Transcription
Just delivered one of the biggest quarters in company history. And I don't think the market fully appreciates what just happened. Q2 vehicle deliveries came in at an incredible 480,000 vehicles, crushing Wall Street expectations by roughly 60,000 units and setting a new second quarter record. Energy was another standout with 13.5 gatt hours deployed, continuing Tesla's remarkable growth in mega packs. Meanwhile, Tesla China just posted its strongest month of 2026, and Europe has come roaring back after a difficult 2025. Now, compare that to the competition. While Lucid, Riven, and Ford continue fighting for scale and profitability, Tesla's widening the gap in both vehicles and energy. And as Cern Basher points out, this may be the first time in years that nearly every major Tesla business is improving simultaneously. From auto deliveries to energy, FSD, Robo Taxi, and Optimus. Today, we'll break down exactly what drove this blowout quarter, compare Tesla against its closest competitors, and discuss why this could mark the beginning of Tesla's next major growth cycle. We got CERN Basher here with us today. He's a chartered financial analyst running his own investment advisory firm called Brilliant Advice providing wealth management services. Welcome, Cern.
>> Hi, Herbert. It's good to be here.
>> Okay, blowout quarter. So, did you predict this?
>> Now, I don't really engage in the prediction game. There are lots of other people that do. Uh James Stevenson was the one that was the closest as far as I'm aware. I think he predicted 482,000 or something and so he was very close.
>> Okay. Wonderful. So, first of all, we are publishing this on Saturday and uh I'm going on vacation. I'll be leaving on Tuesdays from July 7th to the 22nd. And thank you again, CERN. You did it last year, you're going to do it again. You're going to host the show. I'm going to leave it in your hands. You got a whole week's worth of shows. You are the host and then Larry Goldberg will take over. So, you should start th uh Tuesday.
>> Well, thank you for doing that.
>> You're welcome. It sounds like a lot of fun. And uh it's the return of Cernbert.
>> Just I hope Cernbert is a little nicer this time around.
>> Okay. We'll see. We'll see what happens. All right. Uh I'll be going to South Korea, so I'm going to enjoy that quite a bit. Here we go. So tell us what happened.
>> Well, it was a good quarter. This was the fourth highest quarterly delivery uh in Tesla's history. It is the highest second quarter delivery. Um and you can see it's actually probably also the biggest increase quarter over quarter.
>> Yeah.
>> Um incredible uh growth from one quarter to the next. Uh this is this is very encouraging.
>> Do you have any reasons why it jumps so much? I mean we know that the first quarter is always historically low. Nobody buys cars January, February. But why did it jump so much?
>> Well, I think a number of things. Um certainly the higher price of gasoline uh helps as a demand driver. I think for Tesla and particularly um you know that they're the best EVs in the market. So there's there's this ongoing trend worldwide towards EVs. That's an underlying trend. And in places like Europe, that was kind of interrupted last year in many regards for Tesla. uh and that really seems to be bouncing back um in places like the United States um you know the uh lack of incentives now um so that where that might have helped maybe other automakers uh position their vehicles in the market now Tesla's competing on its own on its own merits and is winning in the marketplace I think the other thing that's really important and I'm I can't wait to learn more about this in the conference call is the demand driver that is FSD now uh a lot of people are coming to Tesla to get a self-driving car. And in order to get a self-driving car, you have to buy the car, too. You can't buy the software.
>> Gotcha. Yeah, I love it because you're going to show us some data points on FSD growth and uh what your expectations are. A quick side point. Um looks like that this growth, it looks like that Tesla China posted its biggest month of 2026, extending its winning streak to eight straight months of growth. that was up 24% year-over-year, the highest monthly total 2026 follows a 39% year-over-year surge in May. And of course, you really can't compare it to last year, but still it shows you a trend is growing and that's uh that was China. Now, of course, they also export to Europe and that is part of what happened, right? There was the boost in Europe was the big thing. Europe sales rebounded and I think that could have been the biggest one. France, Sweden, Denmark, Spain, regional sales recovery. So almost everybody, all countries went up across the board. I guess maybe not Norway. Uh what was this? This is year-over-year. This is year to date. So you can see the Norway is already at the top of the list as far as EV adoption. So
>> it's hard for them to really improve. Um, you have to remember too that in Europe the price of gasoline is much higher than we have here in the US.
>> Mhm.
>> So that demand driver that is the high price of fuel is just everpresent whereas in the US I feel it kind of comes and goes. Um, so that's a big big part of it of their success in Europe.
>> Okay. So let's go through more of your data points here.
>> Yeah. So in this chart it's just a quarterly uh sideby-side comparison of production versus deliveries just to give people some longerterm perspective. We tend to fixate sometimes on the difference between production and deliveries. And sometimes when it's one quarter if the production exceeds deliveries people say oh my gosh the demand is falling off the cliff or you know whatever the whatever the example is but if you look at this over um a long period of time and if you go to the next page um if you put the two on top of each other this is a trailing 12 month production and deliveries there's not a whole lot of daylight between them the lines pretty much sit on top of each other in other words Tesla delivers or sells every car that they make maybe not in that particular quarter But o over time.
>> Yeah, their inventory days is still pretty low. It's in the teens, I think. Don't know what it is exactly, but it's the lowest, the best.
>> Yeah, I calculated about 16 days. Um, and and the interesting thing about that is when a vehicle is made in the factory, it doesn't instantly get delivered to a customer. And I've calculated that there's typically about um 3 weeks on average for a vehicle to be delivered to a customer. So in reality, Tesla's actually running right now at a negative inventory days of about two.
>> Basically, they've got it dialed down to the thing. They know exactly the purchase and then they know how to get the car out.
>> It's amazing.
>> It's amazing. Okay, so that was a huge thing. Why do you think that the um before we move on just a little bit more here, why do you think that the uh estimates were so low? Why did they This was the 60,000 cars is a huge gap.
>> Yeah, that's an interesting point. I don't know that Wall Street really pays much attention to Tesla at all. It certainly didn't put much effort into those estimates. There's a lot of people in the community that do a far better job. U I think Troy Teslike was at 460 and even he was low and there are other people with with, you know, similar methods and so on that that were in that ballpark. And so for Wall Street to be way off, it's kind of shocking. But again, the the the most knowledgeable community around Tesla is not the professional investor. It's been the retail being the retail group. Um, and it's amazing to be part of this community because the the depth of knowledge and all the different corners of Tesla's business is absolutely amazing. Uh, not just in delivery prediction, which is, you know, kind of fun and kind of cool, but on the on batteries, on all kinds of other aspects of Tesla, it's pretty amazing. The Tesla retail community really is like no other.
>> All right, let's keep going.
>> Yeah, so this is an interesting one, and I wouldn't put too much stock in this because it's it's looking at the uh production capacity that's stated by Tesla in their in their quarterly reports. And you can see that there's stair steps along the way. It's not like a linear line. And so some of these when you look at factory utilization percentages, it can get out of whack. Um, you can see there in 2020, 2021, it was flat. Then all a sudden there was a huge jump from just over a million to almost 2 million as capacity. Since then that's gone up and lately it's come down a little bit because we need to adjust for the Model S and X line being taken down. So the state of capacity for Tesla's factories right now is 2.25 million and based on the trailing 12 months production u we're at about 77% factory utilization. Now again is 2.25 million the right capacity number? I don't know but that's what they're reporting to us.
>> Yeah, that's good. What do you think the Model Y L is going to do now that they've announced it's going to be um produced because it wouldn't it wouldn't it be in the same factories?
>> Yeah, and that's interesting, isn't it? So, are they going to make less other Model Y's or is this can they ramp up production in some way that this is incremental? I think that's going to be interesting to see how that works. Um, and I'd like to learn more about that. Um, I'm encouraged by the fact that they're introducing in the United States. I'm kind of wondering, you know, what the demand will be like for that vehicle, but certainly there are plenty of people that seem to want it. I've I've heard a lot of chatter on X about about that. Uh so I think it's encouraging that they can do that because it seems to be a wellreceived vehicle, you know, globally.
>> Yeah. The reason I'm bringing that up is that uh we know that Model Y is already being sold in China and it's already being sold in Europe. And you saw that I just showed you that China is like, you know, gang busters and Europe also turned around.
>> Mhm.
>> But Europe turned around so much that Giga Berlin, this is Andre Theorig, he's the plant manager for Giga Berlin, says we're expanding again. So they've increased the production from 5,000 now to 6,200 per week starting from July. That's another 1,000 new jobs. So, you know, they had already increased it to 7500 per week. Um, we told the team we're going to increase it uh starting to ramp in October. They're hiring another thousand. All of a sudden, just a few months later, they come back and goes, "Oops, we were wrong. We need to increase it another 20%." So, listen to this. Okay, they're increasing another 20% to 7500 vehicles per week this October. This is in addition to the 20% production output increase previously announced just a few months ago. And they said, "We're going to hire a,000." Now, they're going to hire another,000. The total total is going to be 3,500. Now, that's both uh vehicle and battery manufacturing. But my point is, why do you think that they kind of made a target increasing by 20% and they go, "Oops, we missed our target. We need to increase yet another 20%, another thousand people?" I have a feeling it's the Model Y, but I I don't know because Europe, you wouldn't think the Model Y would be dominant there.
>> I think it's just demand in general. Again, the fuel costs in Europe are insane.
>> Yeah, that's it. Yeah.
>> Um, EVs are now part of the culture in all these countries, and there's some countries that have been lagards and some countries that are leaders. And I think everybody in Europe is converting to EVs. The United States is really kind of on the slow end of that curve globally for a large auto market. Um, we too will probably have a moment like this where Tesla won't be able to keep up with demand.
>> Well, I think that's what's happening. That's why I think that your chart that you just showed where you've got the utilization um that's now and that's no Model Y. So, I think you know in the United States I'm expecting the Model Y to be a gang buster. Now, whether or not it uh what do you call it? Uh cannibalizes the Model Y, for sure. Some
>> some
>> I don't I think it's a Yeah,
>> but the good news about that is it's a cannibalization potentially, but it's at a prem more of a premium price.
>> Yeah,
>> that's the ideal cannibalization to have is replace something that's at a lower price with something that's at a slightly higher price.
>> Well, you are on fire today, Cern. Did you get your rest? You slept last night.
>> A little
>> couple hours sleep last night.
>> Just a couple hours. seem to know what you're talking about.
>> Okay.
>> Um I love these charts. Uh this is the cumulative uh production for Tesla since the beginning of time. They are now knocking on the door of 10 million. Um they are at 9.861 million in production. And the next chart Herbert is deliveries. They're at 9.721 million deliveries. So sometime in Q3 both of these curves will cross 10 million. My fearless prediction is that production will cross 10 million on July 29th at 2:33 p.m. Eastern Central time. Um, and and deliveries, one lucky customer will be the 10 millionth uh customer >> August 26th at uh at 4:20 p.m. Central time.
>> If you want to be the 10 million, when would you have to order? So, if you told me it was 16 days, could I go that way? Could I do that?
>> Good question. That's going to be interesting game. And and what a lucky person to be the 10th millionth Tesla buyer.
>> Oh, they'll do something. They'll do something.
>> I hope they do. I hope they do.
>> I I predict there'll be a customer in Australia that is the one that'll be the 10th millionth.
>> Okay. First of all, you've been pretty accurate when you come to the short term and you're calculating you you've been pretty good about that. So, you are now saying August 26th and for the 10 millionth deliveries.
>> Yeah. and July 29th for production. Give or take a few days, a few hours.
>> I can get the production one. I can get that one because that's like clockwork. I don't know about the deliveries, but okay.
>> The beautiful thing about these predictions, Herbert, if I get it right, people will remember. If I get it wrong, no one's going to remember. So,
>> no one remember. Okay. Well, maybe I'll take a clip and just
>> Right.
>> All right. So, August, I mean, we're talking next month, man. That's next month. 10 millionth. Are you do you think that that's Yeah, it sounds great, but is that below expectations?
>> Well, it's below expectations in terms of where the company said that they would be, you know, all those years ago. And of course, a lot has happened since then. And you can blame Tesla if you want, but you can also blame other things that have happened, the the the tariffs, the the changing in EV incentives,
>> you know, all kinds of stuff, right, has changed for the company. And also a shift towards autonomy. uh the focus now instead of coming up with new models is cyber cab and that will do far more for people uh in the US and globally to reduce their transportation cost than it would be to sell them a lowcost model car that they have to drive.
>> Yeah. Do you uh do you believe and I believe this which is very it was written in the Walter Eisenstein book Elon made a decision right that we're going to go autonomy now which means that I'm not going to build Giga Mexico pulled back of course there was also the recession there was also the interest rates all that was an issue then he said we're not going to create a model 2 we're not going to create that lower small compact car because we're going to do the subc cab and we're just going to go do the cyber cab and that's it we're just it's hell or high water. Now, that probably and did impact sales. We had he sold less cars and everybody's freaking out because they were expecting more cars. And so, yes, their decision not to sell a new variant of car and you know how they even promised that there will be two more affordable vehicles. I think even those two were then pulled off the table too. So, initially there was a a compact car, $25,000 and less. Even Elon was promoting that at one point.
>> Yeah.
>> Then it became, "No, we're not doing that anymore, but we're going to have two more affordable vehicles." They showed it earnings call. Then they don't do that. I think it's because he basically said, "We are going to go all in."
>> I think that's right. And Elon is very uh skilled, adept at adjusting the company on a dime when he sees things change. And he usually in hindsight has been spot on. He was the one calling for for the recession and auto sales kind of a year before it happened. He was warning about it. And a lot of people were saying, "What's he what's he talking about?" And lo and behold, he was right. So, he has a an an eye and ear for all this for all this. And um I think he made the right decision. Although in the near term, it's certainly been been tough.
>> Yeah.
>> It's painful for us investors because uh people want why don't you build more cars? But uh the reality is we're going through Roll with Taxi now. All right. Quarterly deliveries 10 million. It's coming.
>> So this is where we get into a little speculation. And so this is my chart that shows the active FSD subscriptions. All the data on this chart was uh provided by Tesla. That's the dark blue numbers. Okay. The number at the top is what I would like to see for this quarter. That is not yet reported. We don't we won't yet know this number until they report on July 22nd. The light light blue numbers are kind of where I filled in the gaps from what Tesla has so far shared with us. Okay. So only the dark blue on this is actual numbers. um they've really just started reporting these FSD subscription numbers. So I would like to see total FSD subscriptions of 1.6 million. That would be up from 1.28 in the first quarter. That would be an increase of 320,000. So of the 480,000 vehicles that were sold, a good portion of those got FSD, but also you can get more FSD subscriptions from existing vehicle owners, not not just the new ones this quarter. So that would be a 320,000 subscriber increase in one quarter. That would be a big number. I I would be very impressed if they did this.
>> You're guessing at this, right? Like
>> this is this is a this is what I would like to see. Yes.
>> Okay.
>> I'm not predicting this. I'm just saying I'd like to see this. This would be amazing.
>> Okay. I mean, we did hear say he said that the FSD subscription is going I can't remember his words, but it's like gang busters or something like that that it was some sort of very very bullish about the fact that it's being adopted significantly.
>> So, this is me trying to channel what Lars means. And if it means 1.6 million in total, here's what it looks like on the chart.
>> Okay. Now if you go to the next page, it would mean that the uh total take rate if you look at the active FSD subscriptions versus the cumulative deliveries of almost 10 million vehicles would be up to 16.5%.
>> And you can see that that would be a meaningful uptake from Q1, which was a meaningful uptake from Q4 last year. So I might be optimistic on this. If I am, that's fine. But I'm just showing here what what would be amazing if if they did achieve this.
>> Well, the 10 million cars uh have a lot of very old cars, right? 2012 and so forth.
>> And then of course they have a lot of hardware three cars and you really, you know, you can get FSD in hardware 3 cars, but it's not very good. It's the version 12. I mean, it's okay, but it's not uh perfect. I mean, it's actually pretty good. I wrote it in LA and I was shocked how good it was, but it's certainly not that big leap of 14 where you felt like it's solved. But now that 14 light comes in, now this is Q2. You're you're basically saying this is what's happened already, not what's about to happen.
>> What's about to happen, I think, is going to be even more amazing than this in Q3 and maybe particularly Q4
>> as it reta as it pertains to hardware 3 vehicles.
>> Yeah,
>> this is just just AI4 vehicles. um from new buyers of the 480 that that purchased, let's say half of them got FSD and then a whole bunch of existing vehicle owners u that brought cars in previous quarters decided now to get FSD because they've heard it's so amazing they've experienced it, they're now subscribing to it.
>> Yep.
>> So this is the cumulative take rate. Let's look at what the incremental take rate would be. It would be 37%. So if Lars said that, you know, it's amazing that the FSD take rate,
>> this is the kind of number to me that would correlate to something like that,
>> right? That 37% of the buyers of the vehicles delivered this quarter also subscribe to FSD.
>> Again, this is you guessing this number though, right?
>> Correct.
>> And and what did you do? Just took a look at this slope and said, "What happens if it goes up?"
>> I had my methods, Herbert, but it is a pure guess.
>> I know. You took a ruler and you just like did that. Okay, that's what you did.
>> There's some voodoo involved. There's all kinds of weird weirdness involved in terms of coming up with this number, but basically I think the best way I can explain it is this is what would be in my opinion what I'd like to see and what I would consider to be pretty amazing.
>> Yeah. Again, not a prediction, but just, you know, hearing what they're saying about it that FSD is now a demand driver and and hearing what Lars said about how an incredible demand driver it is. This would kind of correlate to those kinds of statements.
>> The only concern I have is the hardware.
>> Oh, I see. Cuz because Yeah, because because AI4 is available in both Model 3, Model Y's. It really is now
>> very capable. It's very, very good. This is incremental FSE take rate.
>> Yeah.
>> And I and I think this right this is a right number that would be um appropriate number. I don't expect it to be more than 50%.
>> Oh
>> and uh and I don't expect it to be you know yeah this is a good this is actually would be a shocking number honestly.
>> It's this is about a third to 40% in that range. It seems reasonable with what we're hearing what we're seeing. I personally think you would be it would be silly to buy a Tesla and not get FSD because that is an amazing feature uh and probably a life-saving feature for many people. So why would you buy a Tesla and not get FSD and the incremental amount that you're paying you know $99 a month? It's it's just I don't know. It just seems to me that you're getting so much for that incremental dollar.
>> Mhm. Nice. Okay.
>> Okay. So let's not forget energy. This was the second highest uh deployment quarter ever for energy. Uh 13.5 uh gawatt hours deployed. Now the challenge with this business is this is so lumpy and you can see in this chart it goes up and down like crazy. The trend is certainly going in the right direction. Um, I actually expected more this quarter, but it's impossible to forecast because the deployment number hinges upon Tesla's ability to uh have these units turned on and active and that's not in their control. So, it may well be that Q3 this year is a bigger number or Q4, who knows? But it's headed in the right direction. Uh, this is a great business. Um and if you look at the next chart, the trailing 12 months uh storage deployed now is 49 gawatt hours, which is pretty amazing. This is a new high. Okay, so this is this is smoothing out some of the quarter toquarter average. Some people look at this chart and say, "Oh, growth is has slowed." Well, let's let's give it another quarter and see where this line is. Okay. And then a chart that I like is the uh cumulative storage deployed. We are approaching 140 gawatt hours. I think it's 132 right now, which is which is a lot. Um so that's encouraging. Um and then if you look at the next one, this is compared to what I estimate the capacity to be. Now Tesla in the last quarterly report I think actually brought down the capacity of the China mega pack factory. I stuck with the old number because if they had they stated that was the capacity once. I don't think they've taken anything out of that factory. Maybe everything is not quite operational yet but basically they're they're using about 54% of their state capacity before that adjustment to the China megapac facility. Um, now we are comparing deployments here to capacity. Ideally, we should be comparing production to capacity, but we don't have the production numbers. So, for all we know, the production versus capacity is a lot higher than this. What we're looking at is a very lagging number of deployments. And of course, it's a 12-month average we're looking at here, too. So, this is, you know, an imperfect measure. over time. I think it's it's helpful to look at, but um you know, I don't think you should say that they're only using 50% of their capacity. I don't think that would be an accurate statement.
>> Well, well, let's just go through it. You got Lethrop at 40 gigawatts per year. That's uh that's already at scale.
>> Yeah.
>> And then Houston or sorry, China, what what's your estimate of China? Is that at scale at 40? But although some people are saying that that can go up.
>> Yeah. But I think then they bring that down to a lower number in the last uh earnings tech. Uh and I'm not sure if it was 20 or 25, something in that range.
>> So it's still ramping
>> apparently.
>> Okay.
>> Yeah. And this is again Yes. This is before Houston and and the mega block capacity.
>> Yeah. When is Houston Q3, right? Yeah,
>> I think so.
>> Yeah. Yeah.
>> Yeah.
>> And it's going to be mega blocks. Okay. So this is good. I'm happy given the fact that uh you got a you know a factory and a half. You're gonna get China up to speed and then all of a sudden Houston's up and that's going to get going and by next year that'll be up and then guess what? They'll announce a new one, new mega pack factory.
>> And again, this deployment number seems to be a very laggy number.
>> There there may well be Megapex that they produce a long time ago. They shipped them to the customer site, but because it's not turned on and operational, they're not counting as deployed yet.
>> I like this chart uh from Roland Poli. Roland Poli on X. At Polei on X, sorry, Roland Percher and he's at Poli on X. So just this beautiful table here, 2025. Here is second quarter. So like you said, it's the largest second quarter ever.
>> And that's great. Uh the first quarter was below expectation compared to certainly the first quarter last year. Uh second quarter now has put the first half ahead of last year's first half.
>> Yeah. And then we've got the red and the blue bars to add. And I I'm optimistic that Q3 and Q4 are going to be pretty strong.
>> And then this is this is what I'm saying. I mean, if we're 40 40 gigawatt, that's with almost well. Okay. Sorry. That's production, not implementation and and all.
>> Okay.
>> Yeah. But that's a nice way of displaying it kind of stacking the quarters like that. So, another thing that I like to do, Herbert, when I put my charts together is sort of look at the combined businesses as either, you know, um, uh, an auto business or an energy business. So, here's here's my analysis of looking at Tesla as just an auto business. So, they've got the cars, got the EVs, and the trailing 12 months deliveries is 1.753 million. And you can see that that's kind of flatlined now for the last 3 years. The peak on this was 1.808. Okay, so they're they've gotten to a certain level, kind of plateaued. Um, that's the car business. Okay, but you've also got mega packs or the energy business. And we can convert the energy deployed into EV equivalents. And I'm using 75 kwatth uh battery packs as my conversion. And so this quarter uh over the last 12 months, it results in 653,000 vehicle equivalents. That is the energy business. If you can if you consider those to be cars. Okay. Picture the mega pack with wheels, right? Um that's how many vehicle equivalents that the energy business is producing. So pretty sizable.
>> Yeah.
>> 653,000 if you're only making 1.8. That's close to half. Almost getting there.
>> Yeah.
>> Yeah.
>> And then what I'd like to do is combine the two. And what's interesting about this, they hit a record >> number of energy EV equivalents.
>> Yeah.
>> Over the last 12 months of 2.406 million, a new high. Now, you could say the growth isn't that great over the last three years, but nonetheless, this is a new high in total energy EV equivalents. If you converted everything to a car, that's great. That's that's some progress at least, right? It's not like they're not making progress. I know people are frustrated about the auto business. Energy is is doing great and the whole company if you if you look at these two together is making progress and I think this curve is going to be really interesting to watch particularly as we ramp up Cyber Cap and ramp up Optimus. This is going to be really fun to to track this number
>> because you've got EV equivalents for both of those.
>> We I'll calculate that. Yeah.
>> Yeah.
>> Yeah. Now the other way to look at this Herbert is to treat everything as a battery. Look at the energy equivalence instead of EV. So in this case I'm converting cars to gawatt hours. So the auto business has delivered 132 gawatt hours of energy over the last 12 months and the energy business has delivered deployed 49 gatt hours of energy. Okay. So the culmination of that I think was what 181. Uh again that's a new high. So depending on whether you want to look at this as a car business or a battery business, here's here are the two ways of looking at that combined.
>> What about profitability or revenue?
>> Well, that information will come with the quarterly report. Uh unfortunately, we we can't make any new statements about that until we get those numbers on July 22nd.
>> Okay.
>> Yeah. But the energy business has been more profitable, I think, on a on a kilowatt hour basis than the car businesses.
>> Yeah. But by but the mar right the margins on energy the gross margins are much higher right now in energy than they have been in the car business. And then this is looking at cumulative. So we are getting very close to one terowatt hour of energy deployed by Tesla over its lifetime. That's a big number. Uh I think we'll get there in the next let's say three quarters something like that. Okay. So that'll probably be a 2027 event.
>> Yeah. What month? What hour?
>> I need to calculate that. Good question. Um, for now I would guess u Valentine's Day in 2027.
>> There you go. Bloody bloody bloody Valentine's. All right. Um, I like the way that you do that that I really do appreciate that that you compare it because um, people think of Tesla as a car company despite the fact that energy is significantly contributor and then uh, margins. But if you just go ahead and pretend they're cars, here's how many cars we would have sold. If you pretend they were all batteries, here's what we would have done. I really like that. Yeah. Puts everything in perspective. The company's growing because it's not just cars, it's cars plus energy and two together means it's growing.
>> I think eventually we may look at it as a compute company and we can analyze it on that basis.
>> Nice. Smart. I see you.
>> Particularly when you put optimist,
>> you did definitely slept last night. Oh my gosh.
>> And of course the mega pod as well, right? That'll just be a measure of compute.
>> Banger after banger here. uh you know the difficult part I think for Elon and the team is deciding where to put the resources the the battery for example or the compute because you know one can make you more money than another and maybe you know what I mean like maybe they'll go I don't need to sell cars anymore I'm going to have it all cyber caps number one that's one decision another one is forget the cars I'm going to take that battery and make them megapods or AI data centers you know
>> yeah I think the answer is all the above because at different points in time that are all valuable, they're all needed. We will need transportation. Um, yes, cyber cab I think will be the most profitable part of the auto business and robo taxi obviously. Um, but you know, there are some people that are going to want to drive vehicles. And maybe the gateway the gateway drug to cyber cab is to buy an EV.
>> You get comfortable owning an EV, you ride a Cyber Cab, you eventually get rid of your EV and sell it to somebody else. So,
>> you think it's the opposite? It's the opposite. You decide to take a cyber cab and it's a Tesla Model 3 or you go, "This is a Tesla. That cyber cab." Okay. Then you check out their cars and you go, "Oh man, I better buy it because it drives itself."
>> Maybe. Maybe it's both. Um I think as long as you've got the capital to do it, you do it. If you have to make a decision like for example, where do we build the first 1 million robots and you say, "Do we build a new factory or do we repurpose an existing factory?" Then you get to those capital allocation decisions where you cancel the SNX and you know the SNX made Tesla money.
>> That's a good example right there. Did it make good money? Because I mean there were tiny numbers under 20,000.
>> They were making profit. The question is is it is it material and it really wasn't.
>> Yeah. But that's a good example right there. They got rid of SNX as badly as they don't want to because they're you know important products. They got rid of them. Move on. But you could argue like like the Tesla shop. Why do they bother with the Tesla shop? That's not a needle mover for anybody. But it just enhances the brand. You got people wearing clothes around, right?
>> But they're not.
>> If anything, it's a money loser. Yeah, I get.
>> Yeah.
>> Um Yeah, I can see the one day that people like, you know, our great grandchildren will look back and goes, "What? Tesla was a car company?" It's like there's some funny companies like I don't know I can't name them but like Philillips used to be a typewriter company or something like that like when it first started you know like well I think IBM was but you know what I'm saying like it was like some weird thing where when it first started like I think Samsung was some sort of rickshaw company you know something ridiculous.
>> Well I think I think the classic one in in today's memory is Amazon as a book company.
>> Sure.
>> And yeah they still sell books but but no one's going to really think about that. you know, how how many books do you buy on Amazon now versus everything else that you spend money on there?
>> Yeah, probably more groceries than books at this point.
>> Yeah.
>> Um, talking about the car company, let's just round it up because Q2 came out and you've got um Lucid reporting 4,000 vehicles in Q2
>> up 20%. They produced 4,000 4,700 vehicles in the same period. Lucid also or delivered 4,000 but they deliver they produce 4,700. Lucid has also announced that the company's replacing a CFO this guy goes well they also said their sales were limited by supply chain issues again. That's their that's their favorite answer. They're losing a billion dollars. Um I want them to succeed. I really do. Um, you know, but just my
>> Tesla's showing us this EV business is so difficult as as frustrated as we are that, you know, Tesla's not selling 20 million vehicles a year or whatever. Um, it's just a hard business and there's a lot of things that have gone on um at the company level that makes it difficult, but also just at the economy and the global level, supply chain disruptions that I suppose that's a real thing. Now, there's things you can do, and I think Laura's talked about that in your interview with them. You've got to anticipate the stuff and not everybody's good at that anticipation. Like Lars said, you got to anticipate a fire in the tire factory or a fire in wherever or earthquake somewhere. All these things just happen all the time. And so it's a weird one-time thing, but for these companies with their complex supply chains, it's happening over and over again every single quarter, something somewhere. And that's hard for a small company to navigate. It's probably a little easier for a company like Tesla.
>> That's a good point. I I want to just point out that you know that in that Q2 Lucid McGuff sold 4,000 cars and here's Rivian selling 12,000 cars in Q2 up 14%. Um you know and uh Ford sold 9,000 EVs in Q2. Now those are EVs so I get you. But I'm just saying that, you know, when you compare these guys to Tesla selling 460,000 480,000, it's um it's not even the same ballpark really.
>> It's not even close. And with Ford, if you just bring that chart back up again, you know, it's a 40% decline. Um so, you know, the Mach E 31% year-over-year decline. The F-150 Lightning discontinued, you know,
>> because we lost the um we lost the incentive, right?
>> Yeah. And so that was tough. Even with the incentive, they weren't making money. They were losing a ton of money, but this makes it even worse. And so their commitment to this is going to be severely challenged. I I don't think that Ford's going to continue to make EVs. I don't see how they can.
>> Yeah.
>> Which is unfortunate. It really is. And same with Rivian. I'm I'm glad to see Rivian's raising their guidance. That's great. I think they make beautiful vehicles. A lot of people like them, but longterm I'm really worried about them in terms of surviving as a company
>> specifically because they were we had the EV race. Here's Tesla, then you've got all them all the current companies trying to make EVs, the Chinese and so forth. Tesla comes and then these guys are struggling with EVs and yet now Tesla's going to roll out full self-driving. It's already reached a point where it's becoming you believe it's a demand driver. It certainly will be a demand driver if it wasn't this quarter within two quarters especially when you start seeing cyber cabs everywhere. So maybe give it give it six months, give it a year from now. What are these car companies going to do when somebody's about to buy a car now? I it, you know, it's going to take a while for everybody to even realize this is the case. It's happening. But it that is a transition we're headed. 2 3 years from now, somebody goes to buy a car, they're going to go, "Does your car self-drive?" They'll try to fool you and they might trick you. But
>> it's also puzzling to me. I don't I don't get this because Rivian actually has positioned themselves very well. Their vehicles are different than what Tesla offers. It's a different lineup.
>> Yeah.
>> They're not even competing for the same customer for the most part. Okay. But Rivian yet has made the decision to create self-driving software on their own. As an outside observer, anybody would any paying any attention would recognize how difficult this has been for Tesla. And EV has the hubris at this point to go it alone and figure this out on their own. I don't know what they're thinking. Why wouldn't they have gone to Tesla years ago and said, "Hey, we want to license this. Help us out." Tesla would have gladly have done it. I just don't know at this point why they're sinking dollars into developing this themselves. I I don't I don't know that they can get there. They might they might get a nice, you know, sort of supervised assistance kind of system, but they're not going to get all the way to fully autonomous where Tesla is anytime soon.
>> Yeah, I I get what you're saying because I think Rivian is not just words. So I think 90% of the automakers out there are words. They're just saying that we actually do this so that their customers believe that they're in the game and they're the leader or they it's coming so don't don't drop the brand yet kind of thing. It's just words because they don't really have a program. But Rivian I think was chosen by some other company to you know to be its partner. Right.
>> Well Amazon originally for the delivery truck and that was a very successful program.
>> Yeah. They made was it 90,000 or 100,000 delivery trucks for Amazon. Fantastic.
>> Yeah.
>> Um but on the the vehicle side, beautiful vehicles. I I think they're great. They look cool. A lot of people like them. But on the self-driving front, I'm sorry. Like where where's everything that Tesla has built? Where where's their supercomputers? if they think they can shortcut that at this point by using Nvidia chips or whatever it may be. Maybe maybe to some degree, but that long tail that Tesla has had to go through now to to really FSD.
>> Yeah, but let's say if you're trying to raise money and you don't have this exciting thing, we're also going to have our own self-driving and we are a second leader something that
>> Well,
>> you're not going to raise the money.
>> I hope I'm wrong. I hope they figure it out. That would be great for them. I just don't see it happening because this again this road for Tesla has been longer than anybody expected and for Rivian to think that they can somehow shortcut that it's going to be tough.
>> Is the $99 a month enough revenue for Tesla?
>> It depends, I think, how you view that. Um, in my view, you've got a life-saving technology. I would want to see it put out to the masses as cheaply as possible.
>> Oh, I gotcha. Okay.
>> Right. Or you could try to maximize your profit and charge more. Fine. Maybe you could, but this is a life-saving technology. Ultimately, the game, I think, is autonomous vehicles. Again, as I said, if this is like the gateway drug to autonomous vehicles and get people used to self-driving vehicles, then that's great. It serves its purpose. I don't think long time long term FSD revenue for Tesla is going to be huge anyway.
>> Yeah.
>> And as I've showed in my cyber cab model, Tesla can make money in three ways. They can charge for the car if they're selling it to somebody. they can charge for FSD or they can charge more or less per mile and the take rate and all that stuff. All those variables that they have and the FSD part you can you can put that at zero and Tesla is still massively profitable. So in my view FSD is you should just price it so that you're driving demand with it that that people see that it's the safest thing and if I want to be in the safest car in the world it has to be a Tesla because it has FSD. I think that if it replaces insurance, car insurance so you know once they get there and I know that uh L um um you know companies well Tesla's offering insurance here in Washington state coming soon where I live in a month or by September October let's knock on wood there but they have two price points one is uh insurance for just regular car insurance but another one is if if you're using FSD so they're starting to copy Lemonade. Yes,
>> Lemonade is already saying it's 50% off if you use FSD. So, depending on, we'll see what the numbers are, but if they come back and they truly are 50% off or even, you know, eventually 90% off or something like that, that $100 of cost of FZE is really just made up by the reduction in insurance. And then it's pretty well free.
>> If you wanted to, if they were licensed to sell insurance in all states, you could just make that part of your insurance package, right? you you buy Tesla insurance and as part of that FSD is included and that's great for Tesla because it makes their vehicles that much safer and less likely to to be inclusions.
>> I think that was the plan. But then uh the part I'm very um you know conservative on pessimistic on is this idea that they're going to allow us customers to put our car into as robo taxis.
>> I think that won't be until late next year if not two years from now. But
>> I think it may take longer. I do think it solves a long-term problem in terms of building out a massive infrastructure. If you can distribute charging and cleaning, then that's really wise you don't need as much infrastructure in a particular city, right? Because when you run the numbers on what kind of, you know, car wash facilities they need or how many tire changes they're going to have to do on massive fleets in these cities, it you get some big numbers. It's a lot of infrastructure to build out. So, the one way to shortcut that is to distribute it to to individual owners. charge it home. The person is responsible for cleaning it once a day or whatever it is. Or maybe not. Maybe Tesla has a cleaning facility that the car goes through before it goes home. We'll have to see how that plays out, particularly if they have robots. That would make sense. Um, but that helps Tesla reduce their capital cost. Um, it also, as I've said many times, I think it helps inoculate Tesla against the political risk of a company having a monopoly on transportation.
>> Yeah. If you bring millions of individual owners into the into the fold and they become part of this Tesla network, now you've got a voting block of people that are financially benefiting that can go to the government and say, "Hey, don't mistreat Tesla. You're messing with our incomes." That's a smart move in my in my book.
>> I think that makes sense.
>> Yeah.
>> Okay. Thank you so much, CERN. That was fantastic. I appreciate that. Um Yeah, this is good. you covered a lot of ground and uh I like the way you have different thinking about how you look at the sales. I think important that people follow it the way you do.
>> Thanks everybody.
>> Thanks Herbert.
>> I've created a website that is the most comprehensive resource for the Tesla investor. Please check it out. Simply go to my website at herbert.com.