Earnings-Call

Tesla is offering a bunch of incentives this quarter, so I put together a list of all the ones I’m aware of for your reference. If you’re in the market for a new vehicle and have questions, feel free to reach out! When it’s time to order, don’t miss out on three months of free Full Self-Driving by using my referral link: https://ts.la/daniel26500 Referral Program Incentive Description: New buyer gets 3 months of FSD when using a current owner’s referral link Products: All Tesla vehicles, Solar, Powerwall Regions: United States, Canada End Date: June 30, 2025 Free FSD Transfer ...

Introduction Tesla’s Q1 2025 Earnings Call was a long one, going almost 90 minutes. On the call Tesla leadership discussed a wide variety of topics including autonomy, Optimus, and energy, alongside its financial performance. They reiterated their commitment on bringing out new, low cost models in 2025 and provided more detail on their Unsupervised FSD rollout starting in Austin, TX this June. Here are my raw notes from the call: ...

Key Notes and Takeaways From 2024 Record Deliveries: Tesla set a new record for vehicle deliveries in Q4 2024, achieving an annualized rate close to 2 million vehicles. This was attributed to excellent work by the Tesla team in production and delivery management. Model Y Dominance: The Model Y was declared the best-selling vehicle globally in 2024, surpassing all other vehicles, not just EVs, highlighting Tesla’s market penetration. Autonomy Ambitions: Elon Musk stressed Tesla’s commitment to autonomy, predicting significant advancements in unsupervised Full Self-Driving (FSD) technology, with a planned launch in Austin in June 2025. Optimus Development: Tesla is rapidly developing Optimus, with plans to produce several thousand units for internal use by the end of 2025. The long-term vision sees Optimus contributing over $1 trillion in revenue. Energy Storage Growth: Tesla is expanding its energy storage capabilities with new factories, emphasizing the role of storage in enhancing grid efficiency and meeting future demand. Financial Performance: Despite challenges like lower ASPs due to discounts and financing options, Tesla grew both its auto and energy storage volumes, focusing on inventory reduction and cost per vehicle. Autonomy ...

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 ...

Like I have done with previous earnings calls, I have compiled notes that I wanted to share from today’s 2023 Tesla Q1 Earnings Call. Enjoy! Opening remarks from Elon Musk General Model Y became best selling vehicle of any category in Europe & best-selling non-pickup truck vehicle in the United States Lots of uncertainty with macroeconomic climate Lowered prices while still maintaining some of the best margins in the industry Elon believes higher volume and lower cost is the right way forward for Tesla (vs low volume / high margin) Elon believes more margin to be unlocked thanks to autonomy Tesla is taking advantage of the current economic conditions as well as their position in their market Cybertruck Alpha versions of the Cybertruck continue to be built on the pilot line at Giga Texas Completing installation of volume production Cybertruck line at Giga Texas Cybertruck delivery event tentatively planned for Q3 Like all new products, Cybertruck production ramp will take time and follow S-curve (slow and accelerates over time) “A hall of famer” -Elon Musk (regarding Cybertruck) “Cybertruck is a very radicular product and not made in the same way other cars are made” -Elon Musk Energy & Mission Energy storage deployment in Q1 reached nearly 4GWH, thanks in part to production ramp at Lathrop Shanghai also mentioned Elon reiterated that stationary storage growth will exceed vehicle growth FSD Crossed over 150M millions driven by FSD Beta and this number continues to grow exponentially Tesla has key data advantage here due to the sheer size of the data training set (which constantly grows) Very focused on NN training capabilities which is a key factor in achieving full autonomy Making significant purchases of GPUs while simultaneously continuing to develop Dojo (which still has potential to replace traditional GPU clusters for training use cases) Dojo as a service is still on the table (think AWS-like offering) Opening remarks from Zach Kirkhorn Record vehicle production & deliveries Record energy volumes Automotive gross margin and operating margin reduced sequentially but still remain at healthy levels Automotive gross margins were impacted: Additional action to improve vehicle pricing One-time items like warranty adjustments on older Model S & X vehicles Deferred revenue on certain Autopilot features Further progress in reducing vehicle costs was made thanks to several logistical improvements as well as the start of commodities savings Giga Texas & Giga Berlin will continue to be margin headwinds until they reach their target volumes Q1 was the 3rd quarter in a multi-quarter plan to move to more regionally balanced mix of build & deliveries Results with lower deliveries than production in a quarter due to higher number of vehicles in transit at EOQ Particularly important & applicable to Model S & X as they started to deliver internationally Storage business is starting to take shape Growing at % of total revenue Growth driven by increasing demand for energy storage Highest gross profit yet in Q1 Approach is to grow volumes in vehicle & energy businesses as quickly as possible while focusing on: Cybertruck Next-gen platform I\n house cell production Autonomy & AI products Keeping the business healthy Q & A from Retail Investors Pricing Pricing is reviewed weekly based on where they are at globally Energy Storage Elon predicts Energy Storage to eclipse Vehicle business in terms of GWh (vehicle business may still be bigger in terms of revenue) As business grows and smooths out they will start including volumes in their reports later this year The goal is to get margins to match automotive business (~20%) by EOY 4680s Texas 4680 factory (about 50% complete) will be about 70% lower CapEx per GWh than typical cell factories (when fully ramped, inline with what was discussed at battery day) Still continuing to produce first-gen tabless cell (Kato Road Facility in California) as well as 2nd gen (more manufacturable version) at Texas today Corpus Christi Lithium refinery breaks ground in May and is expected to be partially online by end of this year Refinery uses sulfate-free spodumene refining process (produces beneficial byproduct which can be used in construction products) Demonstrated cathode precursor process (discussed at battery day) is now in final detailed design phase Cathode production is 50% equipment & 75% utilities installed at new Cathode plant in Austin Dry & wet commissioning this quarter and next quarter, first material production will be ready by end of year Big improvements with 4680 structural pack manufacturing 50% lower CapEx, 66% smaller factory for same output Will continue to use this design going forward and iterate design to B level (from current A architecture) Q1 was all about cost & quality Texas 4680 production increased 50% QoQ, through yields increased 12% Kato 4680 peak rate increased by 20%, through yields increased by 20% All together 25% reduction in COGs in quarter and on target for steady state cost targets over next year Steadily ramping production ahead of mass Cybertruck production next year Financials Expectations that all factories continue to improve all key metrics Still at max pain for commodities but starting to see a little bit of improvement here Lithium has dropped significantly and should result in a noticeable impact in Q2 / 2H 2023 Orders are in excess of production Cybertruck No details will be shared until Q3 delivery event “Incredible product” -Elon Musk Q & A from Financial Analysts Regional Exposure Many areas Tesla does not currently serve however there are plans to address this “High time Tesla offers its cars to the rest of the world” -Elon Musk FSD Elon declined comment on FSD take rate Current price is based on future value of having an autonomous vehicle Elon expects more “2 steps forward, 1 step back” with near future FSD updates “I think we’ll do it this year (regarding FSD)” -Elon Musk “Robotaxi” terminology is really a generic term for Tesla’s next-gen vehicle More details to come on this down the road “All of the vehicles that have HW3, which is vast majority of our fleet, will achieve full autonomy” -Elon Musk “Model 3 or Model Y will be a robotaxi, robotic taxi” -Elon Musk FSD has potential to create the largest value increase in history if it pans out General “We are in uncertain times” -Elon Musk Elon expects economical stormy weather for next 12 months and then assuming no geopolitical wild cards, things should heat up next spring Lithium bottleneck is more related to refining capacity vs mining capacity “Tesla will have the most lithium & cathode refining capacity in the world” -Elon Musk Elon mentioned they are doing this because they are forced to since others are not doing this About half of miss re: margin is attributed to pricing adjustments, other half related to things that are not reoccurring Elon believes no other company in the industry has more realtime data than Tesla and that allows them to quickly make intelligent decisions Tesla expects improved costs from suppliers but also reducing logistical overheads From a production perspective, they could possibly hit 2M but 1.8 remains their goal Tesla is not dropping prices in response to competition however Elon mentioned several times they could in fact sell cars for $0 profit however thanks to autonomy recoup margin later (a unique advantage for Tesla) Tesla is not trying to crush the competition and they gave an example of allowing 3rd party EVs to use the Supercharger network Tesla leadership does not see any limitations with direct sale model and is one of the fastest growing, complex product manufacturer ever Energy Should be closer to full production utilization in 2H 2023 Still a goal to develop heatpump for homes & commercial environments (on back burner for now) Tesla opened first Supercharger V4 location in Europe and first Magic Dock locations in NA in Q1 Key site layout & stall design will emphasize universal compatibility (no matter where the charge port is located) Going to continue to roll out these new offerings as they build new stations Always balancing servicing their own customers as well as non-Tesla EV customers Tesla has done a great job with this especially when you look how they’ve done in Europe

Like I have done with previous earnings calls, I have compiled notes that I wanted to share from today’s 2022 Tesla Q4 Earnings Call. Enjoy! Opening remarks from Elon Musk General 2022 fantastic year for Tesla, best year ever on every level Over 1.3M cars delivered in 2022, 17% operating margin, highest of any car maker Generated $12.5B in net income and $7.5B in free cash flow Tesla achieved these records despite numerous headwinds Most common question from investors is how is demand As of January 2023 Tesla has noticed the strongest ever demand year to date Demand is almost 2x the current production rate Model Y price has been increased due to increased demand Tesla expects the automotive industry as a whole to contract so price is very important with current state of economy Making very good progress on cost control and seeing the cost of production in Berlin & Texas drop as production ramps FSD FSD Beta has been deployed to 400,000 customers 100 million miles of FSD usage for city streets FSD released in light of exemplary Safety Statistics that the Tesla team has been closely tracking 4680s 4680s production reached 1000 cars per week at in 2022 Q4 4680 production capacity increased by 100 GWh with expansion plans for Giga Nevada Will continue to use other cell providers as well as cells produced internally Ultimate goal is to produce 1000 GWh per year Energy & Mission Energy storage saw record growth in 2022 and that continues to accelerate Tesla’s main goal is to continue accelerating the advent of sustainable energy & transport Tesla wants to make as many cars as possible Tesla wans to be the best manufacturer including that of technology Opening remarks from Zach Kirkhorn Revenue increased over 50% Operating income doubled Margins remained industry leading Sequential and annual margins were impacted by ASP reductions Rising interest rates in US increased cost of each vehicle by 10% Energy business had its strongest year yet Plan is to move aggressively Demand - Customer interest remains high Cost reduction Holding steady while rapidly increasing volume while increasing efficiency Accelerating implementation of improvements in Austin & Berlin where inefficiencies are the highest To ensure competitiveness going forward, prices have been adjusted accordingly so ASPs are expected to lower slightly going forward More to come on March investor day Q & A from retail investors IRA EV Tax Credits Long term Tesla expects the value of these tax credits to be significant especially as they ramp in the 100s of GWHs Since these incentives require domestic manufacturing they are splitting the credits with Panasonic in 2022 but expect that to change as they bring more domestic battery capacity online later this year (and in 2024) They expect the value of these incentives to be $150M-200M and growing as volumes grow Pretty well positioned as IRA incentivizes domestic battery production which Tesla already had in their immediate & future plans Expected ASP After Price Cuts In current forecast Tesla believes they’ll be above 20% automotive gross margins (excluding leases & $47k ASP across all models) The ASP reduction is not as large as reduction in configurator prices Most focused on operating margin Every time Tesla sells a vehicle they have the potential for future revenue from software (ex. FSD especially as it continues to get better) Elon still expects FSD to result in the biggest value increase in history Elon & Politics Elon states due to his follower count on Twitter he is popular and therefore mostly favorable Tesla does not officially monitor favorability of Elon 4680 Ramp (Texas) 1K vehicles / week was years in the making, big accomplishment for the Tesla team 1 of 4 4680 manufacturing lines in Giga Texas are in production, 3 are in the commissioning / install stage & continue Plan is to appropriately (cost effective) ramp 4680 production before start of production of CyberTruck Drive factory yields up as much as possible 2024 is planned to be a major year for 4680 HW4 CyberTruck will have HW4 For 2023 CyberTruck will not be a significant contributor but it will be in 2024 Elon said CyberTruck will be his personal vehicle of choice Upgrading cars w/ HW3 should not be needed as long as they can get to 200-300% safer than humans, HW4 may be 500-600% safer What really matters to Tesla is that they continue to improve the average safety on the road Cost and difficulty of retrofitting (for HW3 vehicles) would be quite significant and therefore not economically feasible Insurance Currently $300M premium run rate 20% QoQ growth States in which they are operating, 17% of customers are using Tesla insurance products This percentage keeps creeping up Most commonly see adoption occur when vehicle purchased vs after the fact Motivation of starting this business is to improve TCO of their vehicles Want to keep costs low and accessible to customers Competition helps drive costs down across the board Adjusted design of car and software to minimize cost of repair Avoid accident first and foremost by encouraging use of Autopilot Most accidents are fairly small CyberTruck Production to start sometime this summer Going to be very slow at the start Future Factories Will provide an update in the future and thinking about very carefully What’s the fastest path to 1000 GWh Q & A from Financial Analysts Production & Increasing Efficiencies Current production capacity is actually closer to 2M but saying 1.8M to be conservative due to potential external headwinds (like we have seen the last few years) If you look at size of Giga Nevada that is allocated to make 100 GWH, it is noticeably smaller than the space used to produces 35 GWh Elon expects competitors to struggle to keep up with Tesla’s manufacturing prowess New products are going to blow people’s minds Elon believes they have the most exciting product roadmap of any product on earth “More great ideas than they know what to do with” -Elon Musk Expect bumps along the way including a recession in 2023 Long term Elon believes Tesla will still be the most valuable company on earth Lithium costs per car expected to rise in 2023 and therefore do not expect COGS to get back to $36k Continue to re-design supply chain to reduce costs Fleet is starting to mature and gathering a lot of data to optimize for margin going forward Later this year they’ll be looking at the powertrain side materials where they are paying for perf than they need or more content without sacrificing reliability Elon expects to see a deflation in input costs which should improve margins 1.8M unit forecast estimate is production capacity constrained, not related cell supply Not all of 4680s produced in Giga Nevada will go into the Semi According to Elon future products will use the 4680 Elon believes it is counterproductive to ramp number of products without appropriately scaling battery production Autonomy / FSD Excitement around FSD continues to grow and is resulting in an increase in take rate Tesla is both a software and hardware company and many forget that according to Elon HW3 is still the most efficient inference computer out there even though its 5 years old from design Fully recognize EAP cost, recognized a portion of deferred revenue for FSD for features that are available, some deferred until they are ready for public consumption Tesla still believes nobody is close from a general autonomous driving perspective “You can’t see 2nd place with a telescope” -Elon Musk Elon doesn’t expect that to last forever Whoever can keep up with EVs will be there Going to keep focus on total vehicle space and Car companies in China are most competitive in world Elon thinks a company out of China is most likely to be in 2nd Tesla China team is winning in China Dojo & Optimus Dojo slated to be used by Tesla by end of 2023 Optimus continues to be developed and potential is endless with this product alone Tesla thinks Dojo will be competitive with NVIDIA H1 at end of 2023, surpass it in 2024 They are going to focus on energy usage per frame of video when training Do see potential for order of magnitude in training performance compared to traditional GPU training clusters Very similar to ASICs being CPU for specific tasks Communication between Dojo modules is extremely efficient Efficiency w/ inference not going away especially when you expand outside of vehicles Captive Financing Captive financing has been used to plug gaps in markets for existing 3rd party products Couple offerings in Europe Energy loans in US Leasing Using captives to support vehicle sales Zach believes there is an opportunity to grow captive financing and plumbing is in place to do more Cash is required to grow so want to be careful on how much they invest into this aspect of the business

After a long drive back from California I had the chance tonight to listen to the 2022 Q3 Tesla earnings call. Like I have done with previous earnings calls, I have compiled notes that I wanted to share below. Enjoy! Opening remarks from Elon Musk General Q3 record quarter on many levels Industry leading operating margins of 17% Free cash flows surpassed $3B in Q3, $9B over last 12 mos Q4 should be record breaking and tracking well so far Giga Berlin reached milestone of 2000 cars per week (with very good quality), continues to rapidly ramp Giga Texas should reach milestone of 2000 cars per week very soon Demand continues to be strong especially for Q4 and Tesla expects to to sell every car they make for the foreseeable future “Long way to go to reach 1% of global vehicle fleet” -Elon Musk Stock buyback completely possible even with worst case scenario but still needs to go through formal board review Long term trend for Tesla continues to be positive Elon for the first time recognizes that Tesla has the potential to be larger than Apple & Saudi Aramco combined (without factoring in Optimus) “Most exciting product portfolio on earth, some of which you have hard of and some which you haven’t” -Elon Musk Final development stage for CyberTruck with production equipment being set up Robotaxi platform design coming along nicely Moving as fast as possible to achieve 1TWh of vertically-integrated battery production capacity in the US (including anode, cathode, lithium refining, etc.) 4680s 4680 production has tripled in Q3 compared to Q2 Elon expects 4680s to be a significant portion of vehicle production in Giga Texas in the near future 2nd generation of manufacturing equipment for 4680s in Giga Texas continues to quickly ramp and will nicely compliment the existing Kato Rd Battery Pilot Plant AI Day 2022 Follow Up Recruiting goal accomplished as smartest AI folks are applying and considering careers w/ Tesla Autopilot 60M millions driven by FSD Beta as of September 2022 FSD Beta to move to wide release to all North American customers by end of 2022 (current target is November) Anybody that has ordered FSD Beta (or subscribed) will have immediate access to FSD Beta Tesla is seeing that safety increases with vehicles w/ FSD Beta enabled than those that don’t Opening remarks from Zach Kirkhorn Automotive Profitability GAAP: 17.2% Gross: 27.9% Operating margin best yet even with Giga Berlin & Giga Texas production ramps weighing heavily With Giga Berlin, Giga Texas, and regulatory credits excluded, operating margins would have been strongest yet and gross margin would have been ~30% With that said, Giga Berlin & Giga Texas are positively contributing to future profitability as they ramp further & further Margin headwinds associated w/ macro economic conditions Energy gross profits highest they have been thanks to record production of Megapack & Powerwall offerings Free cash flows record despite decrease of cars in transit at end of quarter Started to experience limits on outbound logistics capacity which was not anticipated Definitely recognized with cargo ships leaving China as well as trucks within Europe Previously, roughly 2/3 of Q3 deliveries occurred in month of September with 1/3 of those coming in the final two weeks As a result, Tesla has begun to spread regional builds throughout the quarter to reduce transportation & logistic bottleneck (should also reduce costs, improve customer experience, etc). Still on track for 50% annual growth in production in 2022 however some supply chain risks exist (out of Tesla control) 50% annual growth for deliveries will be just below due to increase in cars in transit Expect a gap in production & delivery numbers in Q4 however those vehicles will be delivered at the beginning of Q1 2023 Continuing to build cars as fast as possible while maintaining healthy operating margins Q & A Inflation Reduction Act (IRA) Tesla plans to fully meet IRA’s requirements and sees it as a big accelerator for Tesla achieving their mission as well as battery supply chains here in America Elon meets they will meet all thresholds outlined in the IRA Worldwide Backlog (outside of North American) Elon believes China is experiencing a recession of shorts (property market) while Europe has a energy-driven recession New Products “Tesla is committed to continuous improvement” -Elon “Best Tesla is the latest Tesla” -Elon Musk “Plaid Model S & X are the best cars on earth, nothing close, just try one” -Elon Giga Berlin & Possible Power Cuts in Germany Don’t foresee this as a large risk to the company Cast front underbody as well as structural battery pack (Model Y) will be introduced to Giga Berlin later this year CyberTruck Facilities are actively being prepared for CyberTruck production On track for early production in early 2023 Beta builds have started and will continue to ramp into 2023 “When can I drive my beta” -Elon Musk Elon blamed delay on force majeurs including global supply chain crisis Tesla Semi First deliveries to Pepsi Co December 1st, Elon will be attending in person Will initially ship with the 2170 battery cells and eventually 500 miles of range (on level ground) fully loaded w/ cargo “I’d ask, what are your assumptions about wh/kg and wh/mi and they’d look at me with a blank stare, and say Hydrogen” -Elon Elon believes hydrogen is not needed for heavy duty trucking Takes a year to ramp production so expectation is to significantly ramp over next few years w/ production target of 50,000 units in North America by end of 2024 Plan is to expand Tesla Semi beyond North American Batteries 4680 production is expected to exceed 1000 car sets / week by end of Q4 2022 Focus is now shifting from production ramp to cost optimization and increasing production capacity in North America 300-400TWh of battery production necessary to transition entire world to sustainable energy Main cathode material will be iron since it can scale to very high tonnage 2x as much iron as nickel Manganese mixed in as well Aggressively pursuing a North American cathode supply, more to come on this one Tesla still believes they will meet the estimates they outlined on Battery Day Drew has been daily driving a structural pack Model Y for some time, still going strong Prolonged Recession Not reducing production in anyway, recession or not Elon believes Tesla is recession resilient (not recession proof) thanks to the fact the world has acknowledged they should move to EVs Battery storage needed to realize larger rollout of renewables Growth of energy storage business unit expected to grow at a rate of 150-200% per year, faster than vehicles by a lot Tesla can withstand quite a bit of downside before having to tweak production, product roadmap, etc. Even if 2023 is a horrible recession year, they still foresee generating noticeable amounts of cash Primary focus of new vehicle development team is to create next generation vehicle Half the cost of the Model 3 & Y platform Will be smaller as well Will quickly exceed the production of all other vehicles combined Going to take everything they learned from other vehicles into next-gen vehicle Goal is to create 2 cars with the same effort it takes to build a single Model 3 Vertical Integration Only have done this out of necessity and if it is required for them to do mining, Tesla will do it Elon has been meeting with senior US govt officials and he has asked for them to expedite permitting process for clean energy related projects Gradual improvements as they redesign the whole supply chains, Tesla is figuring out dramatic inefficiencies FSD Beta Elon expects functionality to be good enough to take you from your house to a friend’s house, grocery store, etc. “Almost never should have to touch the controls” -Elon Elon believes next year they’ll have sufficient data to share w/ regulators that proves FSD Beta is safer than the average human driver Operational efficiency Many different areas that Tesla can optimize further Costs of many commodities coming down however key elements like Lithium remain high Shipping costs went from $20k per container to about $3.5k (lots of things have been deflationary) Twitter Elon is excited even though he and partnered investors are over paying for Twitter He believes long term value far exceeds that of its current value Dojo Still a debate on whether or not it’ll be able to exceed performance of latest & greatest NVIDIA GPUs when it comes to NN training Elon believes they’ll known within next 1 - 1.5 years if Dojo is more powerful than NVIDIA GPUs

Today I had a chance to listen to the 2022 Q2 Tesla earnings call and as a result have produced the following raw notes. Enjoy! Opening remarks from Elon Musk Unique quarter for Tesla due to Shanghai shutdown Production records achieved in Fremont & Shanghai Set up nicely for record breaking 2nd half of 2022 Past years have thrown several force majeure at Tesla yet the team continues to overcome Giga Berlin Production Ramp continues with 1000 cars / week in June, Giga Austin to follow with the same number in the next few months Still making cars w/ 2170 cells in parallel and important to note they aren’t dependent on 4680s and will still hit their production numbers FSD Beta deployed to over 100,000 owners 5-6 years ago they set out to be the best manufacturer in the world Pro-manufacturing mindset has given them a competitive edge Currently make the largest castings in the world As a result of improved manufacturing processes in Berlin & Texas, Tesla has reduced body welding robot count by 70% per unit of capacity Body shop is roughly 3x smaller as it would be otherwise New vehicle bodies are lighter, cheaper, and quieter thanks to reduction in NVH Another level of simplicity and improvements are coming with Cybertruck (as well as future products coming down the road) Intelligent seat belt tensioning based on vision system recently released, first in the industry to do this Can also adjust the airbag deployment as well Delivered via OTA update Will have profound impact on passenger safety Compatible for all HW3-equipped Teslas Cybertruck Production still expected to start middle of 2023 “Best product ever” -Elon FSD Beta Planned to be released to all North American customers by end of 2022 FSD will then be released to other geos such as Asia and EU soon after pending regulatory approval Opening remarks from Zach Kirkhorn Made substantial progress in almost every area of the business New production records reached in existing factories and new ones actively ramping Highest solar production volumes in years Temporary shutdown had noticeable impact to vehicle margin Factory ramping also associated with negative impact on vehicle margin Inflation, commodities, and logistics continue to be headwinds Resource constrained on Powerwall and Megapack which should be resolved in the 2nd half of 2022 Austin & Berlin operating costs are going down as production ramps up Tesla sold 75% of Bitcoin holdings They did so as they were uncertain when COVID lockdowns in China would end As a result they wanted to maximize cash position They are still interested in Bitcoin and have not yet sold any Dogecoin Highest operating margins ever at 14.6% Still targeting 50% of growth and still within reach Q&A Chinese EV Manufacturers & Software Innovation Elon believes Tesla China is the best EV manufacturer in China Chinese car companies will be a force to be reckoned with going forward Tesla has respect for Chinese automakers but believes they have whats necessary to compete Unified Vector Space Unified Vector Space would be if instead of knitting together dynamic & static objects w/ C++ you knit them together at the NN level (meaning you no longer need to reconcile them in C++ heuristics) Architecturally better way Slight improvement in efficiency of FSD stack and something they want to get to Nirvana situation would be to have surround video auto labeling for all static & dynamic objects as well as surround video inference w/ spacial memory Elon believes they have a unified vector space by the end of 2022 Elon is also very confident that Tesla will improve the frame rate as they delete legacy NNs and further optimize the FSD software stack The goal is to get FSD Beta to operate at 36fps for all 8 cameras compared to the current 24 frames which will reduce latency when reacting to a dynamic environment Inflation & Future Price Reductions They do not control so therefore Elon says take w/ grain salt but thinks inflation to decrease by end of 2022 Carbon, steel, aluminum, etc are trending down in cost which should see impact later in 2022, early 2023 Processing of lithium is insanely costly Elon again encouraging entrepreneurs to enter the lithium business as there are, “software margins” “License to print money” -Elon Bitcoin Cryptocurrency is not something Tesla thinks about a lot according to Elon Main goal is production and addressing climate change by making sustainable energy & transport a reality 4680s Structural pack is a monumental step forward from a physics perspective and is the way to go Gained perspective through entering production w/ structural pack Teslas which proved their hypotheses Cost improvements are thanks to solving technical issues and scale They have saved 4-5kg in mass from the early cast Model Y underbodies since their initial production Plan is to reduce mass of castings and to include more parts (and to adapt vehicle to work better with castings) Cybertruck will be another big step in this area Making progress on 4680 production ramp but continuing to leverage supplier cells (2170s) to ramp Giga Berlin & Texas Total production ramp of 4680 packs to 1000 per week by end of the year (preferably earlier) Q2 @ Kato fully automated powder conveyance for the dry anode electrode tool there unlocking major improvements in production & yields too Production as a result has increased 35% MoM since March and yields throughout factory are already at targets or trending towards them Took learnings from Fremont cell & pack lines and built optimized lines in Giga Berlin & Texas Cell design was revved to unlock higher performance and manufacturing simplicity Lines were fully integrated and insourced additional content As a result new challenges for ramping in Giga Berlin & Texas Last quarter cell equipment was fully installed at Giga Texas and they have since produced their first commissioning car sets of 4680s cells The target for Texas is to begin mass producing 4680 cells in Q3 2022 with the goal of being able to exceed the weekly cell production capacity of the Kato battery plant by end of 2022 Priority with 4680s initially is simplicity and scale, Tesla was not aiming to include all of the bells & whistles right off the bat As manufacturing goals are achieved they plan to layer in new material technologies into their structural packs (and increase range as well) Currently in regards to 4680s Tesla’s main focus is to remove low hanging issues that would prevent further production ramp Dry electrode anode & cathode are included in the current 4680 process which makes things harder to ramp (yet they continue to achieve success here) Once mass production achieved they plan to quickly iterate w/ an increase in energy density and overall performance soon thereafter Tesla cell production will continue to compliment production volumes from suppliers Fundamental rate limiter for transition to sustainable energy is rate of li-ion battery pack production Not due to scarcity of raw materials, refining lithium in ultra high purity is quite difficult and requires massive amounts of machinery Super difficult to create anode and cathode Elon believes 2/3 of batteries in the future will be iron phosphate, maybe some with manganese Tesla is actively working with suppliers to ramp as quick as possible Tesla is taking action by building their own Cathode plant at Giga Te xas as well as taking the plunge into lithium refinement FSD Development Progress & Andrej Departure While Andrej Karpathy will be missed (recent departure), Elon remains very bullish on current team of 120 people in software / AI group and believes that they will solve FSD by end of 2022 No major setbacks or delays in FSD timeline should occur as a result of Andrej’s departure Elon believes they will raise FSD price just before they go to wide beta (targeted for end of 2022) Value of FSD is extremely high and not well understood by most people, Elon thinks its ridiculously cheap if promises of performance materialize Semiconductor Supply Chain Constraints Tesla procures about 1600 unique pieces of silicon from 43 different companies Supply chains are more stable w/ latest generation of chips Chips from the analog & mixed signaling space still remain a challenge from a supply chain perspective Supply chain line of sight continues to match planned outputs for both factories (no constraints) Long term contracts already in place for key battery materials and so there are no concerns about future constraints Tesla does not plan to manufacture their own chips however they continue to work with suppliers to ensure future product goals are achieved Chip shortage forced Teslas to delete redundant chips and update software accordingly (big positive in hindsight) Cybertruck Deliveries to begin by the middle of 2023 Vehicle Demand Vehicle demand not an issue for Tesla for the foreseeable future No sizable macro impact on demand Difference between value in money and affordability and why you can’t just keep increasing prices Elon feels that they have raised prices to “frankly embarrassing levels” Supply chain and inflation are main culprits for price increases Elon is hopeful Tesla can reduce prices soon Elon thinks its achievable to produce 40,000 vehicles per week by end of 2022 Teslas has already produced 30,000 vehicles per week many times, 40,000 vehicles per week is definitely in reach Plan is to get Giga Berlin & Texas to ramp to 5,000 vehicles per week by end of 2022 and 10,000 vehicles per week by end of 2023 Elon reaffirms that Tesla does not have a demand problem but instead a production problem Elon’s Role At Tesla If there is only good news Elon won’t plan to join the future earnings calls Elon is committed to working at Tesla as long as he can continue to help advance the company AI Elon didn’t want to steal thunder from AI day so he will save the news / updates regarding Dojo & Optimus for then

I spent sometime listening to the 2022 Q1 Tesla earnings call and have created raw some notes which I have included below for your reference. Enjoy! Opening remarks from Zach Kirkhorn Per unit vehicle costs increased due to inflation, raw material costs, and supply chain constraints Slight shift towards more profitable vehicles like the Model Y Energy business continues to be impacted by macro conditions more than vehicle business (chip constraints) Achieved record operating margin over 19% amidst construction of 2 new factories (Giga Berlin & Giga Texas) Tesla has reduced debt (excluding product debt) to nearly 0 Lost 1 month of build volume lost due to COVID-related shutdowns at Giga Shanghai (will dramatically affect Q2 delivery numbers) Inefficiencies of ramping process at Giga Berlin & Texas will affect bottom line Tesla still believes 50% YoY growth w/ vehicle production in 2022 is still achievable Opening remarks from Elon Musk Record deliveries and production even with many headwinds Even with COVID shutdowns in Giga Shanghai Elon believes they still have a shot at 60% YoY growth for 2022 Two new factories opened in Q1 and exponentially ramping (Giga Berlin & Giga Texas) with higher production volumes achievable by end of this year Just crossed 1m units in the last year however long way to go as Tesla aspires to produce 20m units per year (only 5% towards their goal) Elon never more excited for Tesla and their future then he is now Robotaxi Highly optimized for autonomy (no steering wheel or pedals) Numerous other innovations Fundamentally optimized for lowest fully considered cost per mile, accounting for everything (very powerful product) Expect to reach volume production of Robotaxi in 2024 CyberTruck On track for volume production in 2023 Optimus Elon surprised people weren’t more excited for this but he thinks folks will fully understand its capabilities & impact will be greater than FSD or vehicle businesses Energy Battery & solar production will improve as supply chain issues are resolved Q&A FSD Development Progress Elon has never seen more false dawns than with the development of FSD. Real world AI has to be solved for (nobody has solved yet) and with our roads designed for humans, NNs & cameras have to be solved in a way that is on-par with (and exceeds) the capabilities of humans. Elon still believes they will deliver on FSD in 2022. Best way to realize this is participate in FSD beta program and experience it for ourselves as they’ll be expanding the program later this year. Still targeting new FSD release cadence of every 2 weeks. Giga Shanghai Shutdown Production is coming back with a vengeance and Elon expects weekly production records to be broken as they work to catch up. Still possible to match / exceed Q1 numbers however Q3 & Q4 are expected to be record quarters in terms of production. Elon believes Tesla will easily be able to produce 1.5m vehicles this year. It’s important for new factories to target limited configurations during ramp and that is why both Giga Berlin & Giga Texas are hyper-focused on producing the Model Y. Ramp period (5k per week) takes typically 9-12 months from start of production however it’s possible for Tesla to ramp sooner based on their experience. Price Increase Elon says it is understandable that there are many folks questioning price increases especially amidst record profitability however the price increases are there to account for an increase in raw materials costs and potential supply chain constraints in the future (since vehicle deliveries are a year out). State-based Dealership Laws Tesla would love federal-based laws that allows direct sales across the country however congress is not willing to take up this sort of legislation at this time (so Tesla is approaching it on a state-by-state basis) 800V Battery Architecture Tesla is not ignoring the reality that they can go to a higher voltage however there is not any compelling reason to change at this point Going from 400V to 800V might save them $100 per vehicle (however requires changing all of the backend infrastructure) Switching to 800V might make sense down the road however Tesla needs to increase vehicle volume to absorb the cost of moving from 400V to 800V first For larger vehicles where higher power on the battery side and/or charging side is required (where current requirements go up), savings can be seen by increasing voltage as it would reduce semiconductor needs (and thus save $) Tesla is considering different voltages for CyberTruck and Semi For 3, Y, and Robotaxi they see no need to switch 4680 Batteries Tesla is working in all areas that they described during the battery day event and making good progress Going to take several years to achieve the cost savings and performance numbers they described during battery day 4680 structural pack will be competitive with the best alternatives later this year and exceed the best alternatives next year New chemistries hinted at however will be included in 4680 production later on Based on Giga Texas factory construction, the 4680 production equipment cost 5x less than what it would have been with other battery cell designs Cost model well understood, rate and yield will be better understood as they ramp over next few years Giga Berlin will transition to 4680s from 2170s later this year Giga Texas has the capability to produce non-structural pack for 2170s (mitigation) Volume production for 4680s in Giga Texas targeted by end of Q3, for sure Q4 Sizable cell inventory thanks to Giga Shanghai shutdown and allows them to be more deliberate in 4680 development (gives them some breathing room during ramp) 4680 production not a risk to achieving vehicle production target in 2022 however would be in 2023 Raw Materials Required To Scale Tesla needs to think about tonnage of Nickel, Iron Phosphate, Graphite, Separators, Electrolytes for the world as a whole Then take action on limiting factors that get in the way of the advent of a sustainable energy future Tesla is thinking about mining & refining Lithium is a current limiting factor and responsible for cost growth per cell as of late (single biggest on a percentage basis) Lithium only makes up only 2-3% of a Li-Ion cell (5kg per car) Cathode (Nickel & Iron Phosphate) is the heaviest in terms of cost and raw materials composition of a battery cell Exciting announcements on the raw materials topic in the months to come, Elon hinted to a follow up call / event Tesla committed to recycling at all cell factories, recycling 50T per week in Reno (ramping to 150T) which is putting materials right back into their Cathode supply chain As they are building new vehicles at new factories, Tesla is recycling everything they can from a raw materials perspective Tesla figured out they can recycle cast aluminum wheels from retired ICE cars and throw it into their aluminum melting pot and use for vehicle body production for 3 & Y Half of Tesla’s products were LFP-based in Q1 2022 which shows how nimble they are regarding battery chemistry Also looking at other cathode options to give Tesla further agility Some of the challenges with Lithium market are not related to supply & demand fundamentals (frustrating to Tesla) Giga Berlin & Texas Ramping related to Giga Shanghai Elon thinks they need to ramp Berlin & Texas faster than Shanghai as they are more experienced now and have learned so much in the simplification of Model Y production Body line for front & rear cast underbody + structural pack is 60% smaller than it would be otherwise in terms of equipment required If you are waiting for the best Tesla ever you will be waiting forever as they are constantly improving Robotaxi Unveiling event sometime next year, Elon doesn’t want to go into too many details until then Volume production in 2024 Sizable investment required to build robotaxi production lines Prices Over Time Elon wants to make EVs as affordable as possible however this has become very difficult due to inflation (40-50yr high) Likely to continue for remainder of 2022 Long term contracts with suppliers have helped Tesla keep costs down longer than expected but eventually they run out 20-30% cost increase from suppliers over last year which is why Tesla has raised their prices Lithium margins are practically software margins right now (Elon encouraging more to get into this business) CyberTruck Ignoring battery cells Tesla believes the CyberTruck is made of 20-30% less parts than a typical pickup truck Giga Nevada Room for expansion there and the plan is to expand production at Giga Nevada further Majority of battery cells will be produced at Giga Texas going forward COVID Shutdowns in China Elon doesn’t think recent COVID shutdowns in China will negatively impact production elsewhere Elon compensation No plans or talks to increase Elon’s compensation further 3rd Party Access to Supercharger Network in USA Tesla plans to provide 3rd party vehicle access to the entire world and remains committed to that Tesla is pursuing a technical solution to address the difference in charging connector in the US (magic dock) Growth of Supercharger network is being accelerated to match increase in vehicle production Tesla Insurance In state of Texas Tesla is the second largest insurer of Teslas and should be #1 in the next quarter Working to get 80% of states access to Tesla insurance by end of year at which point they’ll look to expand to other markets Having realtime feedback for driving habits (safety score program) is proving helpful to Tesla owners w/ Tesla insurance as it directly relates to a lower rate When a crash happens it gives Tesla a new feedback loop to improve vehicle design, reduce costs, etc (End-to-end visibility)