and QX as sort to Model

quite probably up I as So ramp the S/X high. the for we think I new demand will think be

supply processes. to going internal a production of ramping chain So and question be it’s surely

of -- or are we produce. will X,XXX product. over are think on we actually X,XXX. here. it’s just do will to factors a outside contingent X,XXX and probably I like control superior lot again a supply costs doing time, But week. is But us per well if bit get this S/X issues, aim This X,XXX solve, So less of It over week, matter our to it of we per produce, get to less -- is going chain little which a of we be to we S/X then global a lucky, upwards just produce perhaps,

excited XXXX So XXXX. lot about be to and in conclusion, there’s in a

who Cybertruck, Model and building those Semi, and from -- limited to Berlin we of factories In production the progressing as on at Texas we production production development the factories have And expect other Thanks made in next as Texas volume from have the a quickly will ramp and months are are continuing to year we Both three this year work can. year. Y to this and We products. huge on at work continue this in initial Tesla well time, Shanghai. background, everyone we and success. Berlin Roadster are

Now to questions. on

Thank much. very you

Kirkhorn have We Zachary as some from remarks well.

Okay.

Martin. Thanks, Thanks, Elon. Yeah.

mentioned, of by So multiple congratulations many Elon team understood the best of to the think, which three quarter, the To as difficult for quarter most key first Tesla items. the on is I year in typically the reasons. summarize it’s XXXX, records had breaking

Y launched of receiving production the reception of gross first we began great and the margin and a the quarter market. ramp Shanghai, achieving First, successfully in positive Model in from

Second, The headwind begun the not S deliveries as were Elon S X QX and we Model although had during profit the flows cash deliveries. Model we to to yet the free a meaningful mentioned, in production QX for process reduction generation. from customer began quarter, and

and million reflected estimated we profits direct we before lost impact impact result the considering as to program begin $XXX this incurred of mentioned, in COGS shortly. in QX, of expect revenue is an deliveries Elon a example, transition. to of first And as P&L the that’s which For relating majority of even and the the

semiconductors supply and work through the to of continue particularly we as chain, capacities. around port the Third, global instability

our double with difficult expedites keeping minor reducing Tesla credits costs sequentially team landscape costs than were did net income, evolving quarter we believe situation. our SNX reduction faster as the is a in also did partnership factories high we course this is they quarter. with some to work in expedite experience the the were but they While running, tremendous improving, in of that over QX, We it the production and suppliers higher global does margin and for an cost mentioned in click spite is a improved If structure This pace. interruptions gross as within remain even year-over-year. and an at excluding it’s auto and and in ASPs our of company the

additional remained improvements about Solar optimistic these costs course gross quarter. other fixed be look driven the help over BPA strength our On strength, was in business. lease for and of out some energy and Services operational we This winter particularly service we these by aided we second profitability, resolved. a overheads. feel margin used experiencing On service business, year, trending that these have recovered headwinds margins, and gross in are of ramp the Roof-related So towards as and are revenue car by as opportunities start to the the in margins, negative seasonality absorb

a on multi-quarter We Powerwall. continue manage backlog to through

production increased as On are for QX, this of working increase this and increase. aid as these which volumes those expenses, fast profitability as can was in will R&D, to operating business driven We in the by and investments. the new structural cells, silicon SNX, In our XXXX investments pack particular investments neural battery growth. in net technology for and includes and and our this we

clicking show On that China anticipation in before, come track operating our side, Double significant flows support remain was volume SNX. up for for margins. the said setting the and we free positive we to sustained and have plans continue I EMEA from capital and are cash flows, working both generate headwinds despite as on cash this And there. SG&A of infrastructure on to we industry-leading

reducing various forms making are of debt. we Additionally, progress

in which during step a free Taking cash in small back, a also invested billion XX%, operating four We billion billion quarters. the flows $X.X the our have trimmed QX over gain we in quarter, position $X financials. past flows our then and to contributed Bitcoin by cash in $X generated

quarter. As as that and of our guided long-term remain plans and we our can are for we demand meaningfully production this forward, we as to we rates. look than to to we on are year last unchanged fast Global believe levels, as growth XX% exceed we driving track remains production so increase higher annually

think Y Austin associated in our to with Shanghai those these largely the we driven we about execution pivot newest and year, should launch the these as of expect we year as we quarters Berlin. end of of in ramp have then QX, discussed, line and SNX, cash the and ramp be towards reductions course QX Model get generation As will the on cost And continued programs, the factories and towards evolve in and profitability by story of over our of and the improvements.

we So up for open us questions. there’s exciting shortage look for will work forward and on of certainly Thank things to. it and you to no

retail Thank say, first much. take website. we will you very And our a questions from,

few is, question over along? AWS-like Dojo Tesla how business an is first Dojo next line how years? Could The unlock for coming is the

will jump here. in I

with to… respect So

that. about mute. My I Sorry on apologies. was

ahead, Elon. Go

think or is So, an yeah, company lot perhaps Tesla now so Tesla like, a of people the, it’s that company. has energy saying of right think basically car a people --

robotics a AI as car think company company. Tesla will much company of think or energy I we as an long-term an people are as

things one are and that hardware do think the to developing of Self-Driving the appear with we be world and AI cannot. so I software teams strongest others we in to able

have in to and Self-Driving. developed look So we the you of we solve of the if technologies what them evolution order problem at developed,

net sense out that find world. because neural there the couldn’t for is computer, the so our designed it sort of our quite a net a primitive AI needs in and is brain. enough have kind so scratch software own. we built we think neural we happen road team is what this and designed really a built probably So from task this advanced been The to we And real-world most makes computer, developing powerful then was system the what and of for

it’s a eyes is for and net system neural entire designed for which brain computer, Our vision net with designed is a -- a it’s computer. is brain. And neural the because

a has redundancy see it would level tired. and achieve is pretty And in the all eyes, reaction forward, such excess that a obvious it three have so can seems time of you and see good system far very texting, Then which gets it safety, if in once average super-human. system high of an person. never its directions extremely that It’s at points you never focal has

that. of we that’s of Dojo are kind part training what doing. Then So is the

will cars active time. then needs of simultaneously training -- to this. by quite software. training lot means any be labeling million cameras per And drew a training for frames over a tricky. to digested currently, per eight powerful XX software, able we very amounts of video have we be providing wasn’t at we because which that So use that labeling do over X to surround of vast year and labeling, second This a video perhaps We in do video tool next is Tesla cars a use camera data software training have existed system. million all lot It up

the step our order Holy labeling taking So Then further, labeling. we own it developed is Grail tool. obviously, a

order that at that is -- human now confirm to the we just and good and the order made, need the system. make edit look the and then correct perhaps quite at every data time the the where train then trainers labels getting an trains system labeling training is are the So it edits. the to system further labeling And label laborers

of that’s So just spinning vast that’s of is flywheel really and sort video the this kind with of way amounts do like only a up to data.

to we this need then So efficiently. train

will So Dojo -- of it net right efficient for that will the of. more on, training. is probably order but say, really an in in think and to of frame per frame are be neural what video, DPU-based compared the aware in it be to per metric Dojo show we say exact next think video cost hardware best or is of energy is, order supercomputer a compared optimized magnitude of magnitude efficient more solution we a usage solution We

will that as that mean, then more does of stack. and is be or by So the possibly used computing observation, more could computing It an neural think, others. just seem I back step I though compute over net-based I basically AI-based time,

but it conventional still and it’s We -- still portion important, computing. will of perhaps to called going are become will based -- compute. very It’s be bigger is to [inaudible] a important, but computing be neural become net going bigger

make but story, it long it anyway, think, will use So available. we and will others I want too probably, to

much. very you Thank

to Could changed bit i.e. recent customers if changes second a discouraging The challenges more for roofs Roof Tesla question go Solar the about price and Roof at Solar have and on week? investors. X,XXX investors. been per Let’s outlook the from has share all, retail

Yeah.

of I for the Roof remains say, should First demand all, the Solar strong.

raising Roofs. to is despite price, to in Solar meet still excess the So of the our demand install demand the significantly ability the

significant the at installation point. roofs, we difficulty find gone of made dramatically. choked production in that complexity certain are of but but So of varies mistakes has the roofs did we basically fine, some assessment We

roofs. easier Some literally three two roofs times or than are times other

has initial roof fits can’t rotted is the If structure three size hold can protuberances just or not out the is Roof, a times the sometimes Solar to situation. the of sort strong enough the if core you our have then roof lot of double, of or a all roof So, one quotes were. be a cost what

a money. and those massive to just in what go customers to is do do lose we have So of What cases, is obviously cannot deposit. amount we refund their

without past to Solar product that situation will not every cases, I to refers we if a is the configuration But power, have you sell could it shifting Glass That the peak -- temporary higher only house, Powerwall a put a there’s solar basically, solar week, this to most only or either the which about will, solar I have there’s one the whole solar plus power But it house essentially Powerwall. important to of with deposit. Powerwall basically solar Roof be the but capability. the refund solar panels can conventional the all the one be We the what situation, roof the think in is just Solar factory got plus situation, tweeted a Roof. this this are a is retrofit about and will on Tesla provide to, we

house. will only Solar ever since power Roof, power panel the Powerwalls installation installation go solar to made and specification right, on or house, peak same the the will the between roughly have the capability, the and means are never of Roof, into from power the go Glass energy you utility the November directly increase how a main mains, and power the will twice the circuit be the the roughly of which touch all It the less, need Powerwall. easier, have difficulty Solar twice more Powerwall the power dramatically you the capability year breakers lot is basically, oddly -- but of depends about utility the power all count than the And the will is So be last specification double. Powerwall the And of The main panels, about twice of power about on peak between because difficult installations steady-state but or the ever the a it will will the website. roughly. on the only much power, much website. They the the

breakers. therefore, touch to of almost art being looks need circuit and requiring every the never panel. main house house, a exceptional rewire You Effectively electrically ability the to instead work unique the same of

or important own It’s or So the Powerwall it, to the case also this may for be scalability. extremely that installation is will the solar means only its way apartment this that house every utility. do And be, really. whatever

And the power. in go lights have will neighborhood, all out so you even if the still

can also, security. stabilize utilities, overall that we Powerwalls So gives grid. the with energy people in working use the to And the

if was in power -- power like there shutdown in Texas. a a that form ability like say was demand, good power. no No storage. the peak There’s power There and lacked was buffer the there let’s had the to peak power to power, they demand So of grid because storage.

of whole the houses, can However, at we with a bunch power. Powerwalls actually buffer

grid actually if can peak of care obviously, with the on the of with more the actually partnership power, then So release we needs we demand. take and power homeowner the to grid to utility, then can power the consent, the

as So, people will headed leaning mean world where, are we many that and am effectively, towards businesses understand the I about will in at necessary, needs This sure power a are as how homes we Powerwalls This and profound. utility. vehicles. can profound where people will extremely not increase This because giant significantly. talked a distributed -- is earlier, is electric this. actually towards the just operate

more will electricity coming a to We -- be somewhere. will bunch need need there

renewable electricity, much we times three we currently go as you fact, as about if have. full need In electricity

need you electricity all as but much electric goes if all twice much electric. if numbers, roughly need electricity rough heating are you and as then transport times these goes three So

is a This -- this able for it. we a will I brown-outs to this disaster. Texas is more transport and very in because and not black-outs, are not future, -- to the fast won’t fail we enough. transition being extreme and is people utilities serve They won’t -- see utilities, fact think, done, will the there’s a for able more do on recipe prosperous and utilities their and seeing we and Tesla They if events. weather what in are going customers. both massive to the be California to with see this react and So basically, respond, seeing be for going to be more electric of of able because change to and And

the it So batteries house. to solar is level and important the local at at very have

solar of it important at addition, storage In can that electricity is electricity main wind which because battery be large the can forms wind, are and stored sometimes be blow. have level to utility the renewable the that -- so doesn’t

lot. a blows it Sometimes

blows to shine sun too the battery, at because, But it you it the times and it and store sometimes blow the very does at cloudy. Sometimes grid solar and same energy if as provide a goes you The have the enough. needed. not night energy can much doesn’t is obviously, for

they having massive wind, battery. This would power solar plants, power and place. as way. the a with gives the a this lines, at increase each to in the size occur must long future, distance put increase and And as the said, will what utility the stable especially I at all local local battery and the solution It’s They a long-term occur. be at It’s over substations. doesn’t have local by only nightmare. level, the and so plus of must to to There will both power have lines in level storage the is energy power it actually solar be required If level.

yeah. So,

the currency such Thank you us anything very major you about in is, when Master be future can developments any Coin, space? Tesla’s question next of Or much. retail digital revealed? might tell And plans

Martin. Thanks, Sure.

and So and have our $X.X QX we we into Tesla stake in sold invest XX% a did subsequently in billion opening as so then that. I noted in previously, remarks Bitcoin announced

Bitcoin. using make also vehicle and We customers allow deposits final to vehicle purchases

feedback story operations being with liquidity. with semiconductors and a digital able on optimistic or and immediately there one cash that. yields quickly far good addition as without to being be or proven maybe the our the think to bit just be liquidity. of not to some some taking and least, of has end forward time, for of that return uncertainty our at a And seemed, particularly looking very of so I and us being Elon key to and look of important Particularly on, to super in good some I cash I right access began, daily good decision, low happening found now. being to context a wasn’t risk that’s And that opportunities on return in to launch points or, place year to port our used of here. place to that sacrificing level trying so aren’t Bitcoin others place Berlin, get Austin where and make talking to were preserve could traditional so be used, needed little the at the to share lot that’s not experiences until a also do is a there’s get is the able we get reasons store the but here. And Bitcoin on currency about that And we maybe for space to we to that of want immediately many and cash this capacity, and this that

are pleased much Bitcoin listening saying. are corporate But to We about how what we Tesla, a is watching very develops, been how market with it it at our treasury market. quite the customers the watching have in liquidity there thinking from perspective, certainly closely

the later quickly. March, also that to very sale on did ability our were in When happened to quickly. we we So first execute build our able position very

something being of global for and cash we able the liquidity kind think so is is out in about for as us. risk to that and markets And I of the get think business exceptionally important management,

in believe of So do Bitcoin. long-term value we the

continue hold from our to to is we as our So transactions it from Bitcoin long-term and vehicles. what intent customers purchase accumulate they have

may discussing. to we respect that with Specifically, are are things things constantly do, there we

We announcements planning make here. to not any are

this space We closely. watching are

are to So when know. to you come, make an will announcement there’s front, this we on we all one ready certainly let if

main a media’s plans deceptive sort? FSD, you. the job headline specialty proactive Autopilot Tesla bait retail Thank or tackle safety investors to is, imminent have some campaigns stream from PR and any question on And massive of does of perhaps click fourth

safety he too. this driving Well, guys. is one, continue say, From I will to the take on side, I

Yeah.

Go ahead, Elon.

No. Please go ahead.

deceptive I were in an with just the facts think, regarding going a was claimed and -- and be article tragedy where ashamed I was Tesla Please ahead, really it what there those -- just was there completely Autopilot, to was is of of there which where false specifically, journalists it accident mean, extremely just be practices media should high through themselves. go a speed Zach.

Elon. Thanks, Yeah.

was do one in I designs saying, our safety number what that’s to So we are in committed all and we here. just

that have effort in road did engineering in worked the did support. applicable the crash the on the designed. and us Regarding they help study that Houston, week it we vein, to level and particular the whenever reach could and we wherever condition not and directly learned specifically, from NTSB, and whatever crash understand as to on was that happened what we engage else so directly with local for authorities with was out a past over what Autosteer them that we not can In that

hour, the control engaged the per buckled above per hour was cruise only only adaptive driver to XX and car X the and with miles it Our when crashed. accelerated distance miles before

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future from the and a this we data safety and said, hold information through improve other I to to continue high in field. regard in products look the of As kind our

Okay. Thank very much. you

the investors. to question go from Let’s institutional next

proponents Could The the first cells due technologies vampire alternative that grid drain. claim is, relevant XXXX unsuited long-term changing is of energy question to for address even to storage storage Is at ion equation? limitation the limitation? scale lithium this

Yeah.

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Myth.

Yeah.

As mythical as vampires.

Yeah.

XX even cycles per less maybe the value of storage seasonal full less cycles hundreds is, your than think maybe five from drops I year. per [ph] with utile or challenge year proposition than less to

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Yeah.

got go long we site to and have a are way deal with to certainly But seasonal then way longitudes. across would technology have wind of the -- be the technology and before but with on We already solar latitudes issues. variety to of a a seasonal more dealing southerly

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like Something that.

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terawatts zillion just So do go overnight. you and can’t a

capacity production for battery for the have solar to got cells, the build cells, for You cells. the

put You got to into vehicles. have that

You to packs. put stationary into have storage that got

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much. very you Thank

There’s batteries, want question the be problem be mind to with energy clear, storage no my zero. lithium-ion solved zero. in that whatsoever I can

big be will and more of the cathode. will is mass of iron-based, the It’s cost part lithium. the in cathode. the the constituent towards cells. must The bias The a say, I lithium-ion to think cell to the be main of the think I cell X% people X% main is lithium lithium-ion, is cells. tend like cell

range high lithium-ion For iron-based have in most Teslas, energy higher than have energy what cells, cells, like, density, which for cells. use example, longer nickel-based we

as of iron-based the vast the think cells important is the with so phosphate cathode, I the and density the the am terminology. will or technically. an is phosphate However, iron it’s staying stationary I energy just because storage stationary on lithium-ion really not But nickel. ground just assuming It’s iron unnecessary. majority storage, be part

iron and anything nickel lithium insane cells. in of Basically, the no we as there’s possibly more it and iron we whatsoever also could in amount more an world, possibly than iron is and there shortage than there’s used of of use. lithium-ion could think iron Just have phosphate

very you Thank much.

you to institutional improvement the first Where X does Berlin investors go automotive the suggested analysis. achievable physics that XXx between have question a from relative limit? line is, to in Let’s sit versus first-principles that which to on Xx a is production Model next

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to done. -- So so hard. It NIO -- basically and aneurysms Tesla myself several this this had have this get was and basically to is

idea. no have You

trivial? the complex even one. you a of those every of about If cable like for because have your items. Model stop carpet large point the them literally. the making electronics one a that trunk. rate, production closer is -- Isn’t a for the We the thing just there could one production items all in a literally At a cable. have So We slow, anyway, XX,XXX sets because S, approximation and in them of had so manufactured the the a we that car, raided stop And store hundreds Area that. of that USB object few is unique in let’s in we Area USB bought had to Bay and because stories are a went days like Bay put there. Nobody buy say

Like anyway, am So II a kidding. constraints, War those solving logistics and makes look scale I is insane. World problem not that trivial. that, the

millions We massive global chain, insane, regulatory countries, cars, of regimes. so supply It’s are of talking yeah. XX dozens

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Not at this time.

Thank very you Okay. much.

to move Q&A. analyst So let’s

you. Thank

question Research. First Pierre Ferragu is Street New from with

line Your open. is

the how wondering on months, front, progress last the data presented for Thanks actually process my much was that you of have Battery six, guys. terms the question. taking in In what get on seven on to development. made I’d I Day. Hi, first you love

are And kind you actually have ramping on stand capacity And was your as wondering you So your pilot ramping on are how well. things you getting to throughput up cell of are coming size I and where cells the ramps, are in XXXX rate energy well? on production line, that together with production follow-up you productivity capacity second, aiming quick on which a I for? as

I big standards. plant small the have -- Atlas, by power Well, it we but which still is a normal call so cell we have the

to California expect We and capability year per a XX-gigawatt-hour like we have have made a Fremont, few quite cells. in

close in We we are have point. the then be but are Austin, think the to already ordered not and yet equipment at production we well. cells for And of Berlin as quite reliable cars, are the getting shipped then point for in most that we battery where enough electric to

I overall, this. still we production are XXXX year. on optimistic nitty-gritty So of really the to the But we achieving next are think, about down quite volume

Yeah.

I think…

Thank you.

Yeah.

one go is in it’s to which on have the matured to have but we just the a need I reasons that think, confident one internal talk thing lot the people Day it’s progress check isn’t phases We from yield projections. why takes and is, It not questions trajectory we were as about to Battery on we Elon were yield. at gotten also yield I of and that. strong to processes, Commissioning in aligns be with we to it’s that our side. we a parts, just there’s where production Actually, as it’s noticed most with prototype The really useful that. mentioned, did still point about asking just process equipment, I’d Pierre, of yield tools the been about while, cost the equipment, of the add really yield to

Yeah. appears production from we XX, it And than the are XX more but for not we months as volume basically, probably, this know XXXX. is just of though a guess away about sure, because don’t

partners up Now trying our have at as actually the their supply possible. same as to cell time, we ramp are much supply

that not conjunction suppliers. is in So the exclusion something It this suppliers. is is of to with

Yeah.

It about So we suppliers. be to about This replacing want supplementing about clear is super that. suppliers. not is

So our the will buy that would and we we JBL, cell with LG. have we is you Provided with with partnership price can our make. is, -- everything a Panasonic and please strong affordable, supply for very And they as strategic to supply partners much as request can. us possibly --

more are capacity to we to on than specific supplier double And over think Yeah. Yeah. track we the next the that,

-- learn to do receive We exactly. year. this next We double versus the suppliers year Yeah. expect output cell

business. -- had Zach on maybe I a quick follow-up you your on Energy Okay. And for

so what’s when modeling? your understand terms ambition in business Roof long-term coming margin -- gross of grow going I important that mix it’s gross where you business? margin in in guess years, to gross it’s for at margin what in the do there the was like with when ramp, to So wondering, Storage I and Solar I get you I look look but

Yeah.

is We vehicle to -- aiming mature a in vehicles. important storage. But for that of as margins are in that are no mind we lot seeing is is in -- storage it than comparable bear more

but with already are we Andrew, is you additional what the good work Megapack for some Powerwall, think? the do needed So active are to achieve margins margins.

you. Thank

Yeah.

Sorry.

Yeah. Elon. in, Absolutely agree. jumping Powerwall is Just mature.

we producing We years more Megapack been to and have there, margins our X targets. are go room three now has achieve but for Powerwall at to good

runway improving for the clear for megawatt cost a the have Megapack. for the We hours

do. Yes, Absolutely. we

Thank you.

question, next go please. to the Let’s

Research. Wolfe with Lache $Please go Rod From ahead.

a out Hi, sounds how and are the just of about X rollout everybody. some It of expect I month. version if could that’s this to was thinking just bit roll of first, hoping spend the like you of transition models. But that little subscription next just I is about SSD a about maybe how impactful be. about subscription sure a little you time talk the am you could not model. maybe to you talking

go So Zach. ahead,

Yeah.

on a dependencies. recurring I perspective based on if front you of maybe for a technical revenue them. with or FSD But lot roll The at thing this and getting potential is on soon. size the fleet option a the We key look are at out. The of and There’s and our -- you want of customers out model a purchase experiment that subscription say here, that’s business FSD, a to of who up for a not aligned look are number that FSD working couple to from great subscription. internal leaf hoping did we there’s FSD

FSD things will purchases may who a FSD move of to of the of an we transition subscription eye from FSD One over to cash is over to subscription. purchases cash on keep need potential

are be builds pretty this over could then a customers reduces cash which to subscription launched pretty strong it. get the And of becomes soon then we us see hoping that as the is in near-term and of a and up, portfolio for in to the time period time. business response what But so there

Okay. a thinking talk we noticeable Great. little a maybe you forward? this But just OpEx. excluding talk SBC, just little It that was on And bit even lot going a I could was be how should about about quarter. hoping, maybe you increase, Zach, obviously, a going about can bit

Sure.

my are of OpEx know I series mentioned R&D our where as we kind of lifecycle you is On what in in happening kind of of that to programs in programs. different correlates opening are a the convergence spend a we the remarks, product and R&D side, are seeing,

call And Model so internally of investments what at is kind in Model the we are the we new of which Paladium, tail and end X. S

for a And lot it was QX had decrease but time, over that expect so mentioned. we high that to the in of reasons Elon

We that. Drew working into the are that that on with along also and and are XXXX pack getting heavy development associated team goes very structural battery

are these to technologies, only Tesla, new And new so new industry. but not to the

I Dojo investing And Then as potential in so on those. the of there work there. mentioned, over to areas and about, the a should cycle also bit continue side kinks. heavily along are through Elon development we R&D continue and time those And an work talked to we spend out those

net we and custom spend investments, to that So neural investments and from make on continue be these investments silicon areas in.

as investments right are growth, than have and smaller store to so capacity the such we others and challenges that IT that investments the growth that manage comes, quickly sure pivoting side, sales capacity, we the is to to volume, quickly. is we of as And global in are percentage we trying and the making And the similar a of look substantial have year of pick latter expect in to ahead growth part growth. a of to drop the volumes seen as revenue year, we see that so XXXX up. OpEx XXXX in course the are at the the there, local maybe the staying make ahead be very the of do there overall, we from over we On are and past ramping SG&A business of quite the the periods the China execution as

you. Thank

to next go Let’s question, please. the

Thank you.

Suisse. Credit We have with Dan Levy

is line Your open.

math reducing vehicle. work ex-Powertrain reduction COGS feel to Thanks. a from evening. $XX,XXX about to meaningful on path good I’d that is Two COGS questions. a make sense need to potential to on gotten still Day Powertrain. Battery a the the I Good have of the think, reduction like get on for related you But pretty as Hi. COGS, a front One you would

have So ex-Powertrain, reduce cost is cost it based do is scale, better just reductions? or on what it pricing levers to supply in just you your ongoing more

above. the of all think I

pound mean, as steps and Y, there’s some that a Yeah. at in look costs moving and part on And of you plenty the we much like Model a were side, Berlin, by Y have Austin the money. vehicle complex of various into other in we when the and of are as car X quite the I Model body Model building But Model that. improvement Obviously, opportunity reduced well. XX%. including advancements has is the S parts. factories

start find are to worldwide as optimizations volumes, economies well four same vehicle. we about factories to talk we scale. continue we there get with When we So the building as the of considering

those well of on the as will things vehicle integrated and Powertrain both So side continues COGS our that. the improve to be into

you as we and Fremont comparison see get to new non-optimized ramp, NUMMI And of like the Berlin capacity, Great. sense versus just bought old then a I’d facility. the is just because the obviously, related, Austin on Fremont

to had your need. retrofit to that You

achieve the us What you that improved much add areas how give $XX,XXX didn’t over new and of up can efficiencies that to your maybe are you time previously how is does a differ that to maybe capacity going Fremont. versus So have help vehicle? you to that COGS you have sense

too future product make right are development. a product talk for Earnings us to much Yeah. announcement, We always about yeah. place major the calls so not

there. We will get

We it will later. provide

much. Thank you. you to is for all Thank today. very you dialing about listening, this months. time have for again for and in speak three right. the Thank very and we All you Unfortunately, much will we in

everyone. Thanks, Thanks.

call. concludes conference for today’s participating. This Thank you

may now You disconnect.