- We like to too.
Okay, welcome guys.
Hello, everyone, thank you for joining me here today.
I'll be your kind of post moderator, Ben Sullins.
I have a show called Teslanomics,
if you guys are new here and unfamiliar.
For everyone else that does know, that is in Crowdcast.
Make sure to go ask your questions,
up vote questions, and all that.
I do have, we will be restreaming the broadcast,
once it begins, which is set for 2:00, 12:00,
sorry 2:30.
I have it in the back of my ear,
so I'm waiting for them to come on.
So, when that happens you know that's where,
that's what we'll jump over to,
and I'll kind of be quiet during the duration of that,
but Tesla just did release the new update letter.
And so, I just wanted to go
through some of those talking points with you real quick.
First and foremost let me just take a look and see,
what it has, too, too, too, too.
I had it in the other screen.
There it is, okay, Tesla second quarter update 2018,
Q2 automotive gross margin increased to 20 percent
20.6 percent GAAP and 21 percent non GAAP.
I think that's pretty amazing.
Those were some of the things that we
really needed to be looking for
was an increase in the margin,
because that is where, how they're gonna actually end up
being profitable down the road.
Next, you have the Model 3 gross margin,
turned to slightly positive in Q2,
expecting roughly 15 percent in Q3,
so that's good, that's the direction that we want
the margin and everything to be headed,
because that will lead to profitability.
Then you have the next bullet
here on the update letter
expecting to produce 50 to 55,000 Model 3s in Q3.
Delivery should exceed that.
So, if you just go back a year ago,
and see what they were doing,
it's pretty, it's pretty wild,
to see kind of how far they've came,
how far they've come on this.
So, that's just an astounding number
if you've been with Tesla for a while,
and you know kind of
what they're normally producing.
So, there you go.
They did a major cost restructuring in Q2,
and they have $2.2 billion of cash
and cash equivalents at the end of Q2,
and they're expecting to grow in Q3 and Q4.
So, remember that's the big equation right?
If you run out of cash that's where things will go bad.
So you can, you know you can be taking on date.
You can be spending and expanding your business,
and doing all these things
as long as you still have cash in the bank,
which you're getting from either financing operations,
or you know divesting some of your assets,
which doesn't typically happen.
So, the last bullet on the update was a CAPEX projection
in 2018 adjusted to less than $2.5 billion,
meaning that they're gonna be spending less money
on new things that they need to do
to kind of scale this and grow.
So, some other notes that I thought were interesting.
The Model 3 according to their letter here
in July of 2018 the Model 3 not only had
the number one market share position
in its segment in the US,
it outsold all other mid-size premium sedans combined,
accounting for 52 percent of the segment overall.
The popularity of the Model 3
is a true testament to the product.
Based on trade ins they've received so far,
they can see that the total addressable market
for the Model 3 is much larger
than mid-sized premium sedans.
We are drawing customers from many other segments
including non premium sedans and hatchbacks.
So, the reason I bring that up,
because I think that is extremely interesting,
because what I think, what you're gonna see,
is you're gonna see a lot of people that weren't BMW
or premium car owners already coming into this space,
and you know this would be the most expensive one
that they'll ever purchase.
So, that's what they mean
by expanding the market segment,
and I think that's tremendous.
They went on to talk about how some of the things,
these things are produced,
and one of the things that they're talking about here
are that they're now producing,
or they have multiple times in July
achieved 5,000 per week milestone.
We will now continue to increase that further
with our aim being to produce 6,000 Model 3 vehicles
per week by late August.
We then expect to increase production
over the next few quarters beyond 6,000 per week
while keeping additional CAPEX limited.
So, that's the thing, right?
If you just wanted a big number
of how many can you actually,
how many cars can you actually produce?
Then yeah you could just kind of
just keep having that number go up and up and up and up
by spending more.
So, what they're saying is that they're gonna try to do it
in a capital efficient way,
meaning not spending much more money,
but still increasing production,
so that way they'll you know
be a kind of a bigger margin on those dollars coming in.
Now they also state that they aim to increase production
to 10,000 Model 3s per week as fast as we can.
Notice they took off the date
of when that might be possible.
I and many others still believe that this will be something
that we'll see in 2019 maybe,
but not something that you're gonna see
very, very kind of soon.
Best guess, 2019.
Could be even even kind of beyond that.
So, they also said that they are trying to get GA3,
which is the main general assembly line in Fremont
to produce 5,000 Model 3s per week,
and then GA4 the one out in the tent,
would be in addition to that.
So, that means that there are
some changes that they need to do.
And so, I'll just bring that up here it says,
to address the short-term issues with GA3, we built GA4
to help us reach our 5,000 units per week target earlier,
and ultimately to push us past that point.
We were able to build the GA4 quickly,
due to the design simplicity of the Model 3 architecture,
and because it's a tent.
Okay, the layout and processes of GA4
are similar to those of the Model S and X assembly line,
while the quality and cost of production are roughly equal
to those of GA3.
General assembly excluding the cost of components
accounts for approximately three percent of Model 3 cost.
The rest of our manufacturing processes
remain highly automated,
including stamping, body, welding, paint shop,
powertrain assembly, and battery pack assembly.
I thought that was pretty crazy to see that it,
that it's only three percent of the overall cost.
To me, I just, it seems like the assembly of it
is such a huge part of the process.
Yeah, it's wild to that that only accounts
for that small percentage there.
So, they also stated in this that
they're now selling the performance Model 3,
which you've seen a lot of,
you've heard a lot of, and that the,
at the end of July, Gigafactory 1 battery production
reached an annualized run rate
of roughly 20 gigawatt hours,
making it the highest volume battery plant in the world
by a significant margin.
Consequently, Tesla currently produces more batteries
in terms of kilowatt hours
than any other car makers combined.
I don't know if that's a big achievement.
Not many other car makers are purely electric
and selling at this high volume.
It just doesn't, it's just not happening.
so you know, that, I don't know.
Yeah, you're the best of you know,
the only one in the industry.
So in Q2, they said that we've produced a 53,339 vehicles
and delivered 22,319 Model S and X vehicles,
and 18,449 Model 3 vehicles,
totaling 40,768 deliveries.
Now remember, they were able to push out
the 200,000th car being delivered to Q3,
so that was a big milestone,
because now that means the tax credit at least in the US
is gonna be extended.
So, that's a big news,
and I think we're gonna see even bigger stuff
happening in Q3,
because a lot of people kind of be you know,
basically saying that they're sandbagging
on their deliveries in order to maximize that,
which makes makes a whole lot of sense.
Now, there's some comments here about the energy side.
They said while we are largely focused
on the Model 3 ramp in Q2,
our energy business grew as well.
Demand for our energy storage products
remain significantly above our production rate,
even as we gradually add capacity.
Overall, we expect our energy business revenue
to improve in the second half of this year.
And I bring that up, because I know a lot of people
are waiting on the energy products.
So, it's good news that that stuff is happening,
and that the people I've spoken to a Tesla about this
all agree that it's, you know,
it's important for them and it's going up,
and they're working on it.
So, if you have a power wall,
you're waiting on a power wall, something like that,
I think you know hopefully
we'll start to see some deliveries
and some changes to that down,
down in the future here.
Okay, so that kind of ends the update letter there.
There's a lot more tidbits in there,
but well of course we're gonna,
we're gonna get into the call here.
And so, let me switch over and just make sure.
I'll take some questions now from Crowdcast
while we're waiting.
And guys, give me a thumbs up if the audio and video,
and everything looks good.
I am on a new set up here with crazy high performance,
so it should be should be pretty solid.
And then of course like I said,
I have the actual webcast in my ear,
so as soon as that starts,
or you know even a couple minutes before,
I'll switch over and then I'll shut up,
so he doesn't have to listen to me yammer.
Okay, let's see.
Going to the questions on Crowdcast.
Liz asked, have you heard when the autopilot self-driving
beyond level two is planned?
I don't think that you're gonna see that anytime soon.
I think that honestly autopilot
or self-driving beyond level two
is something maybe five years from now
will actually be a reality.
There may be little nuances and additional features,
but I think you'll still see a hands on system
that requires the driver to pay attention
and isn't truly beyond level two.
Level three I think is actually kind of a scary one,
so I'm a little mixed on that.
I think what we ought to do
is to jump to level four, level five.
So, yeah that's kind of my thoughts on that.
Thanks, thanks for the question, Liz.
Phil asks, hello Ben, as it has been reported
that Panasonic are ramping up battery production
so as not to cause any bottlenecks for Model 3.
Do you think the new objective of 10,000 a week
will be announced today by Elon?
Well, Phil, as I just mentioned in the update letter, it,
they state sort of what their goal is with the 10,000.
They didn't really put a specific date on it,
and I and many others do believe that they will need
an additional factory to do this.
I don't think they can just keep, you know,
maybe if REI has a sale
they can just build some more tents or something.
Kidding, but yeah I think it'll be a while.
I don't think you'll see 10,000 any time very soon,
but maybe in a couple years, and that probably aligns,
because you're gonna need
a place to build the semi.
You're gonna need to have a place to build the roadster,
very important, as well as the Model Y,
and the pickup truck, so that's all coming.
I think that's when we really get more serious
about 10,000 a week per Model 3.
and you know that calls, but could just be 10,000 overall,
which means a lot of them could be done
in the new Gigafactory in Shanghai,
which I think they said will be up in a couple years.
So, there you go.
That's my thoughts on that Phil.
Thank you for the question.
Crafty Geek asks, if you've got to be on the call
what would your question to Elon, JB, who else be?
Do you know if HyperChange will be on again?
So, I know Gali at HyperChange is trying to get on.
I don't know if he is or not,
certainly last time was a kind of a watershed moment
for a lot of us in this new media space
as you might call it.
I was, I and a lot of people were very excited,
and very happy about that.
So, I don't think it's gonna happen again,
because of the consequences of last time.
So, that's my guess.
If I had a question for Elon and JB in this?
I don't really know if I have one in this context.
I actually don't think I'd be a great person
to be on the call, just because I'm not.
Yeah I would rather talk to them about other things
that I think are far more interesting.
So, thank you.
Thank you for the question.
Kay X42, wonder if there's any analysts
are going to ask any boneheaded questions
that are already answered in letter this time?
Ignore if already discussed.
I don't think they're gonna play that game.
I don't think it's gonna happen, but you know we'll see.
That's kind of why these things are fun to do.
We've got a couple more minutes here.
Then I'm gonna cut out.
I'm gonna stop talking at five minutes prior
just 'cause you don't know exactly
when they're gonna go live, so there you have it.
Tony asks, Ben it's pretty cool that Tesla is now offering
unlimited free supercharging
for Performance Model 3 buyers.
Not sure if that's enough to sway your decision
to purchase one though.
You know I think what it comes down to for me
and why I'm not buying a Performance Model 3 is that
for my family that vehicle just doesn't work perfectly.
I think a better option for us would be to get a Model X,
because it was just more storage and things like that.
So, I just don't see us keeping a Model 3 forever.
I do love my car now and it's fantastic,
and I love taking it around and showing people,
making videos with it but yeah.
I think that that's one of the things that it's not,
it's just not the right car for me and my family.
So, there you have it.
And so, yeah that's kind of my answer in that.
So, if you guys aren't familiar
with what Tony's talking about here,
the referral program was extended to September 16th.
This is officially when the end
of the unlimited free supercharging will happen.
Now in addition to that, Model 3 Performance Edition
does qualify so if you haven't ordered your Model 3 yet,
you can go get one of those.
You can use a code like mine or anyone else's,
and you can then actually get free supercharging
as long as you keep that vehicle,
if, one on a Model 3, which is great.
So, if you're doing a lot of road trips
and long trips and stuff,
I think that that's probably a good buy.
If you're interested in my code,
if you guys haven't heard me say it a thousand times,
it's teslanomics.co/td.
You have to fill out a form,
but become my friend and I'll email it to you.
And then you know, you ask me any questions,
'cause that's honestly where,
that's, people ask me how I got so many referrals.
That's why, it's because you get on,
you get on the email list and I send you a note
with the code and then I respond a week later
saying hey how was it,
and then a lot of people respond to that,
and that's when I come in personally
and answer questions and go back and forth.
So, if you guys are doing that,
if you're interested whatever, go ahead.
There's literally zero additional benefit to me,
so if you have someone else's referral code,
please go ahead and use theirs,
but you can get mine at teslanomics.co/td.
So, you have it.
Thanks for the question, Tony.
Russ asks, how will Tesla and Panasonic overcome
raw material shortages or pipeline snags?
I think I had heard before
that they were buying mines and so forth.
Can Panasonic buy mines, and it routes ...
Okay, so just a couple bits about this.
So, the main components,
there's a lot of different materials
that go into these batteries as far as I know.
There's lithium, obviously,
and then cobalt is another big one
that is difficult to source.
So lithium, I don't think there's a ...
There, I did a video on this.
There's an enormous supply out there,
and with you know, literally everything you use
that is rechargeable, essentially using that material,
this, there you know, tons of industries
that are really pushing hard to expand
mining or in many cases dehydrating that resource.
You get it from the salt brines, in Chile, and anyways,
so lithium shouldn't be a problem.
Cobalt is a problem, but JB had recently said,
that they think they're gonna be able to get
the cobalt in their batteries down to almost nothing.
And so hopefully you know
with the advancements in battery technology,
these things won't actually be, won't be an issue.
So you have it, there's my thoughts on that, Russ.
Alright, last question,
then we're gonna be cut over to the stream
and just wait for it to start.
Flying Panda asks, hi there I understand that there's
a multi coat option that cost $1500
more than the original black
and $500 more than the other paint colors.
Do you know how much of a difference it is
to have a multi coat from Tesla.
Okay, so quick answer, the black is not the multi coat one.
That's an obsidian black, which is $1,000 more.
The white and the red are multi coat.
Those are the $1,500 more, so there's a difference.
There's a solid black.
Then there's all the other colors
with the exception of white and red,
and those are the $1,500 ones.
I think it would make a difference
I think would probably look
a lot better than the solid black.
I had to spend about $1000 on paint correction
just from my Model 3, just to make it look decent
before we did ceramic coating.
So yeah, the paint, the solid black paint,
definitely soft definitely prone to nicks and scratches.
So yeah, and it sucks that it's black,
because like of all the colors
that you wanna have the weakest paint on,
black is not the one, heh heh.
Anyways, thanks for the questions guys.
I'll come back after it's all over and we'll do it there,
but let me switch over to the broadcast near now
as they should be getting started here any second.
(upbeat classical music) This is their waiting music.
- [Cherie] Good day ladies and gentlemen
and welcome to the Tesla Q2 2018
Financial Results and Q and A webcast call.
At this time, all participants are in a listen-only mode.
Later, we will conduct a question and answer session,
and introductions will follow at that time.
If anyone should require assistance during the conference,
please press star then zero on your touch-tone telephone.
As a reminder, this conference may be recorded.
I would now like to introduce your host
for today's conference, Mr. Martin Viecha,
Senior Director of Investor Relations.
Mr. Vieira, you may begin.
- [Martin] Thank you very much Cherie,
and good afternoon everyone.
Welcome to Tesla's second quarter 2018 Q and A webcast.
I'm joined today by Elon Musk, JB Straubel, Deepak Ahuja,
Robin Ren, our Head of Sales,
Jerome Guillen, our VP of Trucks,
and we also, they're our autopilot team with us here,
Andrej Karpathy, Director of AI,
Stuart Bowers, our VP of Engineering,
and Pete Bannon, our Director of Silicon Engineering.
Our Q2 results were announced
at about 1:00 p.m. Pacific Time,
in the update letter we published
at the same link as this webcast.
During this call, we will discuss our business outlook
and make forward-looking statements.
These comments are based on our predictions
and expectations as of today.
Actual events or results could differ materially
due to a number of risks and uncertainties,
including those mentioned
in our most recent filings with the SEC.
During the question and answer portion of today's call,
please limit yourself to one question and one follow-up.
Please press star 1 now
if you would like to join the question queue.
Before we jump into Q and A,
Elon has some opening remarks.
Elon?
- [Elon] Hi, thank you for joining.
First of all, I'd like to say we're incredibly proud
of the Tesla team for producing 7,000
Model 3, Model S, and Model X vehicles
in the last week of June.
It was amazing efforts.
It's an honor to work with such a great team
to produce that incredible result.
It's like mind-blowing.
We continued to achieve 5,000 Model 3s per week,
7,000 combined S, X, and 3,
multiple weeks in July,
showing that they were able
to do this on a sustained basis,
and we expect to,
in the absence of a force majeure
or some very very unexpected event,
be able to achieve an average
of 5,000 Model 3s or above for Q3,
and 2,000 Model S, X's or above
for week four for Q3 as well.
So essentially 7,000 cars a week plus,
for an average above for Q3.
That's an amazing jump from only a year ago
when we were producing 2,000 vehicles a week.
It's really kind of a mind-blowing leap forward
for a manufacturing company.
So yeah, it's incredible work by the team to do that.
Many, many late nights, weekends,
extreme amounts of effort,
and lots of smart ideas.
It's amazing.
One of the results you're seeing
is that the Model 3 market share
has surpassed all competitor premium
mid-size sedans in line.
So Model 3 market share is now a majority,
or in July, it was a majority of all premium sedans.
That trend is we think likely to continue,
so it's not, we do not think it will stop there.
I have Robin Ren here who's our Head of Sales
to talk about some the interesting elements
that we're seeing in terms of cars
that people are trading in,
the sales and demand trends.
It's looking really,
really positive.
We're also getting great feedback
on the Model 3 from our customers,
and we're now delivering
the Performance dual motor and all-wheel drive versions.
And the Model 3 reviews are outstanding.
We really couldn't ask for better reviews
from some of the toughest critics in the world.
And it's yeah, and it's just ...
the thing that we're really finding is that
the more Model 3s we deliver to the field,
it's actually causing viral growth of our sales.
So we deliver a Model 3 to somebody, they love it,
they tell all their friends.
They're actually really,
our customers are our primary sales force.
They love their car and take their friends for a drive,
and that's the thing that fundamentally drives our sales.
But not everyone has a friend
who has a Model 3, obviously,
so we need to get the cars out there for test drives.
As it is right now, not even all stores in North America
have Model 3 for test drives.
We're supposed to be prioritizing
getting cars to customers,
but we're soon gonna have
Model 3s available for test drives in all stores,
and both the Performance version
and the rear-wheel drive version.
So, 'cause you know, a lot of people,
they will not buy a car until they test drive it,
which is not unreasonable.
Although on Sunday, when I delivered it,
we're testing out like direct delivery,
which I think is definitely the future,
direct delivery from factory to customer's home or work,
wherever they are.
But the guy who bought it
had never actually even sat in a Model 3.
Like, wow okay.
I said, well how do you feel about the car
now that you have it and you've driven it?
He's like, I love it, it's amazing.
So.
Yeah, it just seems to be really (mumbles).
Yeah so, at approximately 7,000 cars a week
we believe we can be sustainably profitable from Q through,
Q3 onwards.
We're gonna try to raise that rate of Model 3 productions
steadily in the coming quarters
and try to get to the 10,000 cars a week number
as soon as we can.
We found as we spent
a lot of time debugging
a wide range manufacturing issues
that the potential for our existing lines
to be able to produce far more cars
is much greater than expected.
That by simplifying production lines,
by speeding them up,
by in some cases have things being done manual
instead of with automatic
and in other cases having it be done
automatic instead of manual,
we've been able to achieve dramatic improvements
to the output of existing lines,
which means that our CapEx
going from 5,000 cars a week
to 10,000 cars a week is a tiny fraction.
CapEx five to 10 is a tiny fraction
of the CapEx needed to go from zero to 5,000 Model 3s.
This is I think very good news
for capital efficiency of a company.
And with Web's transmount,
that's gonna bring future mass market
to the vehicles that we produce.
So the, and from an operating plant standpoint,
from Q3 onwards, I really wanna emphasize,
our goal is to
be profitable
and cashflow positive for every quarter going forward.
Now obviously, if there's a big recession
or there's a severe force majeure event
that interests the supply chain,
that's not always possible,
but and we're confident that
and provided the economy is roughly where it is today
or reasonably good
and there's not a big force majeure event that we,
I feel comfortable achieving a gap incompositive
and cash flow positive quarter
every quarter from here on out.
So.
As you said, there may be occasional quarters
we'll pay back a big loan or something,
where there may be,
you know, just because we paid back a big loan,
but,
absent that, it would be cash flow positive.
So okay, I thank
the Tesla team for their incredible work
and our customers for their support.
Without the great crew we have at Tesla
and the customers who put their faith in us
by buying our product,
we would not be here today.
And yeah, I've really never been more excited
about the future of Tesla.
We have a super exciting
set of products to bring out in the future
and yeah.
It's like yeah.
Hey, I'm sorry if I sound a little tired.
I've been working
like crazy in the body shop lately.
But uh it's really
going great, I'm super excited.
Damn good, some good people.
And a good,
a number of the executive team here,
in particular asked the three key leaders of Tesla
Autopilot team to be here,
so they're gonna pick up from here to
see if the Autopilot leaders of Tesla
could introduce themselves
and say a bit about what you're working on,
what you're excited about in the future.
Sorry to put you guys on the spot.
But we're making pretty radical advances
in the core software technology
and the vision and all that,
and then very importantly,
the Tesla
self-driving chip technology that
we've been working on for three years
is finally coming to fruition.
Pete Bannon is gonna talk a lot about that,
but it's,
it's a plug-in replacement for the existing computer
and it enables an order of magnitude improvements in,
in operations per second
or frames per second is the way to think about it,
and we can go say it
the really key to Tesla full vehicle autonomy.
And like I said, designed to be really easy to replace.
I'll let Pete talk about that.
So we're gonna start with like,
maybe Stuart, Andrej Karpathy.
- [Stuart] Okay, hi, I'm Stuart.
- [Elon] You have to talk loud, by the way.
- [Stuart] Oh yeah, I'll talk extra loud.
So I'm Stuart.
Yeah, joined the team relatively recently,
incredibly excited,
see the foundation the team has built up until this point.
I'm gonna be building on top of that right now.
So right now a lot of the focus is on Autopilot V9.0,
which is our on ramp to off-ramp solution
that's going to automatically attempt to change lanes,
understand what lane the car is in,
understand the route the user wants to travel,
and take that route for the user
and ultimately hand back control to that user,
kind of safety control. - Integrate navigation?
So you like, to get to one place.
You said I go out just, by the way, a little,
a little tip for, if you're driving
Model S or X or 3 is if you just tap in that, hold,
tap the navigate button and just drag down,
it will automatically navigate you to home or work
depending upon where you are.
That's pretty cool feature.
Yeah.
- [Stuart] So you have this model focus right now.
We're also kind of digging out some new safety features.
I think probably the thing is most exciting
for me coming to the team is just seeing
the foundation's that's been built out over last two years.
I think Andrej will talk a lot about
some of the perception vision work we've done there,
including data engine.
But it's sort of a lot of to build on top of that
very very quickly.
I think we're all starting to see
a new set of safety features that really only makes sense
in this world we have such an extremely high understanding
what's happening around the vehicle,
so I think, when I sort think what will get me excited,
I come into work it's like one
starting to introduce real aspects with kind of not
just making the commute kind of reducing the drudgery,
or kind of the risk of commuting,
but also really make the element fun.
And the second is like
dramatically improving safety
in a way you really can only do
once you have this very nuanced understanding
of the world around you, the perception.
- [Andrej] Yeah.
Hello everyone, my name is Andrej Karpathy.
I'm Director of AI here at Tesla.
In particular, I lead the Vision team
which is responsible for turning the video stream
that we receive from all the cameras in a vehicle
into an understanding of what is around us
and around the vehicle.
I worked with Neural Networks for about 10 years
mostly as a PhD student of Stanford
and as a Research Scientist at OpenAI.
And what I'm really excited about is
really building out this infrastructure for computer vision
that underlies all the neural network training,
trying to get those networks to work extremely well,
and make that a really good foundation on top of which
we build out all the features of the Autopilot
like the features associated with the v9 release
that's going to come up and that Stuart has mentioned.
- [Peter] Hi, this is Pete Bannon.
My team--
- [Elon] He's gonna talk to (mumbles).
- [Peter] My team is leading currently
the Hardware 3 development.
The chips are up and working,
and we have drop-in replacements for S, X, and 3,
all have been driven in the field.
They support the current networks
running today in the car at full frame rates
with a lot of idle cycles to spare.
So, I think we're all really excited about what
Andrej and his team will be able to do
with this hardware in the future.
I think like one little anecdotal story was,
I gave a talk to ...
- Hey guys, looks like the call just dropped
on Tesla's end.
So I'm gonna to try to get that back up real quick.
I'm not sure what happened to it.
Give me one second here.
- [Peter] Development, the chips are up and working,
and we have drop-in replacements for S, X and 3,
all have been driven in the field.
They support the current networks
are running today in the car at full frame rates
with a lot of idle cycles to spare.
So, I think we're all really excited about what
Andrej and his team will be able to do
with this hardware in the future.
I think like one little anecdotal story was,
I gave a talk to his team on Hardware 3 last month
explaining how it worked and what it was capable of,
and then afterwards, one of the researchers came up to me.
He was really excited, and he said, this is so ...
- Hey guys, yeah sorry about that.
It looks like something is going on
with the Tesla website here,
so give me one second to spin that back up,
and I will get the call going yet again.
Be right back.
- [Peter] Adding something to accelerate
neural networks, but nobody was doing
a bottoms-up design from scratch,
which is what we elected to do.
We had the benefit of having the insight into
seeing what Tesla's neural networks looked like
back then and having projections of what
they would look like into the future,
and we were able to leverage all of that knowledge
and our willingness to totally commit
to that style of computing
to produce a design that's dramatically more efficient
and has dramatically more performance
than what you can buy today.
- [Elon] Cool, thanks.
Yeah, I mean, essentially the key is
to be able to run the neural net
at a fundamental, at a bare metal level
so that it's you actually, in the circuits
and especially during the calculations,
in the circuit itself and not
in some sort of emulation mode,
which is how a GPU or a CPU would operate.
So, you want to do basically a massive amount
of localized matrix multiplication
with the memory right there.
So, it's a huge number of very simple complications
with the memory needed to
store the results of those complications
right next to the circuits
that are doing the matrix calculations.
And the net effect is an order of magnitude improvement
in the frames per second.
Our current hardware, which,
I'm a big fan of NVIDIA, they do great stuff.
But using a GPU, fundamentally it's an emulation mode,
and then you also get choked on the bus.
So, the transfer between the GPU and the CPU
ends up being one of the constraints of the system.
So, the net effect is we're able to,
with the Tesla computer,
and we've been like in semi-stealth mode basically
for the last two to three years on this,
but I think it's probably time to let the cat out of the bag
because that cat's gonna come out of the bag anyway.
But it's an incredible job
by Pete and his team to create this,
the world's most advanced computer
designed specifically for autonomous operation.
And as a rough sort of rough figure of merit,
whereas the current NVIDIA's hardware can do
200 frames a second,
this is able to do over 2,000 frames a second
and with full redundancy and fail-over.
So.
It's an amazing design and we're gonna be looking to
increase the size of our chip team
and our investment in that as,
as quickly as possible.
I think we have some of the best aces in the world,
but I think we want to build on that even more.
And it costs the same as our current hardware
and we anticipate that this would have to be replaced,
this replacement, which is why we made it easy to
switch out the computer,
and that's all that needs to be done.
If we take out one computer and plug in the next.
That's it, all the connectors are compatible
and you get an order of magnitude, more processing
and you can run all the cameras at
primary full resolution with the complex neural net.
So it's super kick-ass, thank you for doing that.
- [Peter] You're welcome.
- [Elon] Thanks for making nets
and thanks for making the software.
Anyway, basically I wanted to introduce
three of the key people at Tesla that are doing this.
I have huge respect and admiration for you guys and,
and it's because of what you and your team's doing
that Tesla will be successful in this arena, thank you.
- [Martin] Thank you, Elon.
Shiree, let's go to the first question.
- [Shiree] Thank you, our first question comes
from Tony Sacconaghi with Bernstein.
- [Tony] Yes, thank you.
I have one question and one follow-up, please.
First, just on gross margins,
it looks like S & X gross margins were up
maybe 500 basis points sequentially and I'm wondering
maybe you can articulate what drove that.
And then, more importantly,
it looks like you're calling for Model 3 gross margins
to go from about maybe 3% this quarter
to 15% next quarter.
That's about a $6,000
cost out per car
and I'm wondering if you can maybe
help us understand what sort of the forces
that drive that kind of improvement
in a relatively short timeframe.
- [Elon] Yeah, absolutely.
First of all, I'd like to apologize for
being impolite on the prior call.
Honestly, I think there's really
no excuse for bad manners
and I was violating my own rule in that regard.
Certainly, I have some excuse.
There are reasons for it in that I'd gotten no sleep and
been working sort of
110-hour, 120-hour weeks.
But, nonetheless, there's still no excuse.
My apologies for not being polite on the prior call.
- [Antonio] I appreciate that, thank you.
- [Elon] And let's see, with respect to gross margin,
I'll touch on that and then hand the rest to Deepak,
but certainly, when it's filling up the production line,
there are a tremendous amount of inefficiencies.
There's a lot of
hurry up and wait, where
some parts of the production line move well.
Then, one part doesn't
and you have associates waiting around
with nothing to do.
There are parts that we thought were right
but then it turns out
that they weren't right because
we got to send them back to the supplier.
It's just like a whole sort of giant machine.
It just needs to kind of lurch into
a high pace and there's a lot of lurching,
which is very inefficient.
So, you end up having super high
labor costs per car
and it just takes time
to sort of spool up this giant machine.
Basically a production system is like
a giant cybernetic collector and,
and it moves as fast as the slowest part.
So, as we address those slow parts
and as we improve efficiency,
then gross margin and so the profitability per car
just improves dramatically.
That's sort of at a high level.
Deepak, do you want to add to that?
- [Deepak] Elon, you described it
extremely well, so just to sort of summarize,
this was a major milestone for us in Q2
that the gross margin in Model 3 turned slightly positive
and we feel really good about the path ahead.
And as Elon said, it's driven predominantly
by manufacturing cost efficiencies.
The labor hours that we use
to produce each car becomes less.
The initial ramp-up costs that we have that are one-time,
those inefficiencies disappear.
Our fixed costs that are there,
that gets leveraged to a higher volume.
So, all of that.
- [Elon] Actually, a thing that can also happen is that,
if it turns out that say, a production part
was either designed wrong or built wrong,
there's something wrong with it,
then on camera, on emergency basis,
we have to go with low volume tooling
which can be produced quickly.
But a part produced off of low volume tooling
can easily be 10 times more than a part
produced off of production tooling.
And so, sometimes where it gets really bad,
if you've got a machine something
out of a block and has either that or gonna make a car,
then the cost of,
of using low volume cost,
of low volume tooling can be really nutty.
- [Antonio] Yeah.
- [Deepak] And the journey just continues as we stabilize
and grow production from these levels,
we achieve even more efficiencies.
And Q3 also benefits with somewhat improved mixes.
We're gonna sell more All-Wheel Drive
and Performance cars and in the long run,
as we continue to achieve those efficiencies on cost,
our gross margins will continue to increase.
- [Elon] Yeah, I don't know if this trend will continue.
We're trying to give you essentially
all the information that at least we know of.
But we're seeing roughly half of all customers
choose the Dual Motor or All-Wheel Drive option,
which is actually quite a good positive surprise.
- [Deepak] Yeah, it's been heartening to see the mix
in terms of what customers want.
Robin can probably add more to that.
- [Robin] Yeah, so,
so starting from end of June
when we opened the configurator
and invited existing reservation orders,
we saw tremendous
excitement and response from our customers.
As Deepak just mentioned, we actually see
more orders for the All-Wheel Drive Dual Motor car
and Performance cars combined
than the rear wheel drives.
- [Elon] Yeah, we don't want to say like
this should be assumed to be a continued thing.
It's just the thing we are seeing now.
- Yes - Yeah.
- Correct. - And another thing
I want to point out is that
we are actually, since we opened the configurator
to the general public in early July,
we are seeing an increased demand coming from people
who do not currently hold a reservation.
I think that's something that we found super exciting,
because these are the people who actually had
no idea about Model 3 and they heard about Model 3
as available to order, many of them requested test drives
and since early July,
we have over 60,000 test drive requests
in the U.S. alone and these people come into our stores,
do the test drive, and they become super excited
and they decide to order the car.
So, we believe that the strong demand
coming from especially the non-reservation orders
is gonna dramatically increase
as we increase our test drive population.
To give you an example, three weeks ago,
we had only eight stores having test drive cars
to Elon's point earlier.
Now we have over 90 stores having test drive cars.
- [Antonio] Okay.
- [Elon] It's worth mentioning,
just an interesting little
bits of information
that Robin was telling me.
I'd just like to also commend Robin on doing
a great job running worldwide sales.
Nice to have you in this role
and the awesome work done in China
was really some next level stuff.
Anyway, Robin was born and raised in Shanghai
and has been,
along with the, Tom and Grace (mumbles),
entire team in China
has been sort of instrumental in
establishing the China factory
and making sure that gets done right
and having a great relationship with the government.
And so it's nice work in that regard.
It's really, I think
some of the things people don't expect like
what are the top five trading cars for Model 3?
- [Robin] Yeah, this is very interesting.
So, we looked at what people
who are buying Model 3 cars in the United States,
what cars they are trading in.
What we found is
through this year, from January to July,
the top five non-Tesla cars people are trading in
to get into a Model 3,
they are Toyota Prius,
BMW 3 Series, Honda Accord,
Honda Civic, and Nissan Leaf.
- [Elon] Really surprising.
- [Robin] Yeah.
They are surprising because they are not
the traditional premium sedans, they are actually,
many of them are the mainstream midsized sedans.
- [Elon] Right, and we're obviously at this point
not yet selling our $35,000 car,
so this is promising for the future.
All right, cool, next question?
- [Shiree] Thank you.
Our next question comes from Joseph Spak
with RBC Capital Markets.
- [Joseph] Hi, good afternoon, thanks.
Maybe we could tackle
some of the commentary about
the Gigafactory coming in China.
When you first announced
the Gigafactory 1, I think you said that was gonna be
about a $5 billion investment,
and you mentioned
some volume numbers associated
with what you think you could do in China.
So we do some extrapolation,
looks like maybe 15 gigawatt,
15 gigawatt hours of initial capacity.
I'm wondering if you could also do
a linear extrapolation on the costs
you think you need for that factory.
- [Elon] Sure, and,
I would also like to apologize for
being impolite on the last call with you.
It's not right, and
I hope you accept my apologies.
- [Joseph] Thanks.
- [Elon] So with respect to Gigafactory CapEx,
I think we learned a tremendous amount
with Gigafactory 1, and
we're confident that we can do
the Gigafactory in China for a lot less.
I think it's probably
closer to, this is just a guess,
but probably closer to $2 billion,
and that should be at a higher,
and that would be sort of at the
250,000 vehicle per year rate.
So I think we can be a lot more efficient with CapEx,
and that would include at least
a factory module and pack production,
body shop, paint shop, and general assembly.
Might even be less than that, but that's,
that's about the right number for that.
And then cell production is something
we're still figuring out
with respect to the Shanghai factory.
JB, would you like to add to that?
- [JB] Yeah, I...
I'd agree with all that.
We found a surprising number of ways
to improve efficiency and speed
and density as well at Gigafactory 1,
and all those lessons
will absolutely be shared with Gigafactory 3.
The teams are already of course
beginning to collaborate and start to figure out ways
to do this more efficiently
and with less CapEx than last time.
Yeah.
- [Elon] Yeah, I think, we,
like less than half is like would be a good estimate.
And maybe a lot less than half,
but not more than half, would be a fair estimate
for CapEx to get to that 250k level.
So it's just, we just learned a tremendous amount
about manufacturing, it's like,
it's definitely burned out a lot of neurons,
yeah, mental scar tissue, it's like next level,
but on the plus side we really know a lot about
volume manufacturing at this point.
- [JB] I mean, there are so many specific examples,
but even in just recent weeks and months,
we found some, certain areas of production
that have been very capital intensive
that we've been able to speed up
with almost no additional CapEx
by maybe 20%, even 25% or 30%.
- [Elon] Yeah, kind of crazy.
Including on the cell, including the cell production.
- [JB] Yeah, just by challenging some
of the initial assumptions, the specifications,
tweaking the controls and software.
- [Elon] Look, what really matters,
what actually doesn't matter, things we think matter,
and some of it actually ends up
not mattering at all.
- [JB] And that's with basically zero CapEx.
So as you start to add-- - Yeah.
- [JB] Very tactical, strategic CapEx to the existing lines,
that's how we can get to something
close to double or beyond
with a really, really small increment.
- [Elon] Yeah.
Obviously one of the keys to success
on the Model 3 production was the GA4 thing,
which was led by Jerome.
And General Assembly is key,
and doing the sort of zone one, two, semiauto lines,
which were critical because
we had this fundamental failure
especially in zone one, zone two
of factory module production.
Thank you, Jerome, 'cause that was,
It turns out Jerome was pulling some
pretty incredible rabbits out of the hat, that was amazing.
- [Jerome] Thank you.
- [Elon] And people make fun of our tent,
but by the way our tent is amazing
and this is not like, when people like say tent,
they'll think it's like some sort of,
it's like made by REI to go camping.
This is a tent that is actually
commonly used as a permanent structure.
It's a giant thing that is
very commonly used as a permanent structure
and we just had to come up with a creative solution
because GA3 was not going to be able to make the rate
and so we had to come up with some ideas,
and that's how that all transpired.
It's interesting, if you want to...
- [Jerome] Yeah, thank you, it was a fun project actually.
- Yes. - So not only was it
producing good results, but a lot of people
contributed from different engineering groups
and had a lot of fun in the process.
We set out...
- [Elon] Some of the people are
the ultimate in building cars.
(laughing)
It's cool, it's great.
It is like really, there's something really satisfying
about building a car.
- [Jerome] We just wanted to
create an assembly line that would be
very easy and very straightforward.
So, it's a straight line, very simple.
Car enters at one point and it's finished at the other end.
Very simple access on all sides.
Very simple tooling that we reused for most of,
actually, nearly all of it is systems
and tools that we discarded
from previous SNX or for Model 3.
- [Elon] Especially Model 3.
Like it was probably we had two weeks
to solve this problem, which is like quasi impossible.
So, we actually didn't have time to order new equipment,
because it would have taken too long to arrive.
So, we took the conveyors
that we'd discarded from the GA3 line,
which didn't work
or was way too complex to actually do our products.
- [Jerome] And we amplified, repurposed them,
make them sturdy for what was needed, and--
- [Elon] Well, I think like the really cool idea was
the putting them on the 1% grade.
So it's like technically
the conveyors for parts delivery to GA3
were not graded to be able to move something
as heavy as a car, so,
we made it downhill and on a 1%-downward grade
with the car at the top.
So then, you can actually overcome the transport.
- Gravity helped. - Yeah, gravity.
So, basically, even on your slides,
you can do, accomplish a lot.
- [Jerome] Yeah, it's pushing the car.
- [Elon] Exactly.
- [Jerome] No.
And something that I'm particularly happy about
is that we installed the quality team at the end of the line
and we wanted to have at least as high standards
on this new line as in the other one,
because it is so simple and straightforward,
they can run very quickly to any point in the line
if there is any potential concern
and address very quickly, there is no maze
to move around or identify where something happened.
And the quality of the cars that come out
of this structure is at least as good
and we make all the Performance cars
on this particular line
and they seem to be doing quite well.
So, this is a very pleasant surprise
and the associates seems to be
very happy and engaged in that particular area.
So, this may be a model of how
we may want to start general assembly
for future vehicles, at least start
and we can always add
further automation and complexity.
- [Elon] And something that's like
somewhat counterintuitive is
that this actually has fully considered
fewer labor hours per car than the GA3 system.
And just to elaborate on what Jerome was saying,
where we have parts delivery to GA4,
the truck literally just backs up to the side of the line,
where there is like a door in the tent.
And then, that is used to unload parts from suppliers
directly to where they are needed on the line.
So there's no intermediate assistant.
Whereas for GA3, they're unloaded,
they're put in a warehouse,
then they're repackaged from the warehouse
into these totes, which ...
So we actually have 220 people, something like that,
across all shifts whose only job it was
was to repackage parts
from the boxes that came in from suppliers
to the boxes that, to these totes
that go into the lifters that go up into GA3.
That's literally all they do
is move things from one box to another box,
and we don't need that at all on GA4.
- All gone. - All gone, yeah.
And there's a tremendous amount
sort of 24/7 robotics
technicians that are constantly trying
to make the machines have uptime.
That's very expensive
and that's where we figured like
not having to maintain all these robotic systems,
that's a big cost savings as well.
And now we're gonna be gradually adding
simple automation into GA4
to make it easier to build a car
and better sort of labor saving devices,
but it's just fundamentally,
it's already at an efficiency level greater than GA3,
which is pretty impressive.
- [Martin] Joe, do you have a follow-up question?
- [Shiree] Our next question comes from
James Albertine with Consumer Edge.
- [James] Good afternoon,
and thank you for taking my question.
And appreciate all the color you've been providing.
Wanted to dig a little bit deeper, though,
in terms of capital spending plans.
Considering your growth you've identified
in China with the Model Y, we believe also in the EU,
it's been discussed about a factory there.
How do you plan to fund all of this growth
without going back to the capital markets to raise funds?
And can you verify for us
whether or not there is a notice from a regulator
that would prevent you from raising outside capital?
Thanks.
- [Elon] We do not...
We will not be raising any equity
at any point, at least that's,
I have no expectation of doing so, do not plan to do so.
For China, I think, our default plan will be to
use essentially a loan from
the local banks in China
and fund the Gigafactory
in Shanghai with local debt, essentially.
And we certainly could raise money,
but I think we do not need to
and we, yeah ...
I think, it's better to,
it is better discipline not to.
- [Deepak] Yeah, we're executing on
an operating plan that keeps us sufficiently self-funded
despite our CapEx needs and our debts maturing,
and still keep a very healthy balance
on our balance sheet.
- [Elon] Yeah, our default plan is
we pay, we start paying off our debts.
I don't mean refi-ing them, I mean paying them off.
For example, there's a
convert that's coming due soon,
a couple hundred million,
then there's a $900 million one,
in (mumbles) something like that.
We expect to pay that off with
internally generated cash flow.
- [Deepak] And still be, still have a healthy cash balance.
- [Elon] Yeah.
- [Stuart] And to answer the other question,
there is no such notice from a regulator.
- [Elon] Yeah, I'm not sure what you're talking about,
but there is no such notice from a regulator.
- [James] Very good, thank you very much.
- [Martin] Let's go to the next question, please.
- [Shiree] Thank you, our next question comes
from George Galliers with Evercore.
- Hi, George. - Okay, our next--
- [Martin] Okay, let's go to the next one.
- [Shiree] Thank you, our next question comes from
Adam Jonas with Morgan Stanley.
- [Adam] Hey, everybody, first, there's so much love
and respect for colleagues
and Wall Street analysts on this call, it's almost,
it is lifting my spirits, what can I say?
I got two questions, the first is for the Autopilot team.
There's an argument that
a fully autonomous car is essentially like a terminator
that is programmed to save lives
in highly complex terrestrial environments
and that this same technology with a few tweaks
have some pretty obvious military capability.
Do you see any risk that U.S. companies
will ultimately not be allowed to operate
weapons grade AI-based technology
in a market like China and vice versa?
- [Elon] Well, this has never come up.
I wouldn't call it weapons grade.
It's just like the car is trying to
drive, you know, and if anything,
the autonomous cars will be pretty easy to bully
because they'll be optimizing so much for
avoiding collision.
So that'll be more of a challenge than anything else is
as soon as somebody sees that the car's autonomous,
they know they can like cut them off
and the car is gonna do everything it can
to avoid a collision.
So it's like that'll actually be probably
a bigger challenge than anything else,
but we've not encountered
anything of the nature of what you're saying.
- [Adam] So you don't see autonomous cars
as a potential germination or training grounds
for things that would have a national security
or military interest, okay.
Maybe a follow-up, Elon,
and my last question, who do you think would be
a more formidable competitor over time,
BMW or Amazon?
- [Elon] For Tesla?
- [Adam] For Tesla.
- [Elon] I don't think either of them are likely to be.
As far as I know, I'm going to be pretty shocked
if Amazon got into the car business,
but I think BMW has great engineering.
And it's good to see that they're making
some investments in electrification.
Hopefully, they do more of that.
And I'm not sure where they stand on autonomy.
It's not on our radar from an autonomy standpoint.
- [Adam] Thanks a lot.
- [Martin] Okay, let's go to the next question.
- [Shiree] Thank you, our next question comes from
Pierre Ferragu with New Street Research.
- [Pierre] Thank you for having me on.
So I wanted to make sure we understand well
how you stop burning cash going forward,
in coming quarters.
And my understanding is that
an important moving part here,
probably is the most important one
is a positive impact of the ramp of the Model 3
on your working capital.
And so I did some quick math on the quarter
and I see your favorables increased by $430 million,
while your risk level didn't move much
which makes sense because you get paid on the spot
and you pay your suppliers
only on a 60 day notice or more.
And so if I divide that by the number
of incremental cars you've been producing in the quarter,
I get to $23,000 per car.
And of course my question is whether
this is a good way to think about it,
which means that going forward
when we move into Q3 and Q4 every additional car,
every additional Model 3 you're going to produce
you're going to bump up payables by something
in the region of $20,000
and that's going to be the main driver
getting you to break even and to stop burning cash.
- [Deepak] Deepak here.
I mean, there are many factors.
Clearly, the working capital benefit
of the difference in the payable terms
versus collecting cash is one of them.
But also, it's our gross margin improvement
on the business.
With the, it's the higher volumes
and the higher gross margins,
I'm thinking higher gross profit,
I'm stating the obvious here on Model 3.
Our S and X volumes are increasing too
in the second half, that's gonna help us significantly.
And all of our other businesses
are improving their profitability,
while our OpEx is staying essentially flat,
so massive leverage in the business.
So when you combine all of that,
that's what is giving us the cash flow from operations
to fund the rest of our business and grow cash.
I'm stating the obvious,
but just sort of summarizing the whole point.
Yeah.
- Okay, so-- - In terms of follow-up
on EP, sorry, go ahead.
- [Elon] Sorry, what was your question?
- [Martin] Sorry, can you repeat the follow-up?
Sorry Pierre, can you repeat the follow-up?
- [Pierre] My follow-up was on in terms
of order of magnitude,
does like $20,000 per car
of payables boost over a 60-day period,
does that sound like something that makes sense
or am I missing other moving part?
- [Deepak] It's rough order of magnitude correct, yeah.
- [Pierre] Excellent, thank you.
- [Martin] Okay, let's go to the next question.
- [Shiree] Thank you, our next question comes from
Romit Shah with Nomura Instinet.
- [Romit] Yes, thanks very much.
I guess my question is for the Autopilot team.
We've been looking forward to this
fully autonomous coast-to-coast drive
and, Elon, I think you sort of said on previous calls
if I can paraphrase that the team has been focused on
developing a full self-driving suite
that would work basically
on all different kinds of road conditions.
And I'm just curious, what's holding back
that capability today to go coast to coast?
And are we closer
now that you've strengthened the compute technology?
- [Elon] Yeah.
We can do a coast to coast drive,
especially if we,
if we pick a specific route
and then write code to really make that route work,
we could do a coast to coast route drive,
but that would be kind of gaming the system.
And I think it's really important
for the autopilot team to be focused on
fundamental safety of the existing features.
So that's, the focus is
really massively on safety of existing features.
Then there's an advanced dev role that
can do things like recognize traffic lights and stop signs
and make hard right turns and that kind of thing,
but it's not at the safety level
that's considered okay for release.
So that, yeah, because it really,
you want many lines of reliability
for anything that's released to end customers.
So I don't want to take the team off that until
we feel like we've really
done everything we possibly can
for the core functionality.
Stuart, do you want to add to that?
- [Stuart] Yeah, I mean, I think the big thing
I would say is to reiterate Elon's point.
There's no question you can kind of build
a demo around this stuff.
The challenge right now for the team
is just increasing the safety and utility of autopilot
to over a quarter of a million cars we have today
and pushing more out after that.
So I think when we look forward to what the next
probably six to 12 months look like, it's taking
those same kind of features we've been working on,
probably deploying them
in the form of active safety features.
That's like a thing we can do already to understand like,
use this rich understanding of the environment
to actually try to keep you safer, to either beep or brake.
And then also, of course like
one huge advantage that we have is we can understand
what humans actually did in these vehicles
and test our software to make sure
that we would have made decisions that were similar
if not safer.
So that's gonna be a huge part
of what we do over the next probably two quarters.
- [Elon] Yeah, that said,
we might be able to pull off coast-to-coast demo
before the end of the year if we,
but really like right now Subaru has not focused on
the version 9 software release
which has got a number of really cool things in it.
And we're hoping to get that out to
early access program
in about four weeks and then broadly in September.
That's the hardcore focus right now,
and that will certainly include some
significant advancements in autonomy.
And then once that's out and stable, I think
that could be a good time
to work on the coast-to-coast drive.
- [Romit] I don't know if you guys have shared
what attach rates are for autopilot.
And just as my follow up, I guess I'm curious
what you can do to
increase the number of cars that have that functionality.
It would seem like
the effects of auto margins and cash flows
could be pretty positive.
- [Elon] Yeah, I think it's extremely powerful
once people are comfortable using the technology
and see just how much utility it brings.
I think that is a very significant
potential for margin gain in the future,
but it's contingent on that functionality
really making a difference.
I think we will really start to see
some of the breakthrough stuff in about a month or so.
- [Martin] Okay, let's go to the next question.
- Thank you. - Thank you.
Our next question comes from
John Murphy with Bank of America.
- [John] Good afternoon, just a first question.
Is it fair to assume the GA4 in the tent
is now essentially permanent?
And if so, is this potentially a new model for capacity
and capacity additions
that might be much more capital efficient over time?
- [Elon] What do you think, Jerome?
- [Jerome] It's permanent for now.
Until we come up with something different or better,
but...
Personally, I think it's a good model
to start assembly of any product.
Gives a lot of flexibility,
and then we can build and iterate over it, yeah.
- [Elon] Like, necessity is the mother of invention,
and when you have to do something quickly,
then you just don't have time to spend a lot of capital.
So it forces you to be capital efficient.
- [Deepak] Yeah, it's taught us a lot of lessons
on how to be capital efficient
in the general assembly area.
And so, in that sense,
those lessons will carry forward, John.
- [Elon] Yeah, I think so, it's still by and large
we'll be aiming for steel-frame buildings to be clear.
It's not like it's gonna just become tents everywhere.
Yeah.
- [JB] I mean the tent itself might be
a little bit of a distraction
from actually the focus of what's happening inside.
And then the methodology-- - Yes, exactly.
- [JB] And that's a similar methodology
that we've kind of reverted back to
and then moved forward from in the module,
where we simplified and then did a very,
very linear intuitive process that was a bit more manual
and then have automated and scaled that up
as we understand it and get good control of it.
And I think that's a lesson that we're taking to heart
broadly across other things
that we're going to do in the future
and it's an efficient way to scale up.
- [John] I mean, is that replication of that simplicity
why you think Shanghai could be
that much less costly
and that then Model Y capacity
might be that much less costly to add?
- [Elon] Yeah, Model Y is sort of a whole separate thing
but it's definitely one of the elements that
convinced us that we can scale up quickly
and at low CapEx in Shanghai,
we would do an improved version of GA4.
And then, we're also figuring out
how to make the paint shop a lot simpler
and general assembly a lot simpler.
And after this call, I'm headed back out to the...
- Body shop. - The body shop
and making the body shop
a lot simpler. - Making it a lot simpler.
- [Elon] Yeah, we can really simplify the body shop.
Man, wow.
And there's a lot that we can
really easily improve like design to manufacturing
and changing some of the joining
approaches that we use
and actually making the car lighter, cheaper
and better and actually stabler.
Yeah, it's ridiculously safe already, but yeah.
- [JB] Maybe one other point, just to follow up quickly.
I think some people have taken this as like
a walk back from automation,
which is not really accurate. - Yeah, exactly.
- [JB] This is basically, I mean,
a more thoughtful and focused way
to apply automation to the actual issues that matter most.
- [Elon] Yes, that's well said.
Actually, it's really worth emphasizing JB's point here.
Yeah, we're seeing a gain.
- [JB] Yeah, it's not an overall reduction in automation.
It is a focusing of our efforts automating the processes
and the value-add processes that matter the most
and I think we got maybe a little bit distracted
on this first round automating a lot of things that
added complexity that didn't necessarily speed up.
And-- - Way too fancy.
- And we can save-- - Start simple
and get fancy later.
Fancy's going to bite you in the ass.
- [JB] But it's not like we're reverting to the dark ages
of all manual everything, that's not at all the case.
- [Elon] Yeah, I mean, Gigafactory is ...
- Massively automated. - Massively automated.
It's pretty crazy.
And the body production is
also heavily automated, almost entirely robots.
So it's a mixture of people and automation.
There's so much that goes into producing a car
going from raw metal and plastic and glass
to an actual finished car.
And, yeah, as JB was saying,
the vast majority of that is highly automated.
- [John] Okay, if I can sneak in one quick follow-up?
I mean, when we look at the grosses
on the Model 3, you're saying 15% in 3Q,
20% in 4Q and I think the ultimate target is 25%.
I mean, what are the average transaction prices
you guys are assuming?
I mean, it sounds like they are gonna be
a bit higher earlier, but is that 25% gross
ultimately still built around the low-40,000 ATP?
- [Elon] Yes.
- [John] Okay.
- [Elon] The simple answer is yes.
- [Deepak] It'll be lower ASPs than what we have today,
clearly, and we are having a richer mix
of All-Wheel Drive, as Elon alluded to earlier,
so that's gonna help, but yeah, 25% is still
the target that we have ahead of us.
- [Elon] I'm highly confident that
it may not be Q1
but I would be shocked if it's not Q2 that we get to 25%.
- [John] Great, thank you very much.
- [Martin] Thank you, let's go to the next question.
- [Shiree] Thank you, our next question comes from
Alex Haissl with Berenberg.
- [Alex] Good evening, everyone,
and thanks for taking the question.
I would like to come back
to the point made on the manufacturing efficiencies.
I mean, one of two main challenges
for Tesla but also for the rest of the industry
is the manufacturing parts,
which has been overcome by a lot of companies already,
with the second one being the technology part.
My question is how would you describe
the learning curve
of the manufacturing process versus technology
and what is really
the pace of advancement you're making?
Because it looks like on the manufacturing side
the curve maybe has meaningfully accelerated here.
Thank you.
- [Elon] Well, I don't really know actually
how others do it, to be totally frank.
I just know that,
we, the way we,
I see the way we are doing it
and I'm told that this is how others do it
and we're able to find ways to make it much better.
- [JB] I guess I--
- [Elon] I don't know what the delta would be though.
- [JB] We also don't really I think differentiate it
quite the way maybe you're implying.
I mean, technology and manufacturing
are sort of one and the same in many cases
and we're treating a lot of the manufacturing problems
as a technology problem. - Yeah, exactly.
- [JB] And applying our design teams,
our technology teams, if you want to call them that,
to solving those issues.
So I think the learning curves
in some ways are quite similar.
- [Elon] Yeah.
In fact, it's amazing how much of production
is actually software.
We're really quite good at software
relative to other car companies and
manufacturing at volume is
mostly a software problem.
I think that was not well appreciated.
- [JB] I think maybe one other
lesson learned is that
it's obviously not the best approach or best efficiency
to outsource some of that development.
- [Elon] Yeah.
- [JB] Some of the areas that we struggled
the most through the Model 3 ramp were those where
we had perhaps less visibility, and less control,
and less direct kind of skin in the game
on how those production lines were designed and built.
- [Elon] And these are cases where we took,
we engaged with
companies that were supposed to be
world class experts in automotive production
and we just assumed that they would do
stuff that worked but it didn't.
- [JB] Yeah, so that learning curve often involves
Tesla coming directly in,
understanding the process intimately, simplifying it,
and then essentially doing our own
design or changes to the lines that were built.
I think that's a key learning point that we've taken
and I think the way that we can do this
a lot more efficiently in the future
is doing that approach from the start.
- [Elon] Just having that very rapid iteration
between design and production is incredibly helpful
and we understand for example,
what are the rate limiters,
what makes it hard to produce factory modules.
We came up with a new design that
achieves the same outcome,
that's actually lighter, better, cheaper
and we'll be introducing that
around the end of this year,
probably reach volume production on that
in Q1 or something, that will
make the car lighter, better, and cheaper
and achieve a higher rate.
That line is under construction,
will be active in about six months.
- [JB] We did this somewhat the first time around
but now there's I think even more exciting understanding
of the value of having those, as Elon said,
having the design engineers just working
intimately with automation and line engineers,
simplifying the process as they're designing the product.
- [Elon] Yeah, I mean,
because we're sort of desperate to
try to get the production working,
we actually took a design engineering team and
had them work in the factory
and improve it, work on production
and it's given them tremendous insight into
how they need to change the designs in the future
to make it easier to produce
because you feel the pain directly.
Once you feel the pain, like okay, didn't realize
I was torturing people with my terrible design.
Now I know.
- [Martin] Great let's go to the next question.
- [Shiree] Thank you, our next question comes
from Ben Kallo with Baird.
- [Ben] Elon, (speaking in a foreign language)
sunglasses.
- Hello. - Douglas Adams.
Can we do more Douglas Adams?
- [Elon] Sure.
- [Benjamin] And less everything else.
- [Elon] Sure.
He is one of my favorite authors.
- [Benjamin] And mine too.
Deepak, so after July here,
how close are you to cash flow positive?
- [Deepak] So your question is after July,
how close are we to cash flow positive?
- [Benjamin] Yeah, you have July,
you have July under the books here,
so how close are you--
- [Deepak] Yeah, well, we don't have,
let me tell this point, one, we don't have
July results done but
it doesn't matter exactly
where we are in the month of July.
What really matters is over the quarter
because it depends on deliveries,
depends on production, many factors, so.
We will be significantly cash flow positive for the quarter.
I think that's what really matters.
- [Elon] And like the logic question is like
do we have like a low balance in the bank?
The answer is no, we've got,
we're in no, we're not in any kind of cash shortage at all.
- [Deepak] Yeah, I mean if that's,
that's the simple answer.
- [Elon] Are we running low on money, the answer is no.
- [Benjamin] No, no, no, that's not the question.
It's just as you're here and you have,
you're selling your higher priced cars
for a better margin,
how's the third quarter look for what you said,
for being cash flow positive?
- [Elon] Oh, yeah yeah.
I'd say highly confident of being cash flow positive
and being GAAP profitable in Q3.
- [Deepak] We're sitting here today saying that
based on what our expectation is.
So yes, sitting here on August 1.
- [Elon] Is there anything we know at the end of July,
it's one month in, we're highly confident of
being cash flow positive and GAAP profitable
in Q3 and Q4.
Now there could be force majeure like earthquake,
touch wood, but something like that
or massive recession all of a sudden,
but in the absence of that, of really unusual--
- Straightforward answer. - Macro events, yeah.
- [Benjamin] Thanks, guys.
- [Martin] Great, thank you very much.
Let's go to a journalist question.
- [Shiree] Thank you, our next question comes
from Tim Higgins with Wall Street Journal.
- [Tim] Hi, thanks for the call, question for you.
Do you still plan to make a total of one million vehicles
in the calendar year of 2020?
- [Elon] I think so.
Yeah.
If it's not a million, it's going to be pretty close.
I'd say,
if it's not a million it's probably at least 750,000
or something like that
in 2020.
So, we're aiming for a million, 2020, but
somewhere between half million and a million
seems pretty likely.
- [Tim] Where do you get the capacity to do that?
- [Elon] There's this place called Shanghai.
- [Tim] Okay, Shanghai will be important
for that, that goal?
- Yeah. - Okay.
Where does the Model Y-- - I think so, yeah, yeah.
I think, you know.
I think so.
I think we
can do over half a million vehicles,
actually probably more like 600,000 vehicles
with current Giga and Fremont,
and so they could throw like, you know,
100,000, 200,000,
maybe more,
a couple that came from Shanghai.
We're probably going to be more than 600k
with Fremont and,
and Giga, Nevada.
That's why I think maybe it's not,
I think we have a shot at a million but
somewhere 700, 800k seems pretty likely
given the current what we know today.
- [Tim] Have you made any decisions
on where you're gonna make the Model Y,
anyway you'd like to tell me?
- [Elon] Not yet.
- [Tim] Do you expect to announce it this year though?
- [Elon] Maybe.
Maybe.
- [Martin] Cool, let's go to the next question,
please. - Thank you.
- Thank you. - Thank you, our next--
- [JB] I should say we are hoping to identify
a Gigafactory location in Europe
before the end of this year.
It's not for sure but we are hoping
to do that before the end of the year.
- [Tim] Got you.
- [Shiree] Thank you, our next question comes
from Zachary Shahan with CleanTechnica.
- [Zachary] Hello.
First of all, thanks for the recent retweet, Elon.
I was really impressed with the Model 3
after owning a Model S, so I'm really impressed
how much you've developed since the early days.
My first question was about Conquest sales, actually.
Right before the call we published an article that
Camry sales were down 22% year-over-year,
Prius sales were down 23% year-over-year,
and we're very curious how much
you're pulling from these other cars, other segments.
It sounds like you sort of
answered that question at the beginning,
but can you give anything in terms of what percentage
those top five are in terms of trade-in sales?
And how broad you're pulling?
I know you pull from pickup trucks, from sports cars.
Can you speak a little more
about the diversity you're pulling from?
- [Elon] Actually, what we have right now
is just the top five.
So I'm not sure what
the allocation is between top five
or where it goes beyond top five.
We just sort of
out of curiosity asked for the top five breakdown.
It's just interesting that,
that people are trading
up into a Tesla, so they're choosing to
spend more money on a Tesla than their current car,
just based on the trade-in values.
A Civic is a very inexpensive car
compared to particularly the Model 3 today.
So that's promising from
a market access standpoint.
But of course, long term, we're gonna do
the Model Y and compact SUV.
We're gonna do the pickup truck,
the Semi, the next generation bus.
I mean, we got lots of awesome ideas.
And...
Probably the biggest limiter on our growth
is like how fast can we grow battery production?
And especially cell production
and the wholesale supply chain I think
will be the fundamental determinant of Tesla's growth.
- [Zachary] And regarding the--
- [Elon] We're super fired up to do the set.
I think they're all super cool.
I know Jerome's favorite is the Semi,
and that's pretty wicked, obviously.
And-- - I love it.
- [Elon] Yeah, it's great.
And the, where we unveiled,
we've actually figured, we've made significant improvements
to the design since the unveiling that we had,
and it's really even better than what we talked about.
Probably my personal favorite for the next product
is pickup truck,
and we are gonna just do an amazing pickup truck.
And the Model Y, compact SUV,
probably the most popular car category in the world,
so that's like obviously gonna sell pretty well.
So a lot of cool things.
And of course, Tesla Energy, getting the,
we're kind of cell starved for Powerwall right now,
so we actually had to artificially
limit the number of Powerwalls
because we don't have enough cells.
So we're solving for that very rapidly
and we expect to ramp up
Powerwall and Powerpack production
substantially later this year and early next
and as well as-- - End Recording.
- [Elon] As well as ramping up retrofit solar
and then the Solar Roof.
We now have several hundred homes
with the Solar Roof on them, and that's going well.
It takes a while to just confirm that the Solar Roof is
gonna last for 30 years and all the details worked out,
and we're working with First Responders
to make sure it's safe in the event of a fire
and that kind of thing.
So it's quite a long validation program
for a roof which has got to last for
30, 40, 50 years,
but we also expect to ramp that up next year
at our Gigafactory 2 in Buffalo.
That's gonna be super exciting.
(many talking at once)
If there's a company with a better product roadmap,
I'd like to know what it is,
because we've got some super awesome stuff coming.
Yeah.
- [Zachary] And regarding the Model Y,
there's been a lot of questioning
if you're gonna have the same process
as with Model 3 with reservations,
if you're gonna shorten the reservation timeline
or if you're gonna
have a different process this time around.
- [Elon] We haven't made a final decision on that.
- [Zachary] So a last question then.
Regarding the daily production,
we've been seeing a rise and fall
with the daily production of the Model 3
as you incorporate new performance or white seats.
Can you speak at all, we always like to get
the technical side of what you're doing there,
can you speak at all about what the bottlenecks are
right now that you're working through
and what we can sort of, how we can picture ourselves
in the factory there with you?
- [Elon] All right.
And actually one of the things I love
about your writing is that you really care about
getting the details right,
and you really understand things well,
which is awesome.
But I have to be careful I don't have a sound bite
that is then for those
that don't have a nuanced appreciation of the situation,
that sound bite then gets, becomes front page news.
So it's like, nope, that's not what I meant.
- [Zachary] Yeah, we know.
- [Elon] Yeah, exactly, I'm like, oh, man.
This is like shooting myself in the foot there.
Right now, the biggest constraint on production again,
please, do not make a federal case out of this,
because it's something that's solved like
in a matter of a week or two,
is body production.
So that's why,
you can generally tell what am I personally working on,
that's gonna be the bottleneck in the company so
most likely, so reducing Model 3 bodies.
We've made huge progress in the last few weeks
and in fact I was just told that we were
able to achieve our first
24 hour period where we made
over 800 Model 3 bodies which is pretty great.
So, if it sets us, you know, sets a picture of that
or we sustain that 800 plus per day rate,
and then paint is doing great, Gari is doing great.
Yeah, it's good. - Yeah.
- [Zachary] I've got 47 questions.
But I'll end with a quick request.
Years ago you-- (audio garbling)
- [Elon] Sorry, go ahead.
- [Zachary] Years ago, you warned about
a coming short tsunami,
and it seemed obvious that it was coming,
but the shorts didn't really seem to recognize it,
and then sort of attacked you, trolled you for months,
and then finally, it came.
You again, warned very honestly, I think very directly,
that there's gonna be an epic short squeeze.
We have I think the whole community has a little request.
Don't let the trolls get you down,
don't see the trolls too much,
but we do like it when you tease the trolls a bit.
So use your judgment.
But thanks a lot for what you're doing.
- [Elon] All right.
Well, thank you for your in-depth coverage
of clean-energy technology.
- [Martin] Thank you very much,
and the very last question comes from Galileo Russell,
who represents the retail shareholders.
- [Galileo] Congrats on an awesome quarter.
Really proud to be a Tesla shareholder
with the Model 3 ramping to 5,000 a week.
And I think you may have touched on this but I'm curious.
Will Tesla ever produce vehicles at Gigafactory 1,
maybe the Semi?
And then I'm curious on any manufacturing synergies
between the Semi and the Model 3.
- [Elon] Oh wow.
Interesting questions.
You always come up with really interesting questions.
Really interesting questions that I cannot actually,
the first one I cannot,
it gets so much attention, where we put production.
So I can't answer any,
like where we're gonna put production questions.
Will the Semi use a bunch of Model 3 technology?
The answer is yes.
Jerome, I don't know if you wanna elaborate
on that or, up to you.
- [Jerome] Well, I mean you can already see
in the prototype that we've leveraged
a lot of the Model 3 components, the screens--
- Yeah. - The door handles.
I mean, as much as possible. - The motors.
- [Jerome] Yeah, the motors, yeah, in the prototype,
a lot of the cell technology.
But there are some changes,
and I'd rather not make that public.
Yeah, obviously it's going to be better
than what we showed last year.
There is a lot of improvements, yeah.
- [Galileo] Okay.
So hopefully you can talk more about this,
with the battery project,
with PG&E that was recently announced.
I'm wondering if you could elaborate how you're prioritizing
battery pack between auto and energy storage,
'cause it seems like you ramped auto battery pack
to 20 gigawatt hours in the past 12 months,
but are only guiding for about one gigawatt hour
of Tesla Energy installation in the next year.
So I'm wondering why is Tesla Energy,
given its supply constraint,
like why not ramp up supply to 10 gigawatts?
It seems like the guidance is a little low there.
- [Deepak] Yeah, as Elon suggested earlier, we are,
it essentially makes sense for us to prioritize Model 3,
but we are adding a ton of capacity, cell capacity,
and JB can talk more about it,
that will enable us to dramatically ramp
our energy storage business
as well in the coming quarters.
- [JB] Yeah, you kinda mentioned only one gigawatt hour.
But that's a big number in that business.
And it's maybe on the order of 300%
what we did the prior year,
and we're still aiming at maybe
another three to four X growth for 2019.
- [Elon] These are mad,
at scale, these are insane growth levels.
- [JB] Crazy growth rate.
- [Elon] Yeah, it's not like shipping a software.
This is like you actually need to build,
it's like a lot of atoms-- - No offense to software.
- [Elon] Yes, no, no, I mean like once you build software,
you can obviously have lots of copies,
but like when it's like a lot of really complicated atoms,
man, (sighs) hard.
- [JB] Maybe specifically also your cell,
to the cell-limitation question.
I think this has been mentioned before,
but we also do use some other vendors.
- Oh, yeah. - Other than Panasonic.
- [Elon] Yes, we use Samsung and LG and yeah.
- [JB] Exactly, in our energy products.
So I've heard people feel like this is
kind of a zero-sum game or something with Model 3,
but that is not the case.
And we do--
- [Elon] It's a partial-sum game.
We did shut down a Powerwall cell line in favor of Model 3,
to be totally honest, but we kind of had to do that.
But we're adding new cell lines,
and we'll be able to address that issue very soon.
- [Deepak] I think to put it in perspective,
we are soon tripling our storage.
- [Elon] These are mad growth numbers, mad.
- [Deepak] And it's one thing to produce,
but it's also another thing to install.
- [Elon] Yeah, exactly.
- [Deepak] You need infrastructure
and the people to do that.
So, it's massive scaling,
as very few companies grow at that rate.
- [Elon] Yeah, and one of the biggest challenges like,
we've got a, there needs to be a lot more electricians.
So we actually had an electrician training program.
We're gonna actually have to train new,
you know, people who've never been electricians before
to be electricians,
because otherwise there's not enough electrician capacity
in the United States and the most places in the world
to install Powerwalls. - Yeah.
- [Elon] So it's like we have to actually literally
train electricians and it takes like two years, basically,
before somebody is certified to be an electrician.
So it's sort of like, okay,
we obviously can't grow faster than the rates,
the number of electricians
who can physically install a Powerwall.
That's like one of the limitations.
- [JB] And that PG&E project you mentioned
is an incredibly exciting one.
It kind of is indicative-- - Yeah, it's awesome actually.
- [JB] Of the growth rate.
It has a-- - Yeah, can you elaborate
on that?
- [JB] We can't say too much.
- [Elon] I hope I haven't said anything that's like, oop--
- It is over a gigawatt hour. - Yeah, a gigawatt hour.
That's public, right? - Fully considered.
- Okay. - It is now.
- [Elon] Okay, all right, okay.
- [JB] And just to give you a sense,
it took us five years of growing that business
to get to a gigawatt hour, cumulative deployed.
- [Elon] And there were like so many people
who had said a gigawatt hour
is an impossible number for lithium ion.
Like that's, yeah.
- [JB] I mean, the car business is still much bigger,
as we sit here today,
but the growth rate on energy is faster.
- [Elon] Yeah, if you extrapolate energy growth rate,
well, obviously, if you extrapolate anything,
when that triples for a year,
pretty soon, it becomes the size of the universe,
but long-term, we would expect the energy business
to catch up to the auto business in size.
- [Galileo] Nice.
And then, lastly, I'm really curious, Elon.
Do you have any part of the business
that shareholders should be asking or thinking more about?
Or what do you wish would have been asked on the call?
- [Elon] Good question.
We were trying to anticipate,
actually, I try and anticipate the questions
that are on people's minds,
that's why we have the Autopilot,
the key leaders of the Autopilot team here,
and much of the executive team of Tesla here
to try to be proactive in that regard.
And is there anything--
- Well, I guess, in terms of-- - I think we really
covered a lot, so if there's any, yeah.
- Just very last thing. - Okay.
- [Elon] Your very last thing, go ahead.
- [Galileo] Yeah, sorry, one last thing.
The new fiscal engineering strategy
of profits and cash flow,
and you saying that would last in perpetuity,
sort of caught me by surprise, personally.
And so I'm curious if there's any trade-off to growth
with that new strategy,
or sort of, what's the rationale behind the scenes
because this seems like the biggest change
in Tesla's financial engineering strategy since the IPO.
- [Elon] Yeah, being cash flow positive
and capping at positive doesn't mean like,
that doesn't mean we're rolling in money.
There's definitely gonna be cases
where we're just barely cash flow positive
or barely profitable in some quarters in the future.
But I think it's been a long time,
it's been almost 15 years now.
I think we're at a scale where
the amount of time that it takes
to actually scale up and do things is,
there's a certain, like we're big enough,
where we actually can spend money efficiently
to make things go faster.
So we kind of hit scale with volume production of cars.
And I think we can,
I think this is probably the right thing to do
is to be sort of essentially self-funding
on a go forward basis
and apart from selective situations
where there's say some debt, temporary debt
for construction of a Gigafactory
in China or Europe or something like that.
But apart from that, I think we,
essentially like I don't think we're constraining growth
in any significant way
by adopting this strategy at this point.
It would have been true in times past,
but I think it is no longer the case, yeah.
- [Martin] Okay, I think that's gonna be--
- [Galileo] Awesome, thank you so much.
- [Martin] Thank you very much.
Unfortunately, that's I think all the time we have today.
Appreciate all your questions
and looking forward to speaking to you next quarter.
- [Shiree] Thank you.
Ladies and gentlemen,
thank you for participating in today's conference.
This does conclude the program.
You may all disconnect, and have a wonderful day.
(classical music)
- Wow, okay.
Well here we are a couple hours later,
hour and a half later.
Thank you guys for sticking with me, those that have.
Lots of big stuff there.
A couple quick things that stood out to me.
First off you know, we didn't have any more meltdowns
this time, which are great.
Gali from HyperChange TV got on the call,
asked some great questions.
I, you know, it was interesting to hear them talk
about why they can't talk about production,
and all those other things,
but one of the most interesting things I heard
was that they're trying to get to that 25% margin
on the Model 3 coming up next year,
which would be huge for them,
and also that they're still hoping or planning to get the,
to one million vehicles by 2020,
and I think the guy that was asking the question
was kind of a short or negative on it,
and the answer basically was yeah.
Remember Shanghai?
Remember that giant factory we're building there?
Yeah, by 2020, they'll add
a couple hundred thousand vehicles.
So super interesting call, lots of great insights.
Also earlier on, when they said that the top five trade ins
for the Model 3 were, from January to July,
were the Prius, the BMW 3 Series,
Honda Accord, Honda Civic, and Nissan Leaf.
With the exception of the BMW 3 Series,
those cars are all far more inexpensive than the Model 3 is,
so I think that's what people
are really excited about when it comes to this.
Also, we heard Elon apologize for,
you know, being plight on the last call.
He, you know, had some excuses,
but basically said look, you know, that's no excuse.
And we heard from the Autopilot team
in the very beginning, which was pretty interesting.
I thought that was great that they invited him,
because I think this is a big question for a lot of folks,
is like how is that coming?
One thing I didn't hear was any updates on the roadster.
Hopefully we'll hear more about that.
It sounded like they might have a plan to build that,
but it's still one of those things that is not official yet.
So thanks again for hanging out.
If you guys didn't catch it during the actual broadcast,
let me bring it up on screen.
I'm gonna show you some stuff.
So I am now going to, I'm officially launching, I guess,
my giveaway for the signature black wall connector,
and I already brought it up on screen.
One second, there it is.
Heyyo.
Okay, so this is a signature black wall connector
that I received from the referral program.
So just to be clear, you cannot buy this.
This doesn't have a technical monetary value.
It is the wall connector, which is, retails for 500 bucks.
So it operates the same, but it's signature.
It's this matte black and does have Elon's signature on it.
I think that's why they call it the signature one.
So you can enter to win this.
I'm gonna run the giveaway for 14 days.
It looks like we got some people that have already entered.
And you can do so at Teslanomics.co/BWC.
Let me put that on the screen for you here.
And I'll drag that down.
Oh, maybe that goes up there.
Okay, at Teslanomics.co/BWC, go enter,
and the big catch about this is that you refer friends,
and then when you refer them,
you get triple the amount of entries.
So for each one person you refer, you get three entries.
So I just wanted to do that.
I thought it was cool, something fun to give back.
I hope you guys win.
You are responsible for shipping, is the only thing,
and I will announce the winner one week after,
after the contest ends.
So good luck to everyone.
Okay, that's gonna be it for today folks.
I will be back here on Friday,
where I'm talking with Bryan Birsic,
the founder and CEO of Wunder Capital.
There, we'll be talking about the future of energy.
So if you're into that and if you're new here,
please subscribe and you'll get a notification,
or make sure to click the bell,
and you'll get that notification when the time comes.
So thanks again everyone for joining me,
and don't forget, when you free the data,
your mind will follow.