Fremont

Part 1 - Formal Shareholder Items Martin - Intro Robyn Denholm Global fleet of cars and vehicles to avoid 8.4M metric tons of green house gas emissions Avoided emissions that were equivalent to ICE vehicles driving 20B miles By 2030 Tesla plans to sell 20M vehicles / year In June 2022 Tesla achieved the highest vehicle production month in their history Tesla continues to make an impact w/ Solar & Energy Storage business Tesla sold 4 GWH of energy storage products in 2021, enough to power 3M homes Solar demand has increased 4x Goal is for all factories to be carbon neutral Tesla already uses less water per vehicle than any other automaker Sustainability drives everything Tesla does Stockholder Proposals Proxy Statement: https://www.sec.gov/Archives/edgar/data/1318605/000156459022024064/tsla-def14a_20220804.htm Part 2 - Elon’s Presentation / Q & A Session ...

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)

I spent sometime listening to today’s earning call and have created raw some notes which I have included below for your reference. Enjoy! Opening Remarks from Elon Record quarter on many levels Record production, deliveries and surpassed $1B in non-GAAP income Demand is the best they have ever seen Used to seeing a reduction in Q1 and this year it was the opposite Model 3 became best selling mid-sized, premium sedan of any kind in the world (used to be BMW M3) Elon predicts Model Y will be best selling vehicle of any kind in the world in CY2022 FSD continues to make great progress even though its one of the hardest technical problems ever to solve With the elimination of radar, Tesla is getting rid of the last crutches When computer vision works, it works better than the best human Elon is highly confident they will FSD this done Q1 was one of the most difficult times in terms of supply chain constraints for Tesla China growth was restricted by COVID-related personnel restrictions which made them 100% reliant on drive unit production at Giga Nevada More challenges than expected in developing the refreshed Model S & X Battery was one of the biggest challenges as most energy they have ever packed in such a footprint They have iterated on the Model S test units they have built and should begin deliveries in Q2 and ramping in Q3 Goal is to produce 2000 Model S & X per week with 2400 - 2500 being peak production target Expect to have limited in production later this year and volume production in CY2022 at Giga Berlin & Texas Model Y continues to ramp in Fremont & Giga Shanghai Semi & Roadster development continues to ramp Financials Successfully launched and ramped Model Y in China (while retaining profitable) Reduction in S & X deliveries were meaningful headwinds to profits Continuing to work through supply chain issues however still experienced higher expedite costs Cost structure is reducing and thus leading to future gains in profitability Energy growth margins remained negative due to winter seasonality and solar roof ramping Remain on track for industry leading ASPs and operating margins Making progress on reducing varying forms of debt Trimmed BTC investment by 10% which resulted in a $127M profit Global demand remains meaningfully higher than production levels so still trying to ramp production rates Q2 & Q3 will hinge on S & X, Model Y in Shanghai, and cost reduction in these programs Cash generation should respond positively Questions from Say Question: How is Dojo coming along? Will Tesla become the AWS of the AI / robotics world with Dojo? Answer: Long term Elon believes Tesla will be thought of as a AI / robotics company as much as a car & energy company. Training system will need to be able to address data produced by a fleet greater than 2M cars in 2022. Surround video labeling is quite tricking as you are looking at quite a bit of data when you consider 30 fps x 6 cameras over time. No tool that existed and Tesla created their own labeling tool to address this. Holy grail is auto labeling which Tesla is getting quite good. Dojo is really a supercomputer optimized for Neural Net (NN) training. Tesla believes an order of magnitude cost efficient per frame of video in terms of hardware & power compared to a GPU solution. Tesla plans to eventually make it available for public consumption. Question: Could Tesla share more about Solar Roof challenges and if the outcome has changed at all from 1000 roofs per week? Answer: Elon mentioned demand still exceeds production & ability to install. He admits to underestimating roof construction variance which has presented install challenges. Tesla is shifting whole solar + battery situation to only 1 configuration where every house with solar will include at least 1 Powerwall. Powerwall 2+ (+ refers to 2x higher peak power output) which started production in September of 2020. Difficulty of installation will be much less due to the way they are wiring the Solar always to the Powerwall, and Powerwall in between utility and house. You never need to touch the circuit breakers of the house as a result become your own utility. In working with the utilities, Tesla can harness the Powerwalls to stabilize the overall grid and address situations like what happened in Texas. They can then operate as if they are a decentralized utility. With the ramp of EVs, Tesla estimates we will need 2x if all transportation goes electric and 3x if all heating goes electric as well (along with ever changing weather patterns). Question: Master of coin, can you tell us Tesla’s future plans in crypto currency. Answer: Zach responded saying BTC investment was based on desire to leverage cash that is sitting idle and get a return on it. Tesla does believe long term in BTC stability and is committed to holding its position long term. There is some additional plans related to crypto being worked on but no announcements as of yet. Question: Does Tesla have any plans to deal with the current fud campaign being amplified by the media? Answer: Elon mentioned how journalists should be ashamed for their deceptive ways in how they covered the Texas crash story. Tesla is continuing to work alongside crash investigation agencies and help them where needed. Autosteer would not and could not engage as designed. TACC only engaged after driver was in seat, seat belt buckled, and vehicle going 5mph. The car only accelerated to 30mph with TACC which was not the final speed when the vehicle crashed (it was much higher). Through further investigation Tesla was able to determine driver was in the seat at time of crash due to the steering wheel being deformed (amongst other evidence). NTSB is still investigating and we will wait for their report. Question: What is Teslas response to seasonal energy storage? Answer: US could be powered off a single 100mi x 100mi solar array, 200MW per KM^2. Entirely possible with using only a small percentage of earth’s area. Elon believes you do not need room temperature super conductors. Low cost, long distance, high-voltage DC powerlines are key. Technologies that exist today can easily solve earth’s energy problems. Tesla believes there should be a carbon tax on energy production just like a cigarette or alcohol tax. No question in Elon’s mind that Li-Ion batteries can solve world’s energy needs when it comes to sustainable energy. Iron-based Li-Ion batteries will become a key player in energy storage use cases due to its cost and stability. Question: Where does Berlin sit relative to the 5-10x production improvement that Tesla achieved with the Model 3? Answer: Truly profound that Tesla was the first American car company in 100 years to reach volume production. Tesla has numerous stories where insignificant components restricted production (USB cables being one of them). Question: High volume transport-related question? Answer: No answer at this time. Questions from Institutional Investors Question: Looking for an update to progress since battery day. Answer: Tesla has made quite a bit of 4680 cells however not quite reliable enough to ship in cars (but getting close). Most of equipment already ordered for battery production in Giga Austin & Berlin. Overall very optimistic in achieving volume production of 4680 cells in CY2022. Progress in yields is really strong and current trajectory aligns with cost production. While they are ramping up their battery manufacturing capabilities, they are working with suppliers to help supplement overall battery production (LG & Panasonic). Aiming for comparable margins in energy storage just like vehicles, already off to a great start with Powerwall however more room to go with Megapack (runway to improve this going forward). Question: L ooking for an update on rollout of FSD V9 and plans regarding a subscription model. Answer: Currently working on FSD subscriptions and hope to roll out soon. OpEx costs will be reduced with completion of industry first projects like 4680 battery cells. On the SG&A side, business is pivoting to being global. China is continuing to ramp quickly and Tesla is trying to stay ahead of the volume to manage growth. Question: What is the path to reduce COGs on powertrain to do something like a $25k vehicle? Interested to learn about new efficiencies in new factories and how does that relates to new COGs. Answer: Plenty of opportunities to improve COGs in terms of battery production, materials, etc. Tesla does not want to talk further about new products. Links Tesla Q1 2021 Financial Results and Q&A Webcast Tesla Q1 2021 Shareholder Deck

Today was another action-packed day for Tesla fans as the company released their full earnings report for Q4 2020 along with details surrounding the newly refreshed Model S & X. I spent sometime listening to today’s earning call and have created some notes which I have shared below for your reference. Enjoy! Opening Remarks from Elon Defining year on many levels, especially with the pandemic Important milestone of delivering 500,000 cars, almost as many as they had previously produced in their entire history Free cash flow of 2.8B after spending >$3B on new factories and other expenditures Industry leading GAAP operating margin, positive net-income, and record cash flow Continuing to ramp capacity in Fremont & Giga Factory Introduced heat pump to all vehicles Tesla is the first automaker ever to cast the rear third of the vehicle in a single, cast piece in the largest, most advanced casting machine ever made Still planned to start production in Giga Austin & Giga Berlin The pilot battery facility on Kato Road came online in 2020 and is already considered one of the 10 biggest battery factories in the world Model S & X Plaid & Plaid+ introduced and already in production New Model S will begin delivery in February New Model X will begin delivery after (March / April timeframe) Full unveil of the Model S & X will be coming in the next two weeks New Model S is the first ever production car to go 0-60 in under 2 seconds (he goes on to highlight it is the fastest EVER road-ready production car) The Model S is referred to as a Luxury Sedan and will have support for a 3rd row of seats Price is being raised $10k to account for additional improvements to interior, fit/finish, etc. Massive progress with Full Self Driving Around 1000 people in the public beta Very common for Elon to have 0 interventions on his drives with the latest builds, even on routes he has never been before FSD subscription coming in February Elon believes that the car will be able to drive itself better than a human by the end of this year Potential around FSD especially for Robotaxi use-cases dramatically increases their utility and thus helps explain Tesla’s current valuation Even with a conservative estimate of the cars becoming 2x more useful thanks to FSD, it would essentially 2x the value of the company which is mostly margin (because FSD is really just software) He gives an example of $50B in cars is like having $50B of incremental profit While 2020 was a turning point for the company they believe 2021 is another big year for Tesla with new factories and products coming online Logistics will be greatly simplified thanks to new factories in Austin & Berlin coming (less capital tied up in with in-transit vehicles) Financials Generate strong free cash flows, record $1.9B in Q4 while continuing to invest in growth and future initiatives Reduce use of debt / various working capital lines including funneling $2B of converting debt in Q4 continuing into Q1 2021 Achieved first calendar year and 6 sequential quarters of profitability Auto gross margins increased from 2019 to 2019 despite reductions in ASP and new product launches In Q4, stock-based comp (SBC) increased which was driven by stock price over 2020 grant process, portion of which is unique to just Q4 Impact of SBC increase across those COGs and OPEX Auto gross-margins in Q4 was impacted by 2 things: Investments in products made in Fremont S & X line refresh Single-piece castings on Model Y Introducing Heatpump to Model 3 Supply chain instability and pandemic-related inefficiencies With adjustments made with previous two items in mind, improvements were still noticed in auto gross-margins Services and other PNL also affected by previous items including onboarding new services personnel Continuing to ramp service capacity and focus as fast as possible Energy gross margins related to: Solar roof-related ramp costs Typical lease seasonality in lease PPA business OPEX as a % of revenue continues to reduce despite impact from items mentioned and continued investment in innovation Early settlement of convertible notes resulted in an additional $100M of expenses for Q4 Tesla believes their operating margins will continue to lead the industry and grow going forward 2020 may be their most meaningful year yet considering where their investments Continue to expect a longterm volume CAGR of 50% and may exceed in 2021 As production ramps the volume numbers will be skewed towards the second half of the year Q1 volumes will be positively impacted by ramp of Model Y from Giga Shanghai S & X production will be low due to refreshed products Still managing to get through global semiconductor shortage and port capacity Continued focus and investment around Supercharging and service capacity while driving costs Global demand continues to outpace production Questions from Say Question: What is holding Tesla back from being market leader in Solar? Answer: Expect to become the market leader in solar now that they are beyond the Model 3 ramp which required all hands on deck for several years. Looking to achieve an industry leading cost structure which would then give them industry leading pricing. One area of focus for Solar going forward is better integration between Tesla Solar / Solar Roof and Powerwall and hope to release it before the end of the year. The plan is continue to reduce complexity and costs around install later this year as well. Question: Could existing owners get the ability to transfer FSD to their new vehicle? Answer: Elon mentioned that Tesla is not considering allowing folks to transfer FSD to a new vehicle (via trade-in) however did note that they do indeed account for the presence of FSD in cars at trade-in vs ones that do not. Elon also believes the market currently undervalues FSD at this time however for folks that want to Question: Can you give us an update of the dry coating of the battery electrodes? Answer: While Tesla expected some issues with the new dry coating process and associated technologies developed for it, the Kato Rd team has addressed each manufacturing problem they have encountered along the way. The team continues to ramp yields week over week and month and month as they move up the production S-curve. The cell team has reinforced the design and reasserted their confidence in the dry process & 4680 design (meeting performance & cost targets). From a capacity perspective, Tesla has the following at Kato Rd and ready for a full production ramp by the end of 2021: 10GWh of capacity Entire production staff almost hired Material supply chain established Enough production confidence with 4680 design and production process & equipment to kick off manufacturing equipment & facility construction to support ramp to 100GWh production in 2022 Question: Why are you confident that Tesla is going to achieve L5 autonomy in 2021 and why isn’t Dojo necessary to get there? Answer: Elon is confident by his understanding of the technical roadmap and the progress they are making with each iteration. No longer rare to have the car drive you from point A to B even with complex intersections and situations in between. They have so much training data in the field that they are then improving rapidly based on that (this is in part thanks to their homegrown video labeling software). Still a few of the neural nets need to be upgraded to support video training and inference. As they transition each NN to video the performance has been remarkable. Dojo may be the best NN training computer by an order of the magnitude when it comes online. Elon expressed interest in offering access to Dojo via a SaaS-offering as they intend to share their investment with other s (For a cost of course). Dojo’s big goal is to increase the speed of training while also increasing the reliability of the system from 100%-200% of the average human to 2000%! Question: What is Tesla’s current GWh run rate of 4680 battery cells? Answer: Tesla’s goal is 100GWh of total capacity in 2022, not important to look at run up to that. Installing capacity in 2022 for 200GWh / year and plan to achieve 50% of that capacity by end of 2022. Question: What is Tesla doing to address service experience? Tesla had a reputation for great service now it is impossible to call a service center and appointments are scheduled weeks out. Answer: Tesla continues to focus on vehicle reliability which has resulted in service visits being reduced by 1/3 over the last year (the ultimate goal is no service). For situations that require service, they are continuing to ramp mobile service which currently accounts for 40% of all service visits in NA (goal is 50% by end of 2021). Also trying to service the cars in less than 2 hours getting them back on the road. For 100 of the 140 global service centers, the wait time for appointments is <=10 days or less and Tesla plans to drive this down further across the remaining 40 service centers. On top of this, Tesla continues to open new service centers and plans to open 46 new service centers in the 1H of 2021. In terms of phone support, Tesla is going to continue to funnel service requests through the app and move away from the phone due to scalability, media sharing, ease of payments, written records, etc. Questions from Institutional Investors Question: What are the key milestones we need to achieve in order to evolve current FSD to commercial L4 / L5 ride sharing solution? Answer: We need transition of remaining NNs in car to video and in order to do that the whole stack has to be upgraded to support video (including gathering surround video clips, label everything in video clip, and train against that, then have those NNs operate the car). This is contrary to the previous process which just looked at a single camera and single frame at a time. They eventually iterated to an approach that used surround video on a single frame basis however now they are including the time dimension as well. FSD Beta will be expanded to include more and more people very soon. Question: Does Tesla plan or expect to license any software apps (FSD, Autobidder, etc) to 3rd party OEMs? Answer: Elon mentioned they are very open to licensing to 3rd parties and have actually held discussions with 3rd party OEMs for licensing Autopilot. Elon believes that Tesla must first prove Tesla Autopilot is capable of FSD which will become obvious later in 2021 at which point they’ll be more than happy to license to other car companies (not trying to keep it exclusive to Tesla). They haven’t thought as much about Autobidder however just like with Autopilot they are open to licensing to 3rd party companies. 3rd party access to Supercharger network is another thing they are open to. Question: Do we need to do things differently to win the Chinese EV market? Answer: Tesla is currently the leader in the Chinese EV market so they are pretty confident they are on the right track. Very few Chinese customers (1-2%) have selected the FSD option so they have work to do in this department. Question: Is it fair to argue that the best way to think about the company’s longterm earnings power is tied to profit per unit of battery capacity? 3TWH target implies half of long term battery capacity goes to storage depending on what you assume for pack size for 20 million vehicle unit goal. Answer: The fundamental limit on EVs is output of battery cells in GWh and you can’t grow faster than this. Thanks to gain in vehicle efficiency (best in class), they are getting more with less battery cells. Tesla is producing their own cells to accelerate total cell output while still relying on cell suppliers as they need as many batteries as they can get (completely supplemental). Elon thinks total value of company can be calculated based on total cell output that supplies vehicle output and 2x it as well as 2x autonomy revenue. Question: Where are you in CyberTruck development and what are your expectations for CyberTruck deliveries in 2021? Answer: Finished all engineering related to CyberTruck and soon will be ordering manufacturing equipment. Will be using even bigger casting machines (8000 ton casting press) for the rear body casting of the CyberTruck (vs 6000 ton casting press for the Model Y). Tesla is very confident that the vehicle will be incredible however volume production will realistically begin in 2022 (only a few deliveries in 2021). Questions from Queue Question: Could you talk about regulatory environment for FSD and how you see it play out? Answer: Tesla is currently not limited on a rule basis re: FSD in the US however they are expecting to work with regulators to establish reliability standards. In Europe current rules are slowing down progress and limiting them to L3 autonomy. China has shown interest in working on L4 and L5 later in 2021 so expect regulatory space to be dynamic. Question: How are you managing your exposure on raw material costs? Answer: For supply chain the first priority is to deal with disruptions thanks to COVID, shipping in particular (boats) between Asia and NA, and look forward to pricing. Tesla is entering into long term agreements with preferred suppliers to ensure they have what they need to continue 50% CAGR. Question: Any expectations on what investors should expect on the regulatory credit front? Answer: Difficult to forecast and 2020 proved that as it was higher than expected. In long term, regulatory credits will be less which is why they do not include them in their future financial plans. Question: What should we think of use for capital funds raised in 2020 beyond maturities? Answer: Tesla is thinking about reducing debt and early conversions of convertible debt is a priority currently. They now have the ability to design factories and tooling around desired end state vs having to start small and add-on as they go allowing them to ramp much faster. Service expansion is really important to future of company and will continue to see a focus for the company (as well as Supercharging network expansion). Question: Does this require suppliers to have the capability to build 4680-based structural battery packs? Answer: Tesla is in talks with suppliers to produce 4680 cells however it is not required. The new Model S & X use the new 18650 cell and will continue to use that form factor for a few more years. Over time they will reduce variance in form factors and standardize on 4680s as their production ramps. Question: Does Tesla have any plans regarding EV vans? Answer: Tesla is definitely going to make an EV van however due to battery output constraints limit product diversity. Right now they could produce the Semi however volume would be extremely limited due to battery cell availability. They will have enough cells for the Semi once the 4680 enters volume production and the same applies to doing an EV van. Question: Is there an update on the next-gen FSD chip? Answer: The current software does not use all of horsepower offered by the current FSD hardware and will be more than sufficient to achieve FSD. With that said, the next-gen hardware is (FSD v2) 3x as powerful and will be paired with higher resolution cameras and sensors. They are limiting resources on development of new chip since FSD is completely achievable with current hardware (new chip will be improvement but not game changer). Question: Are your additional efforts trending towards greater battery ca pacity, charging, etc., and what are timelines for these goals? Answer: Elon mentioned they are confident and currently on track to achieve goals mentioned on Battery Day. Question: (More of a Statement) Caller suggests there is something to Elon stepping down as CEO, becoming chief architect, citing a recent trip to Hawaii to meet with Larry Ellison. Answer: Elon is committed to running Tesla for next several years and has no plans to step down at the current time. The mission of sustainable energy still needs to be achieved and Elon is insistent on making a dent before thinking of taking a different role within the company. Question: Since Semi trucks travel predictable highway miles, will Tesla Semis be the first to achieve full autonomy? Answer: Highly confident that the Tesla Semi will indeed be the first fully autonomous Semi on the road due to the exact same FSD hardware as existing Tesla vehicles. Some software parameters need to be adjusted due to vehicle size otherwise little changes need to be made (no retraining etc.). Question: Could you explain why BEV will win over Hydrogen fuel cell tech? Answer: Elon mentioned how he has received this question a million times before and cited being asked this before the first roadster was released. Hydrogen is a “big pain in the ass really” and if you are going to use an alternate energy storage mechanism to H, Elon thinks they should use propane or methane. Tesla is very confident they can achieve long range trucking with BEVs even with current energy densities. Additional Tesla Semis will be on the road very soon. Links Tesla Q4 and full year 2020 Financial Results and Q&A Webcast Tesla Q4 and FY2020 Update Presentation Tesla Investor Relations Tesla Owners Online Podcast / Episode 95 - SeXier Again!

After a crazy busy day I finally had some time tonight to sit down & digest everything that was mentioned during today’s 2020 Q3 Tesla Earnings Call. I have summarized my rough notes into several categories and shared them below for your reference. Financials Best quarter in company history Record production & deliveries Record revenue Record net income (GAAP & non-GAAP) 5th sequential quarter of profitability Nearly double-digit operating margins Automotive gross margins including regulatory credits increased from 18.7% to 23.7% Some programs achieving greater than 25% gross margins Factory shutdowns did indeed have a negative effect on gross margins Small revenue of FSD released & recognized $10M Record cash balance which grew to $14.5B Record free cash flow of $1.4B Operating free cash flow of $2.4B Regulatory credits more than expected, tracking 2x as much as they were receiving this time last year Tesla’s success not possible without all of the hard-working employees and suppliers 70% of cars are produced locally, up from <50% last year Seeing financial benefits from improved vehicle reliability across the fleet Services and other margin improved thanks to more efficient used vehicle business along with streamlined service business Tesla treats each new product line as a startup internally Tesla is essentially made up of 12 individual startups Tesla is not dependent on typical enterprise software solutions as they write their own thanks to their internal applications team (Vertical integration across all aspects of the business) Tesla is trying to spend as much money as possible without wasting it to ensure continued growth Still aiming to aiming to achieve FY2020 guidance of 500,0090 vehicle deliveries As of now Tesla is aiming to produce somewhere between 800K - 1M vehicles in CY2020 however exact guidance will be provided at the next earnings call Battery Update ...

Yesterday was quite an eventful day for Tesla fans and I have since taken the opportunity to record some notes in order to better understand everything that was discussed. As the day was broken up into two separate events this particular blog post will focus on the 2nd event known as Battery Day. Please continue reading below for a copy of my notes in blog format or if you prefer you can download a PDF version of the notes here. All of these notes were recorded based on the content discussed in the original video stream which can be found here. ...

Yesterday was quite an eventful day for Tesla fans and I have since taken the opportunity to record some notes in order to better understand everything that was discussed. The day started with the 2020 Annual Shareholder meeting which is what this particular blog post will focus on. Please continue reading below for a copy of my notes in blog format or if you prefer you can download a PDF version of the notes here. All of these notes were recorded based on the content discussed in the original video stream which can be found here. ...