TSLA trades around 350 times earnings, a premium justified only by the distant promise of millions of robotaxis and humanoid robots; on current performance — revenue down roughly 1-2% year-over-year — it would trade far lower, and its opportunity cost has been years of stagnating returns.

Neil might be uh Tesla because he was there very early. Well, I have no Tesla anymore. I have way more meta. So, there is that. Unless they suddenly come out with something optimus, but I don't think that they'll give us they'll give us way more information during the call.

on the Tesla side. It's one of those things where I agree with Neil and Jose, you know, what have we seen? But it's like one of those things where it's like, I mean, we'd need to see flying cars for me to be interested in this company.

And then there we go. But it's not going to be materially impactful to their um overall growth.

The one interesting part that I am interested to hear from Elon and the team, from what I heard, that was their largest spike of Tesla website traffic. And if they are going to say, "Hey, this actually did make a material difference to the amount of car sales that we think we are going to do." Um, that could be quite interesting.

But right now, I mean, I'll focus on Meta. Uh, I've got Meta shares. I don't have Tesla shares. So, I'm excited to listen to the call.

I think people are underestimating Tesla just because it's been a year and there's not been much growth, but um it's up 3%. I mean, do we think there's a world where they announced something today?

uh Tanner or Neil that that gets this thing back above 400 after hours.

Uh I don't know because we we already know production delivery numbers. We know the energy deployment and I think that was a bit lower than expected for for this quarter. So I don't know.

I don't know. I I don't want to say stupid things so I'll shut up.

One thing that I am curious about Tesla last earnings they talked about potentially um they mentioned they have so much act so much power with the chargers that they have that they're thinking of ways to maybe adding compute to them.

I know I feel like every single quarter we kind of hear some new story. I want to see if maybe we hear that story again and see if there's any actual I don't even want to use the word anymore meet any uh if there's any meat to this story um or if it was just like hey we're just talking again for another quarter and then we're going to hear something else this quarter.

On Tessy we are looking for about 26 cents on a gap basis, 28 billion of revenue. and then for Tesla, it's all going to be robo taxi and Optimus. And I don't know how much they can communicate on the slide deck versus the call.

First time where two of my major holdings report earnings on the same day. I'm shaking uncontrollably.

Uh Tesla good day. Pounder back above 200.

I think implied volatility on both of these names is around 5 to 7%. So that's what you should be expecting up or down on these results.

uh Tesla so third quarter Adjusted EPS 48 cents versus 44 cents. That is a uh that is a beat. Adjust uh revenue 28.05 versus 28.13. A slight miss on revenue. Gross margins 19.6 versus 17.8.

That's a that's a beat. Uh EPS 22 cents versus 39 cents year-over-year. That is a miss. Um well, that's a you know miss on the year-over-year growth, but overall miss on the adjusted EPS from expectations is correct.

Gross margins again that's a beat. Services 4.6 6 billion versus 4.3. Tesla basically flat. And then revenue 28.05 versus 28.13. So a very slight miss on revenue and then a 7% beat on EPS.

And you're not seeing too much reaction from the stock right here.

Did we get 400o on Tessie? Did we? Very close. 394. Uh we're pulling up the slide deck on Tesla in the meantime.

Tesla still at 393.

Okay so Tesla uh let's get deeper into that. I'm trying to go through the deck and see if there's any information here. Let's read a little bit from the Tesla Q3 uh summary. So in Q3, we maintain strong momentum on many projects spanning super intelligence, robotics, and renewable energy that will be critical to building a future of amazing abundance.

Strength in our core business also continued and we achieved our second consecutive quarter of revenue TTM in excess of a 100red billion. FSD attach rate continues to grow, reaching over 75% of new vehicles in North America, our most mature market, a nearly 20 percentage point sequential increase.

We believe that FSD is driving demand in markets where it is available. And we continue to work with regulators to get it approved in other markets.

Put in the chat if you pay for FSD. I'm curious how many people here actually pay for it. I mean, this is a pretty healthy increase. I know it's only a couple million people in North America, but uh it is growing pretty nicely.

We started providing robo taxi rides using cyber caps on September 3 in in Austin. Cumulative unsupervised robo taxi miles grew eightfold Q over Q driven by sustained doubledigit weekly growth.

We ended the quarter with the largest backlog for our passenger vehicle in over four years. Wow, it looks like the Model Y L uh pre-orders also are increasing the backlog for Tesla.

We rolled out the updated Tesla semi that is produced on our high volume manufacturing line in Nevada and unveiled the nextG Roadster on October 15th. with while battery availability continues to be the limiting factor in increasing order volumes of the quarter.

We have made additional progress in securing future supply. Demand for our energy storage business remains strong in the quarter with our highest ever order rate and backlog. Energy storage is the fastest way to add power to the existing grid and is critical to data center uptime.

We expect rising data center demand to continue driving demand for our products. Mega factory Texas began production with planned capacity of 50 gigawatts. We continue to invest in the future through R&D and capex spend across our business including SI Robotics and Energy.

Much hard work lies ahead, but we are as optimistic as ever. Thank you to our supporters, and we continue to execute on many challenging and important projects.

Um, Optimus, Optimus production began in Fremont on our high volume lines. The bots coming off this line are the first production quality bots that we have manufactured. While we continue to iterate on the hardware and manufacturing process, we have proven that the current manu manufacturing process for Optimus is a suitable for a commercial product.

Energy. We began producing energy at Texas. Energy storing demand is increasingly aligned with SI infrastructure. We achieved record quarterly deliveries in several markets for the automotive business including Canada, Australia, Japan, and Taiwan.

Given the strong demand we are seeing across various markets, we remain focused on increasing production across our factories and attained record production at Gigafactory Berlin.

I mean, margins went up for Tesla by 2% this Q. So, uh, Tanner, any thoughts on what you heard from that? And maybe that's why the stock's getting some love after hours. Um, yeah, I'm I'm interested to hear about the optimist. their production lines that they're making.

Are these robots just for internal use right now? Are they even, you know, remotely thinking about trying to find customers to buy these or are they just making enough for for prototypes?

Like that I thought was an interesting comment that they are doing production lines for something that they don't really have a version of that they feel comfortable showcasing.

Um, yeah, it seems like on the call they're probably going to try to give some deeper updates on Optimus, but the updates might be that it just might take some time.

Seems like a lot of people here pay for FSD, so yeah, I mean, it definitely has adoption. It's really not that expensive. You're paying $100 a month for a full-time driver. Seems like a pretty good deal.

Farzot says, "I don't see them selling to customers until 2028." Yeah, you know, I think it's going to take a couple years and that's being very optimistic. So, that's just something that people are going to have to wait for.

But, nonetheless, I mean, stocks the closest it's been to 400 since the last quarter when it fell to 297. So, I know it's only up 1.5%, but it doesn't look like anything on this earnings call or anything on this uh earnings print is necessarily bad numbers wise.

I mean, you do have year-over-year growth in the business. Well, revenue is down year-over-year, but by like 1%, so it's not that bad.

Uh, Jose Neil, any thoughts on these Tesla numbers or it is what it is. Nothing too crazy from there.

Okay, let's get some more coverage on Tesla here. Auto gross margins X zero emission vehicle credits which basically that has almost gone away completely 18.1%. The street was expecting gross auto margins of 16.8%.

So much better than what the street was looking for.

1.74 million full self-driving subscription members. That's FSD subscriptions. 1.74 million is the total. That's up 67% yearover-year. For point of reference, it was 1.48 million at the end of Q2.

Optimus production has begun, though they don't give any details in terms of how many robots have been built so far. And 2 million unsupervised miles for the robo taxi network.

That includes cyber cab. The release does not go into specifics in terms of number of cyber cabs that have been deployed in Austin or around Texas that have been licensed. That certainly will be coming up during the conference call.

And again, that starts at 5:30. And the main question, guys, we've said it all day long, ever since he said on the SpaceX conference call that he thinks it's a good idea for SpaceX and Tesla to merge.

You can bet he will be asked about that coming up at 5:30, guys.

You know, someone tweeted today that uh like a big fan of of of Elon and Tesla, Hans, that if Elon proposed the 420 split, he would vote no immediately. And I was kind of surprised cuz, you know, he's been a big Tesla supporter, but he was just like, "Nope, Tesla's worth more than 420." I would.

And notice what Elon said yesterday. It's not a certainty the merger happens and we have to get at least 50% of the Tesla shareholder base, retail and institutional, to agree to a quote unquote 420 price.

So there is there will be debate over what that price is and it might not be as easy as just whatever Elon recommends initially.

There have been a lot of people who've been holding for a very long time. They're going to feel jaded that they're, you know, maybe they held out on the SpaceX IPO or didn't buy in private rounds and now you're not getting a premium on Tesla and you have to pay a, you know, quite the premium on SpaceX.

It's just it's a lot. like they I I understand why they would feel jaded.

Thank you. So the third quarter was very strong and I'd like to give a big congratulations to the whole Tesla team for working hard to make it happen. Uh demand is growing rapidly for our vehicles.

It's exceeding our uh production by by a significant margin.

Um and obviously we're we're going to be ramping and we are ramping production uh meaningfully. Uh the the biggest driver for demand is uh full self-driving. Um and uh today there's really no competitor for FSD uh in any car that you can buy.

Um, and and to be clear, we are producing and delivering as many cars as we as we can, and we're pushing very hard for FSD approval in additional markets. Uh, we're we're we we're now approved in many countries in Europe, and we're hoping for an EUwide approval.

It's hard to predict, but maybe, you know, within a few months, but I would I would be surprised if it takes longer than than Q1, but obviously that's that's not a time frame we control, but we do anticipate being fully approved in throughout Europe um and and many other countries.

Um we also began production of the Tesla Semi-Truck in Q3 uh and uh did the the lo the new Roadster demo, which was I think one of the most exciting events. Um, I mean, arguably the the coolest demo of any product ever.

Um, and it's testament to to amazing work by the the Tesla capacity. Um, the uh we we're uh I think aiming for that louder. we're uh I think aiming for that louder. yeah, it's a lot better million vehicles a year by approximately 2030.

Um and uh that's I I think we we've got a a good shot of achieving that goal.

uh and u yeah. So energy demand is is very strong. We're actually almost almost sold out of all uh mega packs for 2027 and we're ramping production as quickly as possible to meet demand.

Uh we also expect uh gross margins on that to increase uh meaningfully. So, um, in a nutshell, after many years of of of sort of grind and and things being fairly flat, I think we're we're we're now headed for a lot of fun and significant growth.

Um, regarding uh robo taxi, we're we're seeing the uh robo taxi uh miles driven or fully autonomous miles driven uh scale uh exponentially, meaning scaling very rapidly.

regarding uh robo taxi, we're we're seeing the uh robo taxi uh miles driven or fully autonomous miles driven uh scale uh exponentially, meaning scaling very rapidly. Um and uh it would be hard to overstate this point.

It really is an extremely fast week-e uh growth in autonomous miles. and and I don't think there's any company in the world that can match our scale with autonomous vehicles as we continue to ramp.

Uh the cyber club cyber cab fleet in Austin uh for example has grown by a factor of 10 since uh launch about a month ago.

The and the cumulative mileage is is really when when I look at the weekly chart it's it's it's wow. I mean it looks like a you know rocket going to orbit basically. It's very growing very fast.

Um, and and if I recommend if you want to try it out, u you know, come to Austin and and you'll see cyber cavs in use at scale in Austin.

Um, as I think a lot of people saw with the Austin City Limits concert recently. So, um, so the the so this is this is really going to to a very good place.

Um and um regarding Optimus uh we we've started like what I'd call early production uh on a high volume line in Fremont.

Now I I want to elaborate on this point because the and I have said this before that the the growth of Optimus it's it's an S-curve but the initial part of the Scurve is uh has a shallow slope and is is somewhat bumpy because it is such a radically new product.

U but we do have um the the you know the vast majority of a a million unit per line production line um landed in Fremont right now. Um, but it it I would expect that it takes us probably at least a year, maybe a little longer to get to that annualized rate to get to 20,000 units a week.

Um, so this is just a fundamentally because there's, you know, there's there's still parts of the design that are changing. like a lot of people ask me about Optimus. That's why I think I' I've got to kind of um sort of belver this point.

Um because if people aren't don't sort of understand like new technology that well or volume production of complex new hardware that well, it sort of seems like well can't you just make a whole bunch of these things immediately and and send them out?

and and it's like no, you've got to uh basically build up an entire gigantic global supply chain and uh have domestically um a very very big factory and everything's got to work.

Um and there's still some things we need to tweak about the design because you need to deliver a robot that is that is safe and reliable and has long duration. So it can't like wear out after a month.

Um and and and there's still quite a lot of work to do with regard to the AI and the robot um for it to be truly useful for open-ended tasks. Um but if but like I said if if I I would expect that the the AI the you know the electromechanical design and the um reliability and and and and uh duration usage duration like the the usage life of the robot.

I expect these I do expect these issues to be solved around the end of next year.

Um, so that that's the time to to expect um when we're delivering Optimus to uh to companies outside of Tesla. Um and and I I remain convinced that Optimus will be the biggest product on Earth.

Um and and humanoid humanoid robots in general will be the biggest product on Earth. So So it's it's a Optimus a very big deal.

Um, but we I don't want to temper expectations that we we still have a lot to get through and it's about about a year or so that it'll take us to get through all that stuff.

Um, but as as to the best of my knowledge, there is no one that is even close to Tesla with respect to a general purpose humanoid robot. Um, regarding the terapab, uh, we the Austin based, uh, research lab is progressing quickly.

Uh, we'll begin commissioning machinery in the first half next year. And, um, hopefully things go well, we'll make our first uh, test chip just to see if we can make any chip at all around May or June.

Uh, so that's that's a I think pretty exciting. Um and then um we're our aspiration is to be making uh some kind of useful chip at volume around Q3 of 2000 of 2028. So um and and and as I've said publicly on X the U the tariff I think will be the most valuable building in the world and and will probably have an economic value that's that will place it in the top 20 of countries.

So it's it's a an an epic project. uh and this will be an an incredibly important a asset if not a necessary asset in order to scale especially optimus um as we can address bottlenecks uh in semiconductors whether it's memory packaging logic or or whatever the case may be

um with with regard to a potential merger with SpaceX I think I said everything that should should be said yesterday tap dancing through a minefield there um and Yeah. Yeah, that's that's it.

Um, in conclusion, we're super excited about our autonomy and robotics roadmap. Uh, there's a lot of incredibly awesome stuff coming and I'd like to once again thank the Tesla team for their strong execution and all of our supporters for joining us on this journey.

thanks Travis. uh we continued our progress on a lot of fronts in K3 uh Elon already covered a lot of them additionally of which I'd like to add is we also started deliveries of mega packs with our in-house LFP batteries and for the first time two consecutive quarters of vehicle deliveries of over 480k

on the automotive business we exited the quarter with our highest backlog in four years with deliveries constrained primarily by production we're therefore focused on increasing production at all our factories to meet this growing demand.

While we are actively working to increase production, it does take some time to get every aspect dialed in from supply chain to manufacturing to delivery logistics.

The Model Y continued to outperform in the quarter and set delivery records in several key markets. Based on the preliminary data which we've gathered, we believe that it was the number one selling BEV in Europe and the number one selling passenger car in South Korea.

We also set new record uh in key markets including Australia, Japan, and Taiwan.

As Elon said, FSD continues to be the key driver for demand. In Q3, over 75% of deliveries in North America included a sign up for paid subs FSD subscription at the time of delivery, which is approximately 20% higher than Q2.

Overall, the FSD attached rate continued to improve reaching over 1.7 million paid customers globally, of which for the first time more 50% is based on subscriptions. Given the strength of FSD in the US, we are taking, you know, extra steps to sell certain cars in Europe with with some uh benefits to try and get more fleet out there before broader FSD approval is obtained

on automotive margins. Uh excluding credits increase sequentially from 16.3% to 18.1%. The improvement in margins is turned by a higher mix of deliveries in APAC. While commodity price increases and interest rate changes continue to add to our cost and create further headwinds, we have adjusted the vehicle financing programs to partially offsets for such cost.

On the energy business, you know, we had our second best quarter of deployments of 13.7 gawatt hour of energy storage. Energy gross margins improved from 20.4% to 33.1%. The sequential margin improvement is primarily attributed to tariffree funds recognized in the quarter and warranty true downs resulting from alignment with a vendor on certain cell related costs to be reimbured by them.

As Elon said, the business is witnessing extreme demand from data centers and we are doing our best to increase production and accordingly we'll see you know improvements in ASP and further improvements in margins as we move forward.

Services and other margins improved sequentially from 14.1% to 15.9% an all-time high. This was the result of strength across service across several of the businesses and services and other including supercharging and insurance.

The robot taxi business which is part of services and others continued to grow with the launch of cyber cab rides in Austin. Accumulative uh unsupervised miles 8x in the quarter as we had weekly doubledigit growth throughout the quarter.

We're taking all the learnings from our Austin expansion to help us prepare for broader cybercap launch in other markets. Our priority is progressing the density and expansion of the network through vehicles that provide the best experience like the cyber cap.

We will also continue to augment the fleet with other variants over time to address the terrestrial transportation needs for of the total population.

I'd like to stress that you know what we are trying to do is literally take over every part every part of terrestrial transportation not just not just getting people I we're starting with getting people from one place to the other but we want to basically own this transportation of any kind on earth.

We are in a huge investment cycle to set us up for the future. Therefore, as previously guided, operating expenses continue to increase sequentially. Most of the increase came from significant research and development related activities, including SI development costs such as depreciation from additional compute, chip development, and pre-production ramp costs for new products like the Optimus, Megapac 3, and Simatra.

This trend of growing opex would continue till we commercialize these new products.

Net income was impacted from a mark-to-market reduction of our SpaceX holding of 142 million, which was offset by a Bitcoin marktomarket gain of approximately 290 million.

We continued our efforts to manage cash efficiently and responsibly. We ended the quarter with positive free cash flow of over 1.5 billion and an overall cash and investment balance of over 45 billion.

We're revising our capex guidance to be approximately 20 billion for the current year as a result of managing our capital deployment efficiently and plan to fund it primarily from our cash flows from operations.

Additionally, during the quarter we secured capacity to borrow up to 30 billion to support the expected growth in capex. A confidence in the cash generation capacity of our business and the investments we are making drove our belief to secure shorterterm financing.

We don't plan to make any draws under any of the new facilities in this calendar year.

The money that we received from our from the tariff refunds is being reinvested to expand production capacity in the US. I like to stress on this that you know we like to do a lot of hardcore real grunt work to get production facilities up and running.

And so you know our capex for the next few years would continue to expand as we add more robotaxi fleet. We expand our production capacity for Optimus install manufacturing capacity for solar purchase additional SI computer infrastructure and build a semiconductor.

This strategy will position the company for the next era of growth and disrupt many existing markets while creating new ones. This is by far the most exciting time to be a Tesla.

The foundation being laid around autonomy, robotics, and energy is setting us up for an extremely bright future.

I would like to end by thanking the Tesla team, our customers, investors, and suppliers for the confidence in us on this journey. Yeah, I'll start here. Um, first of all, we launched cybercap this quarter, which is very exciting.

Um we achieved that by mostly learning from data from the other vehicle platforms. Uh for example, Model Y, model 3 etc. All of the data help make the cyber capab without requiring a ridiculous amount of vehicles to produce the data.

Um so we we are seeing very good scaling uh in in terms of cyber SC cyber caps a capabilities.

Uh we launched in Austin but that's only because you know we had some caps and we want to swarm Austin with cyber caps everywhere. Uh but there's no fundamental reason that we are limited to Austin.

In fact, uh, next month we'll be launching in Dallas and then the same software just scaled to lots of other cities along with the Model Y robot axis.

mostly uh talked about this already, but um it it's it's not crowd sourcing is is is not the issue for Optimus. Um there's a lot of things we have to get right about the um AI architecture.

Um uh that's we're still working on we're making good progress. Uh but but uh but that that needs to be sorted out.

Um, and really in order for Optimus to get the training data we need, we actually need to make a lot of Optimi. So we need we need to make I think on the order of 10 or 20,000 um bots and and then have them do selfplay and and we're building out an Optimus Academy where Optimus can practice doing a a very wide range of tasks.

Um and then we can use that data uh in in sort of a flywheel to make it better and better at these various tasks.

Um the you know a big difference with Optimus versus the cars is we don't we don't have um this vast fleet of cars from which we can gather training data. So with Optimus, we we we have to bootstrap it by by making the robots um and and having them do selfplay, which is really how a human learns to navigate the world.

You know, it's that's uh you can you can see this when you have a toddler or and they grow up and they they initially they're sort of wobbly and they don't know how to do things and they eventually they um you know they learn to wipe their own ass which is a big milestone.

Um, as anyone who's had kids knows, um, and, uh, and then they learn to read and and do all sorts of things and and be able to to do do these things and they learn this by by playing.

Um, and we actually need optimists to play at scale in order to uh, have it be really good at at tasks in the real world.

Yeah. Um like you mentioned alone for the car we actually have the data from the car's embodiment itself but for Optimus there's no ex for humans to get into and like make Optimus into a puppet or something like that like we have to learn Optimus has to learn by watching other people do task initially and then start practicing the task yourself.

For example, you can imag for examp if you're watching a soccer game just because you're watching it doesn't mean you'll be good at soccer yourself. If you got to start practicing and get good at the game and learn from the bot's own experience and we are setting up this huge uh reinforcement learning cycle uh with initial base training done from humans to bootstrap and then put it on Optimus and do a lot of selfplay both in simulation and in the real world to uh learn on the embodiment of Optimus itself.

I think we're pretty close to having very good results uh in this big loop.

Yeah, I think we we're maybe ready to release like an Optimus video. um in a month or so. Um I want to make sure that like when we release this video that it's not like a canned demo that um you know like when you see these robot humanoid robot uh demonstrations, some of them look very impressive, but they're they're they're not really using uh any kind of advanced AI or SI.

I mean they're they're like pre-programmed deterministic tasks.

So, I want to release a video that's where it's Optimus doing things that um that are not pre-programmed. Um, and I think that's that that would be it's maybe a month or two for that um to to have a a demo that's you can believe what you see type of thing.

Um and and then uh there's there's another milestone that's I think important we want to get to which is to uh integrate our the the Tesla AI5 uh chip into Optimus which if if things go according to plan will be in approximately uh April of next year.

Um and that that's a giant improvement in capability with an order of magnitude more um sort of more operations per second. like it's an order of magnitude more compute AI5 versus AI4.

Um, and that will that will help Optimus a lot because the the degrees of freedom that a human robot has to deal with are far greater than what a car has to deal with.

So, so I think the additional compute of AI5 will will make a big difference. Um, and that comes in in in hopefully in volume around April of next year. Um and uh and that that's why I think like all the pieces like the the refinements in the electromechanical dexterity um making sure optimist can operate for long periods of time without wearing out um you know getting the AI software right uh and and the i5 chip integrated all of these things kind of come together um that's why I think about a year from now is when it's something that would be that that that you could ship to customers.

Um, and it would also be reaching scale in production. So that's that's that's probably the right timing to think about. in terms of the the initial customers for Optimus, I I think it probably would be things that are industrial applications at first.

Um, things that are like like dangerous, repetitive tasks, um, things that people really don't want to do. So and and and that that you want done basically 24/7.

as we scale production of course it would be something that people can buy um you know for for their home. Uh but the initial high value use will be the highest value use I think will be uh kind of heavy industry dangerous tasks um or things that may cause repetitive stress injuries um and and and that need you want done um 24/7.

Yeah, like I mentioned earlier, the software for cyber caps and model Y is the same like the uh and pretty soon we'll be able to release the same software as part of the V15 release to customers.

We suspect somewhere around Q2 next year is when we can turn on some of the first customer vehicles to be part of the robot taxi fleet.

Sure. Thanks, Travis. I think it builds a little bit on of what Ashok just said. Um, but in short, we're trying to to get cyber cavs to customers by the end of this year, 2026.

Um, obviously we're producing them in our line in Texas, but all of those are currently going to our own internal robo taxi fleet. Um, and as Tesla grows, we'll mainly deliver fully designed autonomous vehicles to our customers. Um, and CyberCap will be the first.

Um, no, I mean, CyberCap is primarily going to be something that is, um, offered as like transport as a service. um you know whereas our other cars would be more um you know the cars that you'd want to own like the three and the Y and whatnot and the roadster obviously uh but you know the vast majority of the cyber cap stuff will be uh essentially Tesla owned and and transport as a service.

So on the robo taxi side, you know, the main uh geographies where we are operating, we're already seeing utilization improving and you know, week by week, as Elon was talking about, we look at the miles and how many paid rides are happening.

So are we at our goal of 30 cents today? No. But do we see a path to get to that? Very yes, we do.

And what you'll see over the next few uh months is that we'll today CyberCap which is the primary robot taxi product is available only in Austin but we do plan to bring it out in some other cities before the end of this year.

Yeah, I mean I think Optimus cost uh internally we are tracking pretty well in terms of how the design has matured but it would be a little too early to say that we have got there because like Elon was saying we're still making a lot of design iterations.

The good thing is you know when you look at it from a cost perspective we're trending closer to where we would say our cyber cap cost would end up being.

Yep. Yeah, you're totally right that we shouldn't be depending on external people's maps. So, we are building our own maps, but not like the same way as one more maps. We building a entirely new architecture with essentially AI based mapping and navigation.

It's going to be super awesome. It's going to be integrated with voice. You can like talk to it, ask for different routes. It's going to learn your personalized preferences uh plus also the fleet preferences.

Uh the collective in intelligence of all the cars are going to flow into making the maps and navigation be super cool.

Um we'll start we'll you'll see uh the start and end of trips already use this technology pretty soon as part of the V15 release. Uh and over the next several months it's just going to take over all of the navigation functions, parking, destination handling uh and just we'll know you better than you know yourself in some in some regard for uh the driving task.

our factories are operating at record rates um this quarter and of course they can only build at the rate of least likely process or component. Um you know as we've spoken in our past calls we've made strategic investments globally to increase rates of our current factories over the last year plus and you know this quarter uh we are starting to see that and we expect that to continue in coming quarters as those investments come to fruition.

I mean beyond that uh we've also are working to ramp CyberCab um obviously in Giga Texas and we applied for proper permits to expand the factories in Berlin.

Um and as also Elon mentioned we just started our new semifactory in Reno. So in short we are building new factories. Yes. Um and we're aiming to hit that 5 million goal uh by 2030 as Elon said.

it's on FSD. So the attach rate I think according to my math is like 30 to 40% in North America on a paid basis. It's becoming a flywheel as you said for more car sales and the attach rate exceeds other automakers subscriptionbased autonomy by by a lot.

I guess in a weird way, could could you guys be a victim of your own success and seeing other car makers noting the success and trying to aggressively come up with similar L2 Plus, you know, type products, maybe partnering with Nvidia or Qualcomm.

And if that happens, could could that be deflationary for FSD pricing?

I I think uh people take this thing very simply that you know you can e if the software can be solved it's there it's it's not because I mean I'll let Ashoke get into it but basically it's a very hard problem

yeah it's easy to get to the first 90% and make like a cool looking demo but when you get in the long tail of this problem it's so long that people don't realize. Anyone with their same mind should not attempt to solve this problem.

It's like so difficult uh and so longtail uh and especially to get to a safety point where you can drive safely for millions of miles with uh no injuries and so on. That's going to be extremely hard as we uh release unsupervised FSD to the broad customer fleet is just going to be I don't think anyone can like match it in several years.

And one other thing which I'll say if it wasn't clear that you know when especially in our showrooms here in the US customers are now coming in and saying can we get into an FSD drive they're not asking for 3y or cybert truck they're saying can we get an FSD drive and that has become the key driver because what it does is it actually opens up a lot more flexibility for uh different parts of the uh population wherein they had issues driving uh conveniently before now they're getting their freedom back by being able to use FSD and a lot of folks are just like I mean it's a game changer I mean if you haven't tried it I keep saying it every time if you do it you you won't be able to go back to driving any other car

Yeah. Um followup is similar to that question um on China. I mean there it seems like autonomy is is like table stakes. Um is it is is it the same kind of answer on this question one that you know they're not going to be able those car makers aren't going to be able to develop the similar products that you guys have had on FSD or or do you see there that being definitely a different pricing uh dynamic?

I mean at the beginning uh like definitely the the the leaf frog which we have in terms of this technology isn't there with any of the other Chinese OEMs today and you know we're like we're we're working very diligently to try and get broader I mean FSD approval in China.

It is hard but you know for for certain uh cars we have been able to have FSD operating and whatever people have tried who whoever has tried it there they understand how much better it is as compared to any of the competition and in fact I don't know if you've seen this there have been some competitor CEOs who have come and done FSD drives here in the US and they themselves have been blown up as to what FSD is capable of doing.

So it is a similar answer and again we're not taking it lightly. We're actively working with the regulators in China because I don't know if you saw this but we did release our uh we we we've released our safety uh report on FSD before but we've also released our unsupervised uh or robot taxi safety report.

We just think this is the right way to get people into a safe environment because you know the amount of accidents which happen because of driver uh drivers not being alert and this is the only way we can ensure that there are less casualties in the world and any regulator who looks at the data it would be very hard for them to refute it.

I mean, so I think Elon talked about this a little bit at the beginning that, you know, using exponential math, this would become a significant part of our revenue and profitability in 27.

I I wouldn't say it's like it's not like gonna move the needle this quarter, but but if you say like maybe >> I think it's it starts to become noticeable probably in Q2 and then and then and and probably a big deal by Q3 or Q4 of next year.

you know I would give kudos to the engineering team they have designed a product because not only do I talk to the engineers I also talk to the manufacturing guys they think this is one of the easiest product for them to scale in terms of manufacturing so scaling would not be that much of a challenge I think the key thing which we're trying to make sure is that we have all the regulatory approvals where we can start deploying the cyber cabs as fast as we can produce them.

The team definitely crushed it on the cyber cab design manufacturing. Just your point, we have 50% less parts than any other vehicle we've ever built. So that's 50% less things to go wrong.

Um we've definitely been bursting CyberCap line to see how fast we can run it. Um I think the listed capacity is more of a you know rate at which we're capable of running today but the actual capacity of that vehicle signific vehicle line is significantly higher right now.

We're building at the rate that the robo taxi service needs to be needs the vehicles.

Um and and you know I'll say Ashok and I are in a bit of a race who's going to stay ahead. He's got exponential growth coming on the miles uh you know month over month. Um and uh we're going to look to meet that as well with the vehicle production.

I think it's still early days on that front. Um, we don't we don't know the full extent of how, you know, what what that'll how that'll unfold. Um, I think we'll we'll have a better sense for that probably in, you know, maybe in a Q1 or Q2.

Uh but it does have a lot of potential. Um it's just it's just hard to say how much potential right now.

I think the I mean there there are still certain software challenges which we are still working through you know talked about it. Um for example, we had like initially had the robot access service from uh 6:00 a.m. to 9:00 p.m. and then we expanded 10 p.m. 11 p.m. Now it's going to be pretty soon 2 a.m. So we slowly expanding the uh availability of um robot IC and that is driven by the capability of the AI software.

Um and we just want to make sure that there's not a single safety incident. That is our operating principle. uh and even if there's the slightest possible risk at all, we don't like take on the risk.

Uh and so we are very risk averse in that sense as in we want zero uh injuries or anything bad happening and that is the driving principle.

Uh and we will see that over the rest of this year we'll unlock uh 24 cross 7 operation go to higher speed roads and we think all of that is necessary to sort of like scale and offer a a great product to a lot of users.

Um and that's why we wanted to both do the breath first of doing multiple cities. We did six we do six cities now. We are also doing the depth of like having lot of vehicles in a single city which is in Austin and we'll expand to uh more weather conditions uh day and night conditions highways and high speeds and all of that will be done hopefully by the end of this year at which point you will see a lot more uh scaling a lot more cities being covered by robot taxi.

So it's not purely regulatory or something like that. It is uh technologydriven but we do see that that pretty quickly become regulatory perhaps in like Q1 Q2 uh time frames.

Um well, it's it's going to be some pretty significant capital. Um, you know, it's it's it's certainly in the tens of billions um for for Terra Fab. Um although we got to figure out like what what the sort of relative split is between SpaceX and Tesla in terms of who pays for what at at Terra Fab.

Um but it's uh it's it's not going to be less than than tens of billions in in capital equipment. Um you know up through early 2028 and uh and then it will be it'll be a lot more it'll probably be north of 100 billion uh long term.

Yeah. And I'll I'll just add you know the first uh set of equipment for the for the fab which Tesla is building we've actually already placed most of the orders and that's why when Elon was talking about middle of next year that is from the first fab which >> the research fab >> research fab >> yeah um we're just we're just figuring out how to work the equipment type of thing.

>> Yeah. Um but real production would be um late 28 which is lightning fast by fab standards.

So, hand is one of the most challenging hardware areas actually. um most of the electromechanical system I would say um is relatively high confidence meaning like that it's it has converged to uh something that um works decently well.

Um the hand is um uh from an electron mechanical uh point of view um more complicated than actuators for the locomotion system for example. Um also there are some uh bespoke gears that um are carrying a lot of burden for consumption and for um reliability that we are developing still and yeah this would be the most

yeah it's most it's mostly the hand um and uh and just the the kind of the fine tuning of the of the hand design um and the fingers especially just it's a hard problem because you know humans have self-repair like our you know our hands repair our body repairs itself but robots don't.

So you have to and and and our you know fingers are kind of squishy and have lots of sensors in our skin. Um, it's it's hard to make a make a hand that is that can handle lots of wear and tear, but is still squishy enough to pick up delicate objects and and has all the sensors and doesn't damage the sensors when you, you know, do repeated actions.

And um there's there's a lot of like little things that you realize actually what an incredible thing the human hand is at the end of the day. Um, so it's it's mostly from electromechanical standpoint the hands.

Um there are other things that are improving as well throughout the robot but that's the main thing

and then um as I mentioned uh upgrading the intelligence the onboard intelligence of the robot uh with AI5 which is which is a a big step change in intelligence uh that will that will help a lot with the the capabilities of Optimus.

Um so you know I've said before that like you know humanoid robots biggest product on earth um and but it's in its usefulness will be you know it's rough approximation um a multiple of the electromechanical dexterity the AI software and the AI chip hardware um and all three of those things are improving exponentially I think we use that word a lot but um and and the value is you know roughly those three things multiplied by each other and then the Optimus robots f will build the future optimus robots.

So you have a recursive function. So when when you have a recursive multiplicative exponential things will really grow extremely fast. They may start from a small base but they're going to grow to to crazy levels and I think at some point there will be more humanoid robots on Earth than there are humans.

>> Yeah, I mean remember in when you're comparing you're comparing us with right share which has a driver in there and we don't plus we are manufacturing the car ourselves. So our cost basis overall is different and I I I think I said it in my opening remarks and I'll say it again just don't want to be too repetitive but basically our goal is to take over any kind of transportation.

I mean, I I think we like unless unless we're stopped by governments, which is certainly a possibility, um like if they're trying to protect a domestic industry, um I think Tesla will end up doing a majority of all passenger miles uh on Earth in any country where it is allowed to operate freely.

>> Yeah. >> And you can come back and look at this prediction, but I I feel confident about this prediction.

Is is this still the expectation you'll you'll continue to grow that a double digit weekly rate through the balance of the year? And then what what is really enabling that type of growth?

It seems like you've definitely hit a comfort level and and scaling much more rapidly. um you know how much of that is cyber cab, how much of that is better safety validation with the latest version of FSD?

Um and then just on fleet composition, do you expect cyber cab to represent you know majority of the robo taxi fleet over time?

>> Yes. Um we will continue the scaling um for the foreseeable future. We don't see any hurdles along the way. Um obviously there's work required uh but uh we do see a clear path towards uh scaling to millions of vehicles over the next uh several months.

This is happening due to uh like primarily the technology investments we have made over the last several years and also in V15 stack uh that we um alluded to earlier this year.

Um like all of the foundations is like hard to see is like a iceberg. You people only see the tip of the iceberg. There's a ton of work that goes into it. Uh and like now we starting to see the payoff of all that work um of like you know developing end toend neural networks uh learning from humans and so on.

All of that is paying off. So that's what you're seeing that you're seeing the result of many years of work. It didn't just like happen in the last several months. Um yeah and the same technology should scale to millions of vehicles across all over like wherever we are allowed to operate.

I'm very really fascinated by 75% of like US um uh cars selling with um with FSD. And the interesting thing that if you if you look at the cars they probably generate on sale the day they sell like seven about $7,000 of gross profits.

But then of course FSD generates more than $1,000 a year. And so it does it makes like a minimal minimum impact on numbers in the quarter the car is sold but over the lifetime of the car it probably at least doubles the profit per car and so the place where I'm going uh want to get to is uh am I looking at it the right way and are you at some point going to disclose for us like the uh annual recurring revenues that SSD represents and I did my own math and I'm thinking It's probably now approaching a billion dollars of error. Is that the right order of magnitude?

Yeah, I think uh you're uh the numbers which you shared is are correct and uh you know as it scales further we will start sharing more metrics around FSD not just the revenue but also other key metrics around it.

Okay. And and as a quick followup, do you have like a good sense already and can you tell us about like the retention rate like do um uh how many people like three or six months down the line stick to stick to the the monthly monthly subscription and if you see um the percentage of drivers falling off.

Yeah, I mean you know like I said we will share more metrics around churn rates and whatnot but the the the reason we're not doing it at this stage is there are a lot of things which we're doing especially with new countries being added then we offer free trials and one thing which I'd also like to make sure it's clear when I say in North America that more than that 75% attached rate at the time of delivery This is like every car which we're delivering comes with a month of free FSG subscription and still people are signing up even though they have that free available.

Thanks so much guys. You know, Elan, can you talk about the strategy around ramping Optimus production just a little bit to start training even if the hands aren't u fully baked with with the final design?

It seems like there's a lot that you could end up doing in terms of the training cycle and and maturing some of the simulation technology u even without perfected hands.

Well, that's what we're doing is we're building robots that that do not have perfected hands and we are making progress with um with Optimus training and and ironing out um all as you know all aspects of the supply chain and the production system.

So, um, that's that's, uh, we're doing all these things in parallel, like this giant production line, uh, in at our at our Fremont factory, um, massive supply chain. Um, and, uh, and then, you know, fine-tuning the, uh, the design and engineering um, simultaneously with the, um, with with the AI software.

So all these things are happening simultaneously. Um and we're going as fast as humanly possible here.

I I don't think anyone's going to have and in fact I'd be stunned if anyone has a robot that is remotely competitive with Optimus um when we we go when we start delivering it to customers which is likely to be towards the end of next year.

Yeah. And you you should know that you know not only the Fremont factory, we've also started constructing a factory here in Austin which would be able to do a lot more robots as compared to the Fremont one.

So going back to what Elon was saying, we're doing whatever we can. We're not stopping. We're just going at the fastest pace as we can.

Yeah, we're definitely we're definitely, as I say in Vegas, betting on the com. awesome. And then you know in terms of the semicaps um you know capacity availability can you talk about how you're navigating that you know with the suppliers you know obviously seeing some some deposits get put down on equipment and getting deliveries moving forward is is a a net positive on tariff but are there some more aggressive things that you can do to to start getting ready for the larger ramp now and how should we think about that flowing through the capex budget.

It's not it's it's not a massive impact right now. I think capex is actually it's actually ending up being a little lower than we anticipated. Um but it it you know we saw it become more meaningful next year and then like noticeable like in the tens of billions in 28.

He's asleep at the wheel. He's on autopilot at Tesla right now. He's focused on uh he's focused on SpaceX. I'm seeing it in the chat and on X. It is just people that have been holding for years that are really annoyed right now.

Having said that, you're eventually going to have a lot of SpaceX stock anyway, and that's going to be the future of this. But I mean what I got from that call was everything's going to take time.

Optimus is going to take time. Cyber cab is going to take more time. FSD adoption has been good. But even the guy at the very end was like remember we don't have a driver in the car.

We're what we're doing is a lot more advanced than the Whimos of the world and all these other guys. So it's going to take more time, right? So I mean you can't even blame them, right? Like this is really hard technology.

Have a driver in the car. Last time I checked, Dimo doesn't have a driver in the car. So, yeah. And that's why that's why the comment was Yeah, it was that was kind of confusing.

I I think what he was trying to say is like, you know, these new AV companies are testing with all these different things. And but Tesla's also testing with drivers in the car, you know, that that's what they were doing in Austin.

So, I don't know. It was a bad excuse, but it is hard technology. So, I think investors have to be patient. It's just when you keep promising that it's going to happen year after year after year and then it doesn't happen.

Obviously, SpaceX becomes a lot more excited because their growth is happening right now.

Yeah, they they'll have more cars on the road um that are full self-driving than Whimo. And plus, you know, the there could come a time whenever the technology gets so good and they feel so confident to if regulation allows like they're saying, which that'll open up like like that.

Those are going to be like light switches. These are these are going to be like popcorn effects. you're sitting there staring at a colonel and the next thing you know the business is fully open.

Is there will come a day whenever your car will be able to self-drive if you have that technology.

All cars have a future where not all cars have full self-driving technology. And by the way, Neil is not saying this as a Tesla bear. He bought Tesla before any of us. Yeah, but but Neil, there's going there's going to be a time gap between what Tesla can offer and what the rest of the world can offer. There's already the roads with the hardware on

Yeah, but that's that's been said like for couple of years. Like both of us were Tesla shareholders for quite a while. There's a reason why we don't own it anymore. There is a reason why we still like the products that they make.

But you cannot say that Nvidia and everybody that's partnering up with Nvidia on autonomous vehicles is not going to have autonomous solutions over the next two years around the globe.

I agree. I love FSD, but I think self-driving eventually is going to be everywhere. I don't know if Tesla's going to have a data mode on that.

No, I agree. And and there's going to come a time where, you know, the the the service kind of gets capped out on the on the high end and other people are going to catch up like once it can fully like like the the safety gets to such a level.

I don't think that that curve just continues to climb. I know that that's what the bulls really suggest like okay well then you're going to pick whether or not it's 25 times or 50 times safer than a human.

I think at some level in these fractional chances that you're going to, you know, uh, going to get into an accident that you'd rather not pay $100 a month and that the company that offers this for free along with the just the purchase of the vehicle, which you're seeing sometimes in China, um, those those will sell pretty well.

Dude, here's the question. Here's here's the big question. If you own Tesla in the chat heavily, if it's like a legit legit part of your portfolio that will move it up and down based on like a four or five% swing, are you annoyed or are you also un like like are you annoyed?

Are you just pissed off or are you like look, I get it. This stuff is hard. And I know Elon's timelines are off, but at the end of the day, he is building for a decade from now where Tesla legitimately could be a 20 trillion company if this all works out or by 2031, as Kathy Wood says, it could be an $18 trillion company.

And I'm willing to wait. Like I think that's the big question, right? Because obviously Neil and Tanner who were very early were not willing to wait and they sold last year. But I think you have a lot of people that still believe or they have a cost basis that allows them to not worry because they bought it at 20 bucks.

you know what? I I was talking with Farzad and I think that this is so true because my my brother's a big uh Elon guy. He holds SpaceX and Tesla. I think those are the two companies that he holds.

And he's not an investment or he he doesn't pick stocks. He doesn't really have a timeline. So for us, you know, I if I had to pick Nvidia or Tesla, that was my decision before or or Tesla versus some some other positions.

I I wanted to rotate out. But there are people who are focused on their their jobs, their careers, and they do think it's going to be 20 trillion. They don't know when it's going to happen, but they believe it's going to happen.

The vision's there. It's slowly moving ahead and it's going to have that popcorn effect where one day it just pops and and the stock runs up like what we're going to see with SpaceX right now.

I mean, all the talk was it was extremely overvalued and then they put up this quarter and we're like, wait a second, do they have something? You know, and then it's like, okay, if they do put on 20 gigawatts and by the way, it's not like Tesla where we're stalled out waiting for something to happen.

No, they're actively on the they're actively on the path. Um that valuation can start to justify itself pretty quickly.

Aid, I want to say there was a a comment you um highlighted that I thought was pretty important. And it's like if Elon is not excited here, why would a uh investor be excited, right?

I feel like if he came and it's not like we can say, oh, it's just Elon. We saw Elon just 24 hours ago being extremely excited, right? So it's it's not like we can say, oh, this is typically Elon.

So how can you go where he was extremely happy just 24 hours ago and then talking completely different here? It's like as an investor, if you came with that same energy that you came yesterday, I think investors would have loved it, right?

just the energy shift from the CEO gives some form of confidence. Um, obviously what they're working with is super cool. I know Robo Taxis is still going to take some time, but he gave at least some timeline even though we know Elon's timelines are a little off.

Uh, I think he mentioned quarter two of 2027. You're going to see some some contribution from robo taxis. Um then you also see kind of the you're sold out on mega packs pretty much all 2027 because of just the demand that is being used on AI data centers.

So I mean if you came with that positive energy on all these bullish things that you see I think chat and and maybe the rest would be a little bit more excited.

I think he sounded bored because he took the call probably from a conference room at a SpaceX facility and now he's going to go back to Grockbot. Like I mean I I think if I was it's hard to place myself in in Elon's position, but you're going to be excited about what's moving quickest.

And he said Grockbot's by far the most exciting thing he's ever seen. That's where he is right now. That's where his you know, it's like Mark Zuckerberg. He's he's like, you know, how much detention or how much attention do you think that you deserve?

My mind is in back in my offices where our engineers are doing things that you're you know, you remember that that clip? That's Elon right now. He doesn't give a crap about Tesla right now.

He's He hired smart people to worry about those problems. And Hans is going to work his ass off or France is going to work his ass off and they're just going to go back to, you know, setting up GPUs and working with Jensen.

Yeah, look, I think the company is executing and growing. It's just they're they're going after these TAMs that are so monumental, autonomous driving, humanoid robotics, that it takes time.

And I think Elon made that very clear. But this is just another argument for why valuation matters, right? The five-year return of this name has not been a function of like the market not liking Tesla.

It's been the valuation was so juiced up in 2021 that it literally needed 5 years to grow into the valuation. And even 5 years later, stock trades at 350 times earnings. So the growth is not anywhere near a lot of these other uh AI names that are growing at this level.

But you have this massive thing on the side called SpaceX that probably when it engulfves Tesla is going to just turn into a huge company with like probably the most potential in the entire stock market.

It's just that's going to take time and you have a headwind of how many shareholders are going to be happy with the acquisition price if the acquisition is even going to happen.

If not, what are we going to wait till 2029 to have massive cyber cars and robots walking around the earth? I mean, and I think it's going to take till then, like the insurance, the regulation, the jurisdiction, the actual AI for the robot store, like this is stuff that's going to take a while.

We are about to enter into 2027. The idea that someone can buy a robot and it functions in your home and and does things productively. As Elon mentioned, you need to have the right AI.

I mean, he's throwing a lot of shade at the other robotics companies for good reasons because those companies probably don't have really good AI and they're just showing these hyped up demos. But that means the whole industry is behind.

And then Cybercap, right? actually being able to take people from A to B uh every day at the scale of an Uber 42 million rides a day or maybe even onetenth of what Uber is doing like that stuff's going to take time and I think Elon was just highlighting that throughout the call.

One, no, they are not literally adding hundreds. That's a lie. And then two, hundreds doesn't mean anything whenever you're usually expecting to do 400, 500,000 deliveries of cars and then the rest of the world is doing other millions of vehicles.

If you're talking in hundreds, it's just not big enough just yet. And it's about how long that it's going to take. It's not a matter of whether they get there. It's what's the opportunity cost. and and the opportunity cost so far for Tesla has been years of stagnating performance and and you're looking at a company with revenue that did it not decline year-over-year. I think it's slightly declined.

Yeah. 1% 2%.

And then I go back to the previous argument like people say, "Oh, but if they sell it at 420, people will not be happy." I think you should be happy that this thing is trading at $380 and not at $100 or $200 right now based on the business performance like based on future results.

Okay, I get the excitement. You get a premium. But if this company was called something else and not Tesla, I think we can all admit that it would be trading at way lower prices based on the current business performance.

I mean, it's not about making enemies or not. It's just if this was another company, you would see a decrease in revenue by 3%. You will see barely any operating margin as of right now.

And you would see a $ 1.5 trillion market cap, you would think, okay, this doesn't make any sense. But since it is Tesla and Elon Musk and the promise of yes, millions of cyber cabs and millions and millions of robots being deployed over the next x amount of years, then you're getting a premium.

But technically speaking, you should already be happy with with the premium that you're getting today by the market.

Neil was an OG Tesla bull, right? So I think even some of the earliest bulls are acknowledging it's just it's hard to hold it at this level. Um but nonetheless people people are buying it at 300 times earning.

So obviously there is a following that cares about this stock and you know you just have to really have that long-term vision for it to make sense in in the context of this valuation.

Tesla's now down 3% here. to 375.

Tesla still decent even if the call wasn't the best.