2024 Tesla Q3 Earnings Call Notes

Introduction

Tesla’s Q3 2024 earnings call was a banger, revealing the company’s current standing as well as their future plans. If you are pressed for time or would just like a quick overview of today’s call, here is my summary based on the notes I recorded. Enjoy!

Autonomy

  • We, Robot event was successful, thousands of people were transported autonomously without a single incident
  • 20 Cybercabs and 30 Model Y vehicles were present at the event
  • FSD v12.5 introduced support for Cybertruck and end-to-end on highway support with a single stack
  • Actually Smart Summon (ASS) widely released
  • FSD v13 expected to provide 5-6x improvement in miles between intervention when compared to v12.5
  • When looking at the entire year (January 1st, 2024 – December 31st, 2024), Tesla expects miles between intervention to increase by 3 orders of magnitude
  • Critical interventions have been reduced by 100x from early 2024 to present
  • FSD v13 is expected to reduce critical interventions by 1000x from early 2024
  • Higher frame rate coming with FSD v13
  • By Q2 2025, Tesla aims to surpass the average miles between critical interventions for humans; This means at this point Tesla FSD will be statistically safer than a human driver
  • Tesla will continue to offer up a free 30-day trial of FSD with every major release of FSD
  • FSD take rate continues to increase significantly, especially after the 10/10 event
  • Tesla has been operating a ride-hailing capability for employees in the Bay Area for almost a year now
  • This ride-hailing offering has been utilizing safety drivers
  • Ride-hailing is going to be rolled out to the public in 2025 for California, pending regulatory approval; Texas likely to be first due to faster regulatory process
  • Q3 vehicle safety report: 1 crash per 7M miles of Autopilot usage (10x safer than US average)
  • AI training capacity has been expanded for FSD and Optimus needs
  • With recent additions in compute capacity, Tesla is not currently training compute constrained
  • FSD problem areas are becoming more difficult to find as reliability improves (good problem)
  • The new Optimus hand and forearm demoed at the We, Robot event, offers 22 degrees of freedom
  • “We have the most advanced humanoid robot by a long shot, and moreover, the only company that has the ingredients ready to scale humanoid robots” -Elon Musk
  • Elon believes Optimus will one day be Tesla’s most valuable product
  • Vast majority of 7M vehicles produced are capable of autonomy
  • Tesla has started training FSD with their current fleet of Semis
  • Cybercab will be built to FMVSS regulations for nationwide sales like all other Tesla vehicles
  • Tesla found it easier to focus FSD development on HW4 and backport to HW3
  • For HW3 owners, Tesla has reassured them they will be taken care of if HW3 proves to not be adequate for their cars to support unsupervised FSD
  • “There is some chance that HW3 will not achieve a safety level that will allow for unsupervised FSD. If that turns out to be the case, we will upgrade those who bought HW3 & FSD for free” -Elon Musk
  • xAI has been helpful to Tesla in scaling up training infrastructure and improving training resiliency
  • Elon reiterated xAI’s goal of working on general artificial super intelligence while Tesla is hyperfocused on autonoomous cars and robots
  • Elon mentioned that he believed that Tesla is one of hte most efficiecnt inference AI companies out there
  • “It’s (Grok) answering questions on a 10kW rack, it’s like we can’t put that in a car, it’s a different problem” -Elon Musk
  • “Please no!” -Lars Moravy
  • When asked if Tesla will introduce support for X & Grok in-car, Elon said that would be”small fry things”
  • He then went on to say in-car infotainment will continue to be a big focus, especially as autonomy performance grows
  • Tesla will further improve the in-car browser experience so you can access anything
  • Elon advocated for a national approval process for autonomy

Low-cost models

  • More affordable models set to be released in the first half of 2025
  • When AI and EV roadmaps intertwine with Robotaxi, cost is expected to be $25-30k (with incentives)
  • Cybercab will be produced at a rate that is a half of an order of magnitude better than existing cars
  • Cybercab optimized for autonomy which means the lowest cost per mile possible
  • Work to produce lower-cost car is “excruciating” according to Elon
  • “There are no movies about people who got 30% of cost out of a car, but there should be”-Elon

Energy

  • “Energy storage business is growing like wildfire” -Elon Musk
  • 200 Megapack production run rate achieved at Lathrop (40GWh per year)
  • Shanghai to begin with 20GWh run rate in Q1 2025, scaling up from there
  • 100GWh of energy storage shipping expected soon
  • Elon expects growth to multiple TWh of capacity per year
  • Energy deployments fluctuate quarter to quarter; Q3 dip expected to grow in Q4
  • Energy margins recorded at over 30%, function of project mix deployed by EOQ
  • Pipeline and backlog continue to grow; 2025 production slots quickly being filled

Roadster

  • “Roadster is going to be cherry on the icing on the cake” -Elon Musk
  • Still being worked on but has been lower priority to other more impactful products
  • Elon thanked the reservation holders once more and said the wait will be worth it
  • “Peter (Thiel) has lamented that the future doesn’t have flying cars, well we’ll see” -Elon Musk

Semi

  • Semi factory continues to be built out in Reno, NV
  • Semi pilot production goal targeted for late 2025, volume production in 2026
  • Not demand-limited on Semi due to cost per mile per ton of transport advantage
  • Pepsi reported their drivers don’t want to return to ICE Semis
  • “Tesla Semi hauls ass” -Elon Musk

Miscellaneous

  • Record Q3, with Tesla producing their 7 millionth vehicle
  • 20-30% growth in sales expected next year
  • Cybertruck reaching volume production in 2026, aiming for 2M units per year
  • 4680 battery cells approaching most competitive status
  • Lowest cost per kWh than any alternative for 4680 cells
  • Tesla increasing cell consumption to support future energy & vehicle growth
  • Most cells still coming from suppliers, but 4680 project progressing well
  • Tesla focused on building the future of energy, transport, robotics, and AI
  • Automotive margins improved quarter over quarter, but Q4 sustainability challenging
  • Achieved lowest cost per vehicle in Q3, continuing to focus on this
  • Better performance with service business and continued Supercharging growth
  • OpEx reduced QoQ and YoY due to Q2 restructuring
  • AI investments expected to decrease with better infrastructure utilization
  • High interest rates impacting entire industry, extending vehicle ownership periods
  • Tesla seen as having unparalleled integration of thought among car companies
  • 70 new service locations added in Q3 & Q4 of this year
  • North American service locations have doubled in size since last year
  • Dedicated service lanes, treating service like a factory to increase throughput