Tesla (TSLA) 27 Jul 212021 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the Tesla Second Quarter 2021 Financial results and Q&A webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Please, be advised that today's conference is being recorded. now today, hand of Martin would to conference Investor I speaker your Viecha, instructions] like the to over Relations. [Operator Senior Director ahead. go Please

Thank Musk, Zachary Tesla's and welcome a Webcast. you. other everyone. Kirkhorn, joined Quarter executives. of I'm Elon XXXX, Q&A And to by today number afternoon, good Second And

announced X we results PM same the Our published in as Time, were link QX webcast. Pacific at about this deck the update

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

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

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Thank much. remarks some And follow-up have you very Kirkhorn. we from Zachary

Yeah, thanks And Elon. Martin. thanks,

a that gross a profit North our loss in challenges, context better mostly and from the QX in volumes. in reiterate, provide improvement Model the to supply of There excluding cost was the and it as contributors. execution the other credits, margin, In primarily This expedites, And headwinds. cost actions, team, good volume. slight the factories, some was increased including was production and Just increases optimization by to benefit however, was program X great auto continue Note chain small a cost delivery well was substantially. across across plans, particular, for our due against relatively at the low the quarter Tesla reduction pricing driven business. as to S quarter with for America, strong

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progress slightly to While helpful there's find long-term at looking a some quarter-over-quarter, benefit horizon. progress our I over at to more look it

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we recognizing are by absorption. we scale use. differently, and cash P&L is risen and in with line higher benefits By volumes, said or fixed what our As operating to pick benefiting driven unit, marginal from have With improved cash driving strong continues to investments Berlin, primarily Operating incremental the capacity double-digit profitability and of our negative costs have we to flows Austin, of in cost margins overhead managing the our putting up, a each Shanghai. cash that from GAAP balance, are guided. result, and Capex

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Great. Zach. the through go much, say.com. questions retail Thank let's you now on And very investor

website The begin Cybertruck 's Tesla in if production XXXX. confirm Robert --? is, says details question Can from current to field production first is expected on of the Cybertruck the Tesla still is share late status more and M.

That's okay.

do you to want Lars, --

the there in Yeah, out is stages. Cybertruck engineering currently vehicle. for we Alpha basic its cut We Sorry, of a finished the the architecture second.

redefining how the vehicles being With Cybertruck, a we're made.

the phases looking ramp in to of after casting and Y Texas those we As Cybertruck, this Model in beta and being of going. but be over is the production, take the Elon Berlin of and to Y much said, and Model will into built carries Cybertruck up Obviously we the moving large designs are year, structural later Austin. take pack that and it it priority

unique prototypes, which -- items. that a But easy is as parts production. rough of it's or anything manufactured large extraordinary is, produced to is move processes. difficulty slowest and Yeah, make ramping at of magnitude it's XX,XXX really relevant what's worth high-volume, order as be going reemphasizing the production being they'd small just it volume of With repetitive, essentially risk here say the of handbook fast to the

but this was we it's We controls missing a for limited car to models obviously to for customer scale just our module got months. -- just And worldwide, with so chip that's -- and one Fremont. to they XX the would missing, And Cybertruck ship airbags need is the airbag don't In lightning, struggle [Indiscernible] meaningful won't fab? the why chip you deliveries, severely the to solve without the shortage order so example, it that car -- say, when big okay volume we've if X,XXX, just [Indiscernible] irrelevant. a suppliers. we like like a working take that want at to Well, for we're even XX you and us have cannot build you can mattered Shanghai XX module different have in our wouldn't seatbelts. because those. quarter, That had production moving

your it's make like, chip is the [ let's This yah So fab. not – Indiscernible] bet. like

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concerns bottlenecking Yeah increased business, of also targets energy growth ahead the year-on-year our target is supply the given cell's enable XX% and deployments. vehicle cell over growth, to of grow storage

Yeah.

suppliers tracking our in are cell to yeah, their double So production XXXX.

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will contracts juggle a overlaying exponential where curve. each that chain, have of be area roughly have disrupts substantially then top a doubling whole you these we it small in with are bunch is to of cell on changes on graphs for if the of And -- in of the the it's under x-axis other. time And the can So supply XXXX. But supply less. we change quite to there world, calamity it call that suppliers some cell in Tesla the these exponential

basically down So cell then vehicles, Megapack production, Powerwall. overshooting and as vehicle that Powerwall will Megapack and of and there's upward on we're on one or by if then have cell say token, excess what shortage some we the routing thinking in from same doing, month the to supply we throttle -- then for we're reason production. of Well, depending cell so is supply If outputs a prioritizing another,

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What is a disruption there if in production? vehicle the

Yes.

cell. for outlet an have we And

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very that amount supplier, we year, a a insane. cell It's is then that like you if supertanker the momentum. even system to And has tremendous So in of double want doing said it's Well, It a we of plateau s. to output. difficult.

supply contracts we suppliers, secure upstream to just the perspective, long-term a also there. We're Speaking not looking our but to from materials the enable at [Indiscernible]. of which, offer raw chain from

Yeah.

flexible. more is Which

and batteries as as the of place somehow in think cellphones I no bear the way highest a [Indiscernible], As there just back use average the shift and XXX% Cobalt, really there's thing. I might expect direction mentioned, don't. their rather, we Apple actually slowest in be On Cobalt almost all to more use X% but which cobalt say fast -- chain, future. nickel. Apple's that laptops. chemistries. to iron-based, to pack And move nickel-based is weighted I at have with long-term part cells, in will a do a it's raw X we in Tesla But uses Cobalt and basically Anyway, we misconception -- Tesla lot in and of of Nickel in probably the Cobalt materials; that none basis, almost Cobalt. me things uses think to the compared kind our the over goes lithium-ion in supply a the not a XXX% Lithium that

cells. opposed As cells, for the phosphates. as iron-based the granted. well cells, They're But density phosphate, to taken support of ores might iron ironed and energy iron nickel-based lithium-ion lithium-ion

there's much on world. amount iron, this probably shift we'll and And my There's plenty actually iron way Cobalt. see there's insane the an of think I but is order. X/X -- there's less guess is because nickel Nickel, probably a -- is Nickel less or in iron, something to that X/X good of

cells, constraint mostly. stationary there's storage iron-based Powerwall long-term, to So all to it, likely good This chance there's And is most is it -- to a is the move you lesser long-term Megapack, that a need case, iron. volume good scaling since all the and stationary not do storage. I for and transport possibly for to that move think relieving that's

for nickel of be road transports, ships, would would aircraft, and and long be then -- kind thing. range that So really for

you. Thank

Tesla be select EBs share this Let's will is: on second from will contribute opening network they to of has this a structured, this you how that retail, growth will question this more some be details the Can the be said or other which go year. later the brands, network? Elon will up Supercharger to to

just a just real you it's We're stall to download Tesla go thinking And in. Yes. which you're indicate app you simple Supercharger. you thing where currently and the

smarter plug car, then with almost just access charged this cars. your manufacturer's any somebody in biggest time more electricity with If And There at packed. the stall Superchargers in I'm turn the times time, also will there should we'll work so not the basically stall. because it's You times we the are the be is because this be will is on charge Supercharger slow, then hour even charging rush if how rate expensive charge Tesla. are when electricity. jam how constraint the and you And occupied than app charging much and when that they're say, Supercharger, is be car super it's be will one is how the And empty for for at constraints. more

sense time-based to And have it so discrimination. makes some

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buy for sort available something. to it So don't if North at we could adapter. an anticipate in as needed work But adapter this And steal or America. EVs of having Superchargers the them well is people people

have We good solution to a that.

Okay.

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Yeah.

on focus customers. all And time just to minimum for continuing wait

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need in work So This the for faster output. things. scheme grow grand is but team, Superchargers of Superchargers a useful to of only it vehicle the than is lot

Just vehicle public output. That only Tesla than useful the we're faster able if to grow to our goal. is

something very enough And cells life, us else? or Is you third still on question to done enough reliable be update make vehicles. them Thank said is, XXXXs for to aren't what degradation, of referring XXXX Please much. for progress and to needs reliable is this Elon the cycle vehicles.

-- reliable limited I enough volume, for the reliable Really point we'll in where, at it vehicles, not for and -- this we, is vehicles. think, definitely make are enough the is XXXX

Yeah.

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Yeah.

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Yeah.

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Exactly.

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Okay. you. Thank And to go institutional let's questions.

is we of for the and update and the it as already. Model please one, difficult, ramp timelines Can startup on lot of of a to these first The us you Do expect Cybertruck Berlin production Semi. covered Austin you new as the Cybertruck a Y, process? be and

be there's our be really a because new It like might, Cybertruck. the in A product. think of vehicle ever. made But think a car best design Nobody's I Cybertruck this to a before. ramp ideas product going before. It's will be difficult I it's such ever new fundamentally great lot like architecture. this

challenges be territory. probably because will much there there's unexplored So so

Thank you.

already question it. In rate? using to you get be question addressed you the biggest current skip have get to how X. that better we X, what time, I'll think and question need X solve we manufacturing much years pace? X or to given at issues can could capacity to I And expansion faster are

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look in built full in months you at mean, less a and in if ramped think to X I Yeah, Shanghai, I that was expansion done to X factory than year the volume. we've

It than was that. a of about Took [Indiscernible] longer that. year.

continents, repeated And ramping Fremont But designs in said, as you cut-and-paste, and with that there's designs? always one in new X half had and whatever. just definitely and that now or our think we X year lines, expand with having challenges have than we've Elon, rather I more Berlin locations consider we that. you ago. But the when having will Austin, And to new Fremont factories capacity and and new grow and a factory teams our ability in a

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no It as thing production not Europe, And that paste. and example, parts from does there's vast Europe America. So make exist. for be in cut to would would vehicle be producing would obviously the North insane numbers do That and just send -- it of such in crazy.

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of So these inheriting that supply-chains majeure at all we X times are I go force like deep. Earth. feel layers Frankly, X we or

mess wrong chain. on if goes supply the up something to So Earth, anything anywhere happens Yeah.

hopefully lot here, to, growth having -- I does Berlin, though, think the grow, maybe factories Shanghai, exponentially not human but a well, capital Fremont,

are We exponentially growing.

growth. maintain exponential -- that Hopefully

hire people people possible. like It's instantly. collective. in get involved -- to also takes It's old them I And is can't really factory. people a giant just not to manufacturing. A a people hire old have XX,XXX to more and you train cybernetic and while Yeah. factory encourage work it operate a

all U.S., just the many not in especially area where this smart think, been gone has people that have I into. an

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So --

fun. is Manufacturing

Yeah, manufacturing very you and is can't stock someone That's stock. Yeah. it. [Indiscernible], unless how get great. makes It's you have obviously,

part question. present go particular subscription its you Tesla opportunity? or plan going Thank FSD much. forward? offer to Does of the services high-speed very Okay. What And last as beyond let's an in areas to bundle more investor connectivity

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of the most So that in ever that of be one civilization. will things is valuable history the done

much. Thank go you back Analyst please. Q&A, And let's now to very

that yourself ask limit [Operator interest question follow-up. of one instructions] and we to time, you one please In

Oppenheimer. first question comes from Colin with Our Rusch

line is open. Your

Thanks guys. terms so much so the in the FSD levels? ed for to of where subscription Can targeting you're attach you far and speak rates

right Self-Driving, Beta where not really We it's pointless Yeah, not meaningful. now. can get need to on it's worth it. commenting are widely at anyone Full right wants be it'll least things read into available so now, the anything Otherwise, be who to it

about the is up beginning set understanding environment, and the there of technology to really some And with seeing the regulators the evolution in then near-term? Are keeping the kin standards technology. in follow-up to the just meaningful terms the here you sometime regulatory

the based of XXX% straightforward without events least a travel show to be number is that button able It have with and it of were the like elevator" the -- would got safe so operate become Autopilot -- with to which interventions, for will that manually on cars. or big giant more in day, were statistical autopilot make safe. of [Indiscernible] will to billions and with result they limiter. At we operate between a have a in we it attention And to would At used a the by analogy. switch elevator road. to today Back the elevator is But scale, less and for would on safely. elevator the obviously significantly a in to of that a the Autonomy to U.S. kind have it think point, allowed human we I then or there that or arguments see I us the floors. drunk that to that We've be with reliability average car just move it half an That's have alarming in and the just don't But to "shake car it just be regulation those would get takes operators unconscionable person safety driver. because the especially want make require where sheared it they to elevators now That's something use crash. be paying think be to with demonstrate in the will speaking. will XXX% just way It or cars. miles kind floor we fundamental be, distracted allow be safer the the becomes or every between tired not in floors. on unsafe in be of somebody than is I operated excess it At maybe how press would would situation fleet. massive we as if average the and the switch. car grounds, and relatively it work get of the again, it And we driver the we of think, human

you. Thank

Let's go please. to next question, the

Next Wolfe with Lache question Research. Rod from comes

line Your is open.

everybody. Hi

on But the is just in Your going successful kind vehicle's from per of $XX,XXX right. from change for the in lot going mid launch talked cost outcome you're a the $X,XXX year range quarter, evolve. can some structural the I XXXX sold lot of is to maybe down you about. that the just mix already know maybe about. and goods how rear give what has a if of a given that the now. down to us front us year-over-year, would look any like despite framework inefficiencies broad pack of and to to just Obviously think here And sense it's But successful you to a of go a castings cell,

us to it's make really very is predictions specific difficult. for Yes, difficult

percent a year-over-year it's what And year. of to like maybe that. But to of, balls we And something specific out next impossible at make prediction. it few a lot crystal a it's a at is maybe a we XXX, say need least I felt growth to be. figure think confident least exactly going literally XXX%, XX, but -- that's

can some battery And How Okay. you of like just maybe things the the just that dry mixing are clarify What's separately manufacturing, of timeline? those talked you the cathode Day? advances this, is evolving? about in from what status on Battery

unlucky have on demonstrated are the that that's facility we're And it limited by of on. but what we not. already We few XX% today, but in over have rate at actually, processes commented Kato, there, the working the

to an a that One have We're running a improvements through of them that need when. question of not working to and to make It's not the But Elon to was some it's problem. the material calendar. those mentioned full-scale of actual raw limitations. question itself equipment again, [Indiscernible] that engineering if, we it's

On challenges the we're the had complexities terms mixing we direction, in and consumption, still to dry the and utility, side, your complexity, really haven't question. overall space, any process Fundamentally, factory actually happy implication. with specific of footprint,

Yes.

that. associated the And with cost

know, XX% maybe? as I to dry going of mean, XX% or I don't that? programs maybe equipment know, like like cathode, XX We're or have something cost don't of I Yeah. the it's

Yeah. XX%.

dry or like the wet. people dry -- it's like To wet is is Messiah XX% like this cost just like something, than reduces. like versus don't think So less

it's Messiah, basically. to you're not of especially nothing hundreds slow, making GWh a at, the it's So XX% if sneeze not year. But

Yeah.

can question, very please. go to you next much. We the Thank

with Research. The New next question comes from Street Pierre Ferragu

open. Your line is

on actually, wondering but for Thanks question, angle. slightly I at I taking different was my how XXXX. your for looking very you're the sourcing much on batteries, another a strategy question. have

was XXXX less on you're You've than come you manufacturing own as internally, are a But talked see I cells lines, will guys their develop production. your up suppliers with the if could what And follow-up. asking the actually first a doing wondering to lot about Tesla's other about to what well. quick be cell the road do XXXX that have it manufacturers Maybe or coming work innovation whether all definitely in-house we outside and lining battery from own from I technology?

Yeah.

produce XXXX then us not pack around consolidating format, cells. are vehicles, a XXXX in just this now. fact iron-based for guess cells. And a suppliers with right We format XXXX nickel-based necessarily format working existing -- our structural see to other some But I for and is a but and long-range

inhibits and we've this now, coefficient like of right drag as many chemistry variants of an engineering engineering Robbins forward an of battery where kind amount XX batteries progress. each many formats and and our that format of in to got have like so Baskin situation, chemistries, results So This it there's maintain where this flavors -- and this so we the cell requires it's to troubleshoot of just is at point.

-- X going X, is to consolidate to to X, it X troubleshoot maybe X nickel to iron we maybe but -- have chemistry and ideally then different So chemistry ideally be variants. X. important factors, many don't and And so just so

are like we've bear to the going working Yeah, mandating good partnerships core XXXX but good that. on so far what's good. engaging to on there had on on -- been with we competencies end enable it's We're where bringing collaboration. designs are a an They so duplication; not with suppliers and their that is that they're inside,

addition cells suppliers increases the Yeah. We from supply making. that significant do expect to Tesla's in our to see in existing

both. it's So

many our questions and all cells We're get make cell with like, from going them can to I you we Sometimes to no, are supply ourselves? possibly like, us. please as as suppliers the make

out year, We demand is end Megapack have sold significant stationery unmet a storage. the I next in believe. of basically through

Yes.

massive have man an Powerwall a We is production in insane that to backlog mismatch. versus demand Powerwall

of that part issue. semiconductor also the Now problem is

So same we massively is shortage want make one Cars the -- But in alleviated, a you a will cars, which as used production. can to lot semiconductor Powerwall we in Powerwall reduced. up the been that make? as of or do we so Powerwalls? the production do to it's ramp we car, then need so Powerwall chips has So like,

Megapacks of a I hitting of of a a million rate in sustainable of again, order for annualized cell year. think to an well for semiconductors. next terms amounts a demand, units in of we towards X million of on of Powerwall But week. But And supply as the utilities energy actually on and think dependent vast have year, just as demand chance excess the I XX,XXX maybe Powerwalls production. transitions a there's per probably

think provide Solar of is steady when all amount utilities this and year, battery That's of year. needed. batteries the really are you a why to and -- long-term maybe X,XXX GWh we in a need GWh by vast need produce electricity. flow at really world, Tesla the in to in wind order are a nature of and intermittent X,XXX and at their And combined suppliers packs that least look sort a the

about it's affected to version new And give a know, but to I'd massive rate? and curious it's you understand Elon, people looking. be it. I pricing In any XXX think you you. announced without to more try don't have XX,XXX I but thrown FSD of significant a in quick if was? you thoughts like I'd ring you us curious know most how effect issues, days, about looking the spike very to a thinking the tech as And on effect, affecting have so Thank of when the today, question. behavior Great. I'm seen be service. big in can it meaningful on how not you Okay. And the advanced a have from the sense to message, the it a at even try autopilots, pricing, the first and

if FSD too sure why your the question tech not What doing are like subscription? and that's we're if Or -- Okay. understand asking, expensive is I'm you correctly. rate I

people when the question did like they pay the front. the subscription $XXX new up took the XX how No, time take how is was the who much car. to you is the [Indiscernible] like grand about it announced basically at my subscription rate the had from That increase amounts,

Yeah. is This here. Zach

but to couple FSD of did have they that presumably that our our of look there? was it's customers to seeing see understanding backlog in there, I part took possible think strategy And still cannibalization points how at But We who that backlog take of the there in was after to XXX. not changes, delivery? of pricing early also $XX cancel ordered data subscription cancellations a and subscription will unfold. we're at they a our FSD, go here. level

mean, I -- Yeah, we

and strategy, $XX pricing Also at part of our $XXX.

to so time any proposition value adjust the mean, makes going over sense price see it just people. I we given as be Yeah. to is we'll wrong,

We Self-Driving about on order -- now, people So lot this it thinking are just for to right Self-Driving betting the really now. sense value compelling make it not rare to Full I somebody everyone a point, FSD think individual be I have that at debatable. -- could But a in who deployed, And subscription? widely it's think Otherwise, once will Like a for to be future. Full right do need then rare basically will work use value be we I'm the we're proposition. it does makes proposition clear. it doesn't. or

questions that's Thanks time time. in to we'll again Okay. we for Thank your speak a have help. X months for you Have very think much And today. you the I all all everyone. good for your day, and

All right. Thank you.

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

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