Source

Earnings call transcripts from Quartr are pretty amazing. They clean up filler words, technical terms and proper nouns.

Summary of Interesting Points

• Megablock, Megapack 3 and ... Megapack 4?!
• Optimus V2.5 performs karate with Jared Leto; V3 to come in 25Q1
• Updated Tesla Mission: "Sustainable Abundance"
• FSD paying customers account for 12% of the current fleet
• Continues to hold 11,509 BTC
• FSD approval in progress for China, EMEA
• Robotaxi approval in progress for Nevada, Florida, and Arizona
• 4 Optimus key differentiators: vertically integrated supply chain, production scale, real-world AI, and dexterous hand
• Elon: "Optimus at scale is the infinite money glitch."
• FSD supervised mileage crossed 6 billion miles
• Tesla-designed AI5 chips will be 10-40x better than AI4, thanks to the deletion of unnecessary parts (unlike general-purpose Nvidia chips)
• Samsung and TSMC will manufacture AI5 chips in the US
• Tesla aims for an overproduction of AI5 chips to use for cars, robots and datacenters
• Claims ISS and Glass Lewis are corporate terrorists for their influence over index fund-held shares

Notable Quotes

There are, you know, we have millions of cars out there that, with a software update, become Full Self-Driving cars. You know, we're making a couple million a year. In fact, with the advent of what we see now as a clarity on achieving Full Self-Driving, unsupervised Full Self-Driving, I should say, I feel confident in expanding Tesla's production. That is our intent to expand as quickly as we can our future production. I was reticent to do that until we had clarity on achieving unsupervised Full Self-Driving. At this point, I feel like we've got clarity and it makes sense to expand production as fast as we reasonably can.

On the Megapack front, we unveiled Megablock, Megapack 3. We also have exciting plans for Megapack 4. Megapack 4 will incorporate a lot of what is normally in a substation and be able to output at probably 35 kilovolts directly.

If you buffer the energy with batteries, you can effectively double the energy output in the United States just with batteries building no incremental power plants. It's very difficult to build power plants. They take a long time. There's a lot of permitting. It's not an industry that's used to moving fast. We see the potential there for Tesla battery packs to greatly improve the energy output per year for any given grid, U.S. or otherwise.

We look forward to unveiling Optimus V3, probably in Q1.

In conclusion, we're excited about the updated mission of Tesla, which is sustainable abundance.

Greater China and APAC were up sequentially 33% and 29% respectively. North America was up 28%, while EMEA was up 25%. The pace in deliveries was the function of continued excitement around the new Model Y.

Unlike our competitors, our robotaxi fleet blends in the markets we operate in since they don't have extra sensor sets or peripherals which make them stick out.

On the FSD adoption front, we've continued to see decent progress. However, note that total paid FSD customer base is still small, around 12% of our current fleet. We're working with regulators in places like China and EMEA to obtain approvals so that we can get FSD in those regions as well.

However, as the ramp-up of Mega Factory Shanghai is happening, this is helping us avoid tariffs because we are using this factory to supply the non-U.S. demand.

Our other income decreased sequentially, primarily from mark-to-market adjustments on BTC holdings

We are expecting to have no safety drivers in at least large parts of Austin by the end of this year.

We do expect to be operating robotaxi in, I think, about eight to ten metro areas by the end of the year. It depends on various regulatory approvals.

You can actually, I think, most of our regulatory applications are online. You can kind of see them because they're public information. We expect to be operating in Nevada and Florida and Arizona by the end of the year. Yeah. We continue to operate our fleet in Austin without anyone in the driver's seat, and we have covered more than a quarter million miles with that. In the Bay Area, where we still have a person in the driver's seat because of the regulations, we cross more than a million miles. On the customer side, customers have used Full Self-Driving supervised for a total of six billion miles as of yesterday.

Especially, it's difficult to create a hand that is as dexterous and capable as the human hand, which is an incredible... The human hand is an incredible thing.

With a humanoid robot, there is no supply chain. In order to manufacture that, Tesla actually has to be very vertically integrated and manufacture very deep into the supply chain, manufacture the parts internally, because there just is no supply chain. That's why I think Tesla is in almost a unique, I think, unique position when you consider manufacturing technology, scaling, real-world AI, and a truly dexterous hand.

Q: The next one, though, is, can you update us on the $16.5 billion Samsung chip deal in Taylor? Given the importance of semiconductors to autonomy in Tesla's AI-driven future, what gives you confidence Samsung can fulfill AI5 at Tesla's timelines and achieve relatively better yields and cost versus TSMC?

A: Samsung, it is worth noting, does manufacture our AI4 computer and does a great job doing that. We're actually going to focus both TSMC and Samsung initially on AI5. The AI5 chip design by Tesla is, I think it's an amazing design. I've spent almost every weekend for the last few months with the chip design team working on AI5. By some metrics, the AI5 chip will be 40 times better than the AI4 chip. Not 40%, 40 times. Because we have a detailed understanding of the entire software and hardware stack, we're designing the hardware to address all of the pain points in software. With the AI5, we deleted the legacy GPU or the traditional GPU, which is in AI4. AI5 does not have, we just deleted the legacy GPU because it basically is a GPU. We also deleted the image signal processor. Technically, the Samsung fab has slightly more advanced equipment than the TSMC fab. These will both be made in the U.S., one TSMC in Arizona, Samsung in Texas. We're going to make, starting off, just to be confident of having our goal, explicit goal is to have an oversupply of AI5 chips. Because if we have too many AI5 chips for the cars and robots, we can always put them in the data center. We already use AI4 for training in our data center. We use a combination of AI4 and NVIDIA hardware. We're not about to replace NVIDIA, to be clear, but we do use both in combination, AI4 and NVIDIA hardware. NVIDIA keeps improving. The challenge that they have is that they've got to satisfy a large range or a lot of requirements from a lot of customers. Tesla only has to satisfy requirements from one customer. That's Tesla. That makes the design job radically easier and means we can delete a lot of complexity from the chip.

Q: The next question is, instead of trying to replace hardware three with hardware four, why not give an equal incentive to trade in for a new vehicle?

A: For what it's worth, my daily commuter is a Hardware 3 car, which I use Full Self-Driving on a daily basis. We will definitely take care of you guys. Once the V14 release series is fully done, we are planning on working on a V14 Lite version for Hardware 3, probably expected in Q2 next year.

You know, we do see, at this point, I feel, essentially 100% confident, I say not essentially, 100% confident that we can solve unsupervised Full Self-Driving at a safety level much greater than human. ... This car will feel like it is a living creature. That's how good the AI will get with the AI4 computer. This is before AI5. AI5, like I said, is by some metrics 40 times better. Let's just say safely it's a 10x improvement. It might almost be too much intelligence for a car. I do wonder how much intelligence should you have in a car. It might get bored. Actually, one of the things I thought, if we've got all these cars that maybe are bored, while they're sort of, if they are bored, we could actually have a giant distributed inference fleet and say, if they're not actively driving, let's just have a giant distributed inference fleet. ... You can think of Tesla as like, I don't know, a dozen startups in one company.

We've created the Supercharging network globally. No one else has created a global Supercharging network. In fact, that North American Supercharging network is so good that basically every other manufacturer in North America has converted to our standard and uses the Tesla Supercharging network.

Optimus at scale is the infinite money glitch.

One thing which I'll further add is, people forget, like our first iteration of Autopilot was 10 years back. Elon had started this way back in the day.

We have made radical improvements to the design of Optimus while increasing the functionality, but making it actually possible to manufacture. I'd say Optimus 2 is almost impossible to manufacture, frankly. ... My two bypass points, we've gone from a person in a robot outfit to what people have seen with Optimus 2.5 where it's doing Kung Fu. Optimus was at the Tron premiere doing Kung Fu, just out in the open, like with Jared Leto. Nobody was controlling it. It was just doing Kung Fu with Jared Leto at the Tron premiere. ... What I'm saying is Optimus 3 will be a giant improvement on that and made at scale.

Q: Yeah, just as a related, maybe you could just talk about to what extent are the AI efforts at Tesla and xAI complimentary, or are they just different forms of AI? Maybe you can just help distinguish for the audience. Thank you.

A: Grok is like a giant model that you could not possibly squeeze Grok onto a car. That's for sure. It is a giant beast of a model. With Grok, it's trying to solve for artificial general intelligence with a massive amount of AI training, compute, and inference compute. For example, Grok 5 will actually only run effectively on a GV300. That's how much of a beast that Grok 5 is. Whereas Tesla's models are, I don't know, maybe about less than 10% the size, maybe closer to 5% the size of Grok.

Q: Perfect. Thank you. Just getting back to Austin, if you can remove the safety driver at your end, is the limitation in the Bay Area just regulatory, or is it kind of the market-by-market learning process? I guess similarly in the 8 to 10 markets that you mentioned to get added, is the decision there to put a safety attendant in the passenger seat or the safety driver in, is that like your step-by-step process to opening up a market, or is it really just the regulation in the individual market? What we're talking about here is, you know, maybe three months of safety driver in a new metro to confirm that it's good, and then we take the safety driver out, that kind of thing.

A: Yeah, as I mentioned earlier, we'll be adding reasoning to, I don't know, Ashok, is that like reasoning in 14.3, maybe 14.4, something like that? Yeah. With reasoning, it's literally going to think about which parking spot to pick. It's going to say, this is the entrance, but actually, probably there's not a parking spot right at the entrance if it's full, you know, if the parking lot is fairly full, the probability of an open parking spot right at the entrance is very low.

There is no way to have a super voting stock after you've gone public. For example, Google, Meta, many other companies have this, but they had it before they went public, and it sort of gets, I guess, grandfathered in. Tesla does not have that. ... So many of the index funds, the passive funds, vote along the lines of whatever Glass Lewis and ISS recommend. Too much of the publicly traded company is controlled by index funds, it's de facto controlled by Glass Lewis and ISS. This is a fundamental problem for corporate governance because they're not voting along lines that are actually good for shareholders. That's the big issue. I mean, that's what it comes down to: ISS, Glass Lewis, corporate terrorism.

Thoughts

• What's more superior. Boston Dynamics or Optimus?