Tesla Q1: The Most Insane Valuation Disconnect EVER ⚡️⚡️

All right, we're live. Welcome everybody. We're here today for Tesla's Q1 earnings call. This, uh, specifically is a very important event. That's typically Q1 is when we get guidance for the rest of the year from the company. So, this is what we're going to do today.

Uh, right now, we're going to start the pre-show and in about half an hour, this is when Tesla will drop the financials deck. We'll take a look at that, tear it apart, and examine it, analyze it as soon as it drops. So, that should drop in about 30 minutes from now. And then about an hour or two hours from now, that's when the Tesla official event happens. We will live stream that right here on this channel. And then afterwards, we will do a post-show analysis.

So today, who we'll have here, we've got James from Invest Answers, finance and stock analysis. We got Larry Goldberg here, business and energy. We got Nick Gibbs for investing and stock analysis. And then shortly, we'll also have Jeff Lutz, Alexander Mertz, and Cernin Basher, and maybe Joe joining us as well, and everybody here. This is a power panel. Everybody here brings a lot of expertise and so forth. So let's start with, uh, the team that's here right now. What are you guys expecting? Let's start with you, Nick, because you, I've seen you have two posts in the last day or two saying that this is the most important event in recent history for Tesla, or some words like that. Are you, were you just hyping it up, or do you really believe this is a critically important event?

>> This is the most important earnings we've ever had to date. This is the, there's not been one more important than this one. So, yeah, a little bit of that hyperbole because the next one will be the most important one after this one.

>> Okay.

>> So, uh, but I, I do think that this is a critical one. Uh, I think it's an exciting one is a better way to say it. We are at a, I think, a moment in time where we see, to steal Kathy Wood's words, a convergence of of things happening at the same time. And if we look more narrowly at Tesla, we have them expanding for the first time ever into two cities at once. Not just one city, two cities at once. And doing so unsupervised at the same time that it appears CyberCab line is locked and loaded, ready to go. So everything's at kind of like this peak pressure point moment for what the future is going to be. And the fact that they did all this before the earnings call, I think it's exciting because hopefully it means that they'll open up the aperture a bit on what they're willing to discuss and give us some insights into on how this plays out moving forward, you know. So we know the CyberCab line is up and running. We know that they obviously have some confidence to roll out to new cities unsupervised out the gate, which last quarter they guided towards going to new cities supervised first for three months and then going to unsupervised. So things have changed, confidence has changed, and so I think this is just be a very exciting earnings call.

>> Wow. Okay. You have a very good opinion there. Uh, James, what's your thoughts about everything?

>> You're on mute.

>> You're on mute.

>> Yeah, we're on the verge of a huge inflection point. Everything is set up, but and it's great that Wall Street still doesn't realize it yet. And we'll go through some of the, some of the things that I, I think are just so profound right now. What I've done as well, uh, in preparation for this, just to give the audience some red meat before we jump into the big stuff, is look at some comparative valuations and talk about seasonality of where we are for the stock right now. Yeah, there's the seasonality slightly popped up. You read my mind. So, basically, where we are at the point of time, April, every year, going back 10, 15 years, it's literally the low point for the year for the stock. So, if you're feeling pain, but if you're buying LEAPS at 330 bucks 2 weeks ago, well done. Uh, it was priced at 390 now, not bad. Is it going to go back to all-time highs? Yes. Is it going to go back to all-time highs soon? Probably in the next 3 or 4 months. Not financial advice. That takes us to $499. But once the market starts seeing all of the goodness, and I'm talking maybe Optimus showcasing demo, maybe, uh, some excitement around SpaceX, and people, you know, we, we'll talk more about space too, because space is actually a big part of the story, not the merger or the acquisition. I'm going to make that very clear, but the actual leverage and synergy with space is huge. And then we'll look at some comparative valuations. So that's kind of where I am right now. I couldn't be happier. Uh, this is an extremely exciting time to be in the markets and to have such a glorious asset at our fingertips that's so misunderstood, and I cannot stress that enough. It's like a dream come true.

That's a good setup for you in terms of stock, right? Uh, James, what do you think though? Like, uh, people are saying Q4 was a lot of hype. A lot of things were said, and a few things there did not happen. So the doubling every month of robo-taxi did not happen. Are you concerned about that?

>> No, not at all. So, so what happens is, and I heard this on an interview with Elon or with one of Elon's, I think his investment analyst. He said, basically, point blank, what Elon tells the world is what he tells his team. And the way to decode that is to understand he sets impossible goals. So his team are kept under permanent perpetual pressure to deliver. That's why the life cycle of an employee at Tesla is not very long. They get burnt out. We all get burnt out. And that's part of who he is. So he has one script for everybody, whether you are a Wall Street analyst, an employee, or us. You hear the same thing. So he sets these impossible goals for people to stretch themselves. If you said, you know, realistically, yeah, I think we can get a CyberCab production out by October 2026. And I can guarantee that with 99.9% certainty. That's what other kind of executives say. But Elon will push people to breaking point. And we've already seen things like the production of CyberCab ahead of timelines too, which is very positive. They're rolling around now in 19 cities per my model. I built a robo-taxi tracker model, which is, you know, up to 39 cities, which is crazy. That covers 175 million people. That was the goal. He said, I think the previous to last earnings call, he said, we will have half the population covered by the end of the year. That was his goal. That's the 39 cities. So, he drops you the breadcrumbs 6 months ahead of time. And yeah, he missed, but it's all percolating under the surface. That is the magic.

Anybody am I just Tesla fanboy here, Larry?

>> Yeah. So, it's, um, you know, we had a brainstorm a couple of months ago, um, and and the game was to depict when the robo-taxi project would, you know, be underway in full steam and people would be riding in multiple cities and so on and so forth. And, um, we guessed, I mean, in the general consensus came out at, you know, April, and we're not that far wrong, um, as James has kind of alluded to and and and outlined. But it's all, it almost doesn't matter, uh, you know, whether it's today or tomorrow, or whether it's next month. The The big issue is when will we start generating major income that we can report on the financials and show a margin, right? So, you know, if one were to guess, one would think that by the end of this year, we would see, um, you know, reportable revenue. Um, and and I don't think it's going to be a massive reportable revenue by the end of this year, but it's going to be significant. And by next year, I think we'll start seeing huge impacts, huge impacts on the bottom line because the margins are just staggering at this point. I think they will level the margins down as the market expands, but I think we're going to see impacts early next year, in the at least the first quarter. So, I'm pretty excited and I'm aligned, absolutely aligned with James on the impact to the top line and and to the share price in terms of timing. I think we're going to see a wakeup amongst the analysts and as that wakeup occurs, it's going to sort of reverb into the institution. So I'm, I'm very encouraged by where we are. Um, my only hope is that we get, you know, Elon in a great mood, um, and that he's exuberant on the call. I think that makes for a huge impact on shareholders and analysts alike. By the way, um, even analysts are impacted by, uh, Elon's, um, mood, um, as I've tracked it over the years.

>> So, so that's what, and as to expectations on the call, I have very low expectations in terms of actual results. Um, I'm, I'm very, uh, I'm very relaxed. I'm very interested in capital expenditure plans, capex plans, and capex amounts, and just some sense of where we are, and also I want to hear, um, some material, um, some material numbers about the investment in, um, the fab, the Tera. So that those are my interests.

One thing that I've, I've noticed on the Q1 calls, instead of the Q4 calls, this specific one, is that I find that after this particular call, uh, that's when they actually do guidance. That's when they actually will tell you here's how many cars we think we'll sell and and other metrics. Do you guys see that as well, or do you think I'm hearing things?

>> To the extent it matters? I mean, maybe I, I haven't noticed the pattern, but I don't know that it matters.

>> Yeah. A little, little bit of bad news as well, regarding one thing you said. You hope he's not tired or in a bad mood. I was up at 2:00 a.m., 3:00 a.m., and 4:00 a.m. And at the same time, Elon was tweeting, so he didn't sleep much last night, which has

>> Yeah, but that has nothing to do with his mood. Sometimes his mood is great when he doesn't sleep. Yeah.

>> Okay.

>> Alexandra, geez, you have your fans out in force here. Oh my gosh. Alexandra.

>> I can't hear you. You're on mute.

>> Jeez.

>> Microphone.

>> We can't hear you, Alexander.

>> She's got the fit check.

>> Yeah.

>> Can't hear you.

>> You sound best this way. Alex.

>> This is what. Yeah, this is weary. Yeah, it takes me with a pinch of salt.

>> Can't hear you.

All right, let's, let's start with you.

>> I like this. Just keep watching her like this. What's she gonna do next? What's next? Oh my god.

>> Yeah.

>> I just want to see her do something now.

>> Uh huh.

>> Hey Jeff.

>> Jeff. How you doing?

>> Hey everyone. How you doing?

>> Good.

>> Good brother. Good to see you. Happy earnings day.

>> Likewise. You celebrating with your family or what?

>> Celebrating with all my friends around me.

>> Nice. I love it.

>> There you go.

>> So,

>> so this is. Where is going on? What? What? I can't share anything here. Here she's back.

>> Remove this. Put this up. Here's the earnings per share that's been estimated. Uh, looks like that, uh, where are we now? Analyst consensus is at 30 cents, 33 cents, and a couple folks here, Matt and, uh, James Stevenson, 54 cents, 37. Everyone else is below that. And Kelsi and prediction markets are basically 80% chance they'll miss 33 cents, and they're normally right. But again, earnings don't matter a damn. This is at an inflection point like we covered earlier. It's like, I think, as Jeff, you said, the minute earnings drop, they become history, and you move on to forward guidance. That's it. That's the whole story every single time.

>> So, people shouldn't freak out.

>> Yep, we got you.

>> So, who said something nasty? Was that Larry to start off with?

>> Yes, it lasted.

>> Larry.

>> He's here.

>> How was your hair? Come on, do something.

>> Comb your hair.

>> I mean, I've been working very hard on my hair. Very hard. Doesn't seem to respond.

>> Do a better job. Anyway, here I am. And I put on the yellow glasses thanks to the comments. And we'll see if I put the red ones back on. Jeff, nice glasses, too.

>> Hey. Yeah, I like yours.

>> Yeah, we're going crazy. A crazy old lady.

>> Okie dokie. So, what are we expecting? 30 cent. More cent.

>> If it's not earnings, people are saying that these metrics, whether it's vehicle sales or earnings, not matter. What does matter then? What is the key milestone you're looking for, Alexandra? More robo-taxes in more cities.

>> Amen. Say it louder.

>> More robo-taxes in more cities.

>> I would say that I want to hear Ashok or Swami say it, not Elon. If Ashok says it,

>> I want WBO to speak really good English explaining us capex at the moment in very clear language.

>> Yep.

>> Please hear me. I love you, but please.

>> Herbert, what's all with what's with all this South African hate? Stop. Stop. Leave. Leave Elon alone. We want to hear Elon say it, too.

>> Oh, well, okay.

>> I immediately started looking at the comments like, what are they saying about Larry or what are they saying about Elon?

>> Oh, no. Just because he said we don't want to hear from Elon. So, you know, South.

>> In terms of number tweet about that lately. So.

>> What is this?

>> What's that?

>> What's this anti-immigrant stance now?

>> Ridiculous. His comments about number of robo-taxes hasn't found out. We need to hear from the operations folks. That's what I'm saying.

>> Yeah. I would love to hear just like what happened. Like you said this a quarter ago. Like, just walk us through it. Like, obviously there's a good, cogent reason. Can you just let us in on that?

>> That would be cool.

>> Yeah.

>> I have a real question.

>> Why did Fazette? Why did Fazette pay you 50 bucks? What? What is that?

>> Me?

>> No, the the chat.

>> Yeah, he did. Oh.

>> Herbert, why are you laughing? Oh, her.

>> Because he got he got the 50 bucks.

>> Oh, he does. He always does. Here's what he said.

>> Why do you think he's laughing? You know.

>> He says, "Thank you for always steering the discussion in the right direction." So happy to have a group whose wheelhouse is.

>> Okay. Tell Farz to drop the IPAs in the chat. He owes me.

>> I've won every bet against him. We've only had one. And I refused to ever do another one.

>> And did he pay? Did he pay?

>> It got complicated. Shipping beer from Austin to Florida got really complicated. I told him, "Dude, just keep it. Just buy your son a share of Tesla and we'll call it good." But, but I just like to give him crap now.

>> Generous.

>> You're so generous.

>> With his own money.

>> A share of Tesla for a.

>> A beer.

>> How many beers were involved in here?

>> Well, he was going to send me a case of IPAs. A case of IPAs.

>> I think at the time Tesla was like at 200 bucks or something, too.

>> Okay.

>> So.

>> Yeah, we forgot those good days.

>> Now, we complain at 400.

>> One of the, one of the questions that's going to be asked is number seven. Uh, is that can we say who that's from? What data are you seeing that is causing you to be more cautious with the robo-taxi rollout? Number of vehicles, number of unsupervised versus your Q4 earnings call guidance?

>> That's my question.

>> That was your question. They made it, dude. They made it.

>> Good.

>> Why don't you explain to us why you asked them?

>> We upvoted. Yeah.

>> Yeah. No, that, I mean, that's what, what Nick was just going through, which is you, you, you gave near-term guidance, and you said something, and something else happened that was meaningfully different. What did you see? And is it persistent? Is it pervasive? Or, uh, is it behind us? I think that's, I think that's the critical thing. The other thing I asked about, I'm surprised it, it didn't float up there, is why was energy 40% off consensus? Um.

>> Yeah, that was a good, that's a good question.

>> I, I think, you know, again, I, Larry, I think it's, I think energy is one of those things where you really want to stitch a couple of quarters together, or you want to look at a 12-month trailing view because it's so.

>> It's lumpy on production. And it's lumpy definitely on interconnect and sell-in. But, uh, 40% I mean, and and the fact that it, it was meaningfully lower growth than the prior Q1. I mean, it's just, just a question and answer. Were you supply limited, demand limited, or a combination thereof? I think that would be critical to to understand.

Do you guys have no credence at all to this theory that they took the, uh, mega packs and they used it for data centers, or they used it for other reasons?

>> Too small.

>> It's too, it's too small. I mean, somebody asked me about that. It was, you know, oh, they, they put 200 mega packs here. I'm like, that's like 8 gigawatt hours. We, we have a six gigawatt hour disconnect. And they didn't put, they didn't buy that themselves. So, um, anyway, it just, hey, if you know, guess what? If this quarter is three or four, uh, gigawatt hours higher than consensus, then we probably know a little bit of what happened. If it isn't, then just, yeah, just, just walk everybody through it.

>> I, I wouldn't be surprised if it has something to do with, uh, shipping logistics. You know, everything happening with Iran has like, when you affect one ship in any port, like whether you get into force majeure or just anything, even if it's just sitting off off port at anchor, it disrupts everything and it's a crazy domino effect. So with the straight port moves shut, like you can just imagine how much disruption that had. I'm not even saying that's the whole story, but I imagine it had a meaningful impact.

>> Well, for sure, it'll be a, there'll be a statement on this in the, um, in the quarterly. So, you know, we'll see in the Q1 exactly what the reason is before he even comes to the to the meeting. So, I, I think that the question may or may not be spurious.

>> Straight ahead. It's going to be an issue. Um, but you're, you're typically not doing just in time for, uh, for ocean. Um, so they, they should have a couple of weeks of inventory of of that material, but it may be an issue now. I mean, it's a good, it's a good point, but man, that's a that was a big.

>> But Jeff, the only, I think the only rational explanation I could come up with was a large number of very large projects in, in flight.

>> And so you've got a very large amount of work in progress. It's the only rational explanation.

>> One factory could have been down for a month or two for re, I don't know, whatever. But, um, it's hard. Otherwise, yeah.

>> Larry, can I say that back to you? So, what you're posting is that huge client requires so much, so much, so many, uh, mega packs, all that that they're just stockpiling it right now until they can do delivery once it's all set. And then at that point, it'll hit.

>> Delivery doesn't get them. Delivery doesn't get them a sale. What gets them a sale is the switch on.

>> Yeah. Uh, they can get some progress payments of, you know, a a relatively small amount of the total project.

>> Uh, upon delivery. But delivery doesn't get them paid. They have to be connected and switched on. So if they have three or four very large projects, which is perfectly normal, and they're all in flight, and usually all in flight rather than some of coming due and so on and so forth, and they, they have large deliveries to themselves, then, you know, it could be, um, and we know that one very large delivery was to, um, SpaceX X AI, or X AI at the time. So, um, it's hard to tell, but that was my immediate assumption when I read it, and I haven't, you know, I mean, I haven't raised that question online or anything, but, but Jeff is right that that's the first question I would have asked.

>> But, but on the other hand, I expect the Q1 will, the actual report, the the company's report would will give it to us. Okay, we are expecting it to drop maybe in 3 minutes, 5 minutes. Usually, it's 3 to 5 minutes after the hour. So, we're going to keep refreshing this. Share it with you as soon as it drops.

>> Uh, we can barely hear you, Jeff.

>> Yeah. I, I will say though, with Jeff's question there too, though, I, I don't, as far as, you know, like what changed, I don't necessarily think that it's a bad thing. I mean, the fact that they didn't hit those milestones yet, now we're launching in Dallas and Houston, starting off unsupervised, like to me that says like something really good might have happened that they were like, "Oh, screw what we were doing before with this idea of 3 months with supervised. Let's wait, see what 14.3 looks like or whatever it is, whatever the limiting factor, whatever they saw that made them excited and now they're putting vehicles out there unsupervised." I think it could be a really good reason why, why they Q1.

>> I think that's right, Nick. And and you have to couple that with the fact that they're entering, uh, production that I think we've got first production on underway. So I think that, you know, the confluence of those events and the parking of very large numbers of Model Y's in some locations are all of the, all the indicators are pointing in the right direction.

All right. So all of us are waiting for that one same metric, which is just all of it, 100%. It's all about robo-taxi rollout. That's what we're looking for that guidance.

>> Well, that's the company, right?

>> Yeah.

>> Yeah. That's that's where.

>> That's where our future lies in the near term.

>> And and I mean, he has given two precise metrics earlier, you know, with this doubling. I mean, first with the what the status end of year 2025 would have been, and now the doubling, and that's not happening. So I think we're sort of waiting for a correction of that and, you know, making a point of where we are exactly. Mhm.

>> I will also add, if they do a spectacular Optimus showcase in Q2,

>> like literally doing crazy things like playing the piano or stitching something, you know, showing that hand dexterity and the brain,

>> um, the AI, that would get attention. Mhm.

>> And the fact that they're shutting down their two flagship models to build Optimus in Fremont, California with a million units. I mean, that's huge signal right there.

>> Incredible signal.

>> Yeah.

>> So, and if we're trying to kill some time, Herbert, I do have a thought I'd like to share with with the gang here. And this is this is like a four-part story, so forgive me. I'm trying to weave together a picture just so people understand a few things, and I am a little bit against Alexandra and Larry here on this. First of all, the deal they structure.

>> Stand no chance. Okay, just.

>> The the the deal they structure with, uh, XAI because I, I now look at XAI, SpaceX, and Tesla all as one big synergistic bag of deliciousness. When you look at how they structure that deal with Cursor, it's very intelligent because that will give them a leg up on Anthropic. Enter Anthropic. Next slide. If you could, Herbert, this. Okay. Anthropic is now valued at $830 billion. Call it a trillion dollars between friends.

>> They have no infrastructure whatsoever. So, think about that for a second.

>> Exactly.

>> You know, the Wall Street freaking out, wetting their panties over, you know, a $2 trillion valuation for SpaceX. You know, they've got global internet, launching rockets, Starship, the most coherent computer on the planet. They own the energy for that compute. They have over a million H100 GPUs. They're planning data centers in space. And by the way, China have just entered that race as well today. We can get to that later if we have time.

>> Yeah.

>> And this is this is a mega moat. Now, I always go back to the fact that in the age of AGI, hardness is what matters. Moats matter. Moving electrons matter. They have the moat. Anthropic doesn't have a moat. Allegedly, they were hacked as well. So, somebody got access to Mythos to be able to hack other companies. The hacking system, or the system that can identify vulnerabilities, has been hacked to identify vulnerabilities. So, the gangsters can go hack other things. The irony is also not lost to me on that one. So, that's huge. And then, wait for it. This is the Anthropic versus Samsung valuation. Showed you hardness. Anthropic again, 850 billion. Samsung, 800 billion. But look at the revenue, 30 billion versus 230. And I know that people say, well, Anthropic is pure profit. No, they're burning a lot of money providing all those tokens, but they're also making a lot of money, too. But I want you to look at that Anthropic valuation and put that in perspective with the value of XAI, which is part of SpaceX and the energy. Now, this is where the story gets a little bit different. And I'm going real fast because I want to get this across. Tesla valuation should be valued at 8.5 trillion conservatively based on the comp plan. So, we'll call this a 2030 timeline. The most bull case I can calculate for SpaceX is 6.6 trillion at a 2 trillion valuation is dropped.

>> 3.3x. Okay. You want to come back to the story later then?

>> No, keep. James, you're wrong.

>> I still need to download it. Well, we'll get, we'll get to my wrongness in a minute because.

>> We're up by 1.3%.

>> Up sharply.

>> And now down. No, no, up.

>> 1% isn't sharply. It's not that exciting. But anyway, the point is, if you look at Tesla.

>> I want to interrupt you because you're going to say I'm wrong. So, I'm going to interrupt you now.

>> Oh, no, no, no. Not wrong. I just don't agree with your timeline. It, it's definitively up.

>> Okay. Not you, actually. So, you, you may agree with Larry because I'm the only one so optimistic on the timeline.

>> Yes.

>> And I have good reasons for it, but they are much more technical than fundamental.

>> Herbert, you get it?

>> Yeah, I got it. It's coming.

>> Let's see it. Right.

>> How about we get to that later, James? We'll have a look.

>> Yeah, exactly. It's a deeper conversation, but I just want to plant that seed for now.

>> 2 and a half%.

>> 397. Is that now high enough for you?

>> No, I want to see a lot higher. A lot north of.

>> You know these people.

>> Where do you guys want to go first?

>> You want to go to Outlook first?

>> Just why don't you work your way through and then I think we'll all be looking at it on our own to find Easter eggs.

>> Oh, the actual deck is out.

>> Yeah, the actual deck is out. Yeah, go straight to look. Here we go.

>> After.

>> Focus on maximum capacity utilization at our factories. The deliveries and deployments will be impacted by aggregate demand.

>> Holy free cash flow, 1.4. I thought it was negative. You thought it would be most important.

>> So margin must be pretty good.

>> All right. How about 4% up? How does that work for you guys?

>> That's better.

>> Jeff, you're so.

>> Oh my god. I told you I would go straight to free cash flow, but 1.4. My god, everybody expected it negative. That is.

>> Okay, here's the big line, I guess. CyberCab, Tesla Semi, Mega 3 are on schedule for volume production starting in 2026.

>> First generation production lines for Optimus are being installed in anticipation of volume production.

>> So that means everything is on track. Okay.

>> Okay. Slight conflict there though, to play devil's advocate, because Elon did say recently it's not complete. They have some finishing touches. So how can they do the final production line?

>> Margin is up 1% probably.

>> Here's another good line. Once in production, we expect that CyberCab will begin to replace the existing Model Y fleet and will be the largest volume vehicle in the fleet over time.

>> That's bullish.

>> Bullish.

>> Oh, yeah.

>> Free cash flow.

>> Um, so they do have the same table with the same seven cities. Ramping unsupervised, ramping unsupervised, ramping unsupervised. Preparations underway. Oh my goodness gracious. This is good. Whenever you don't expect it, that's when they're coming through.

>> And also also Q1 is the weakest quarter of the year, and nothing is even starting. That's the backdrop. Can you imagine the free cash flow two or three quarters from now?

>> Wow. They increased cash on hand to 44.7 in a quarter where it could have gone down to 40. This is incredible.

>> Began ramp ramping LFP production.

>> That's for mess, isn't it, Jeff?

>> Yeah.

>> Also, well, do we know what, do we know the battery chemistry inside the CyberCab? Is it the 4680?

>> It's 4680 LFP.

>> Yeah.

>> We do know.

>> But if you don't need performance.

>> No, we have. Yeah, we do need performance. It's pretty definitive.

>> Um, yeah. Where's.

>> Cortex one is in production.

>> Yeah, we need.

>> Well, that was known already, but it's over 100,000 H100 equivalents. And then Cortex 2 says early ramp. Okay. Wow. Here's here's the big jump. Stock up 13%. $13. Sorry.

>> Oh, jeez. Why you do that to me?

>> Sorry.

>> Uh, Jeff, we can still barely hear you.

>> Can't hear you.

>> Better, better, better, better.

>> Yeah, there you go. There you go.

>> Gap gross margin 21.1%.

>> Yeah, it had to be that. It had to be that because there's no way they would have made cash otherwise. That's exactly. This is a return to. This is a return to gross margin, guys.

>> It is. Did you see the picture of the Cortex 2? I mean, that's the most sexy server I've seen in a long time.

>> Does it have wine bottles?

>> Oh my gosh. My, you can put my wine bottles somewhere else. My goodness gracious.

>> Jeeoff, what's your take on this pilot production for the CyberCab? Yeah, that's that that means that they're in the stage between the first off production in February and SOP. So th this at the time of this publishing, it says they they're not in started production.

>> But it could be imminent. It could be tomorrow. I mean, maybe they'll announce it on the call.

>> Yeah, I was wrong. I thought they had started production just from what I was seeing, but. Yep. It's very close.

>> Yeah. And Semi too is in the same bucket of they, they've made the final version of the Semi and now they're getting the line to quality rate and speed and and Semi will enter production too. So these are.

>> Two really good developments for Tesla.

>> It seems that Semi is not quite as far along as CyberCab, but maybe I'm.

>> For robotics, it says preparations for a first large-scale Optimus factory will begin shortly in Q2.

>> So that's good. I had a schedule.

>> They, they wasn't a Q3 to start, so they're doing things earlier now.

>> Mhm.

>> Yeah.

>> Mhm.

>> I like. How's my audio now? Is it better?

>> Good.

>> It's better, but it's still low. But keep going.

>> It's good. Yep.

>> It's good.

>> Okay. Uh, I think adding this robotic section is powerful. I think California will be in a couple of stages. I think there'll be a shorter line inside of a full production line. Let's see what Tesla says about that. The shorter line would allow them with a little bit less capacity to start sooner. So, let's see what they say about about that. FSD subscriptions looks like it's up. I mean, this is sequentially quarter-on-quarter. I mean, these are actually kind of big moves. I love this line here. Deliveries and deployments will be impacted by aggregate demand for our products. Supply chain readiness, allocation decisions between sale to customers or use for our own for our owned and operated fleet.

>> Yeah, there you go.

>> Page 25, statement of operations. You will see.

>> That the 25.

>> Page 25, statement of information. Oh, of operation. You see the services line. So the services is FSD, right? You see it went up to 3.475, 475 in Q3, and then it went down in Q4, and then now it went up to 3.745. So that is FSD, and that is when did they stop selling? Wasn't it middle of February that they stopped selling FSD outright?

>> That everybody had to go so that so you actually had less of the outright sales.

>> And more people switching to subscription, and it paid out because it's a 10% increase. No statement on.

>> Are up 51% year-on-year. That is.

>> Huge.

>> Move.

>> Yeah.

>> Yeah. But there's no, no statement about the energy situation.

>> But energy generation and storage went up. Well, went down from 3.8 to 2.4. Yes. Yes. That is the moment.

>> Should have voted on my question.

>> Yep. So revenue went up.

>> But the cost, the cost for energy generation also halved. So they produced this.

>> Yeah. No, no, no. It's it's work in progress. I'm convinced of it. Cost is simply the cost of the sale. So if they don't book a sale because the the customer hasn't approved it yet, then they won't book the cost of goods. Well, we are back to my theory, which is maybe completely wrong, and which I got from, uh, Chess, one of our listeners, who said maybe it is because they put all the mega packs into the Cortexes.

>> It's not enough. It wouldn't, it wouldn't move the needle.

>> Okay.

>> Alexander, what about this line here? Increase in operating expenses 2025 CEO award. What, what is that?

>> Well, that is now, which give me the line a little bit bigger because we have two things we're expecting. We're expecting the 96 million restricted stock. Remember we did those an intermediary award just before the vote so he could vote with those, but they, if there was no double dipping, so when the new verdict came out, it had to be handed back. So that could be.

>> One of it, increase in operating expenses. Yeah. So maybe that is that, or it is the issuance of the restricted stock. Mhm.

>> We, we still have to wait for the for the quarterly SEC filing to see how many stock we have now. Whether we at 3.7 more or less billion Tesla stock, but I think that is it. Does it say the 2025? I'm sorry, it's too small on my.

>> 2025 CEO. That's what I'm saying. Weird.

>> Showing up in Q1.

>> It must be the the cost associated with the issuance of the restricted stock. No, but the weighted average share diluted is exactly the same as last. It's actually a thousand less, 3.538 compared to 3.539.

>> 4%.

>> Hadn't changed.

>> I do believe the issuance of the restricted stock.

>> It's the margin that's it's the margin that's moving the stock, the stock price.

>> Look at this. Perfect. Hey, Jeff. Look at this. Higher. You said this already. Driven by higher increase in FSD sales and subscriptions, but then lower average cost per vehicle due to lower material costs. That is, uh.

>> That's a big deal. That's a big shock.

>> For this timing, as you go. The conversation we had earlier.

>> That's why that's why the stock is up. It's the margin and and the and the way they've got the margin is through lower cost.

>> Yeah. Under the profit section.

>> On page 10. He, they really, they really talk about in that one sentence that they're transitioning from a company that bends metal to a company that is a software company.

>> And and by the way, this is going to be a software and robotics company.

>> We really. I can't really.

>> 15% louder. 15% louder.

>> Can't hear you.

>> I'm on auto. I don't know what to do with the sound.

>> Just do it manual. And did you see, did you see on page 26 in the assets?

>> That in property, plant, and equipment, we went up 2.5 billion.

>> Which is the biggest jump in quite a while for a quarter.

>> This is this has something for everybody.

>> Oh yeah.

>> Whatever you wanted, this, it's in here.

>> I want to point out something too, as well. Last time people were confused about this one. It's the, uh, services up 42% year-on-year. That's all supercharging.

>> FSD. FSD. I.

>> Told you that FSD. Told you that 10 minutes. FSD is in there. Yeah.

>> I thought I separate line.

>> You said it's for everybody, but we saw at the very beginning. The most important thing is right here. Robo taxi, CyberCab. So, we heard that CyberCab is in. Well, it's not. It doesn't say in production, but it says that it's, uh.

>> It is on track. He's on track for volume production. So that's good words. And then.

>> Pilot production. Literally says pilot production. No, I know it's at pilot production, which means it's not yet in production, but in another place that it's on track for volume production. CyberCab is on track for volume production this year. So that means it's still on track. It's all good. But here, and then they did say that they're going to use robot, uh, CyberCabs to replace Model Ys. That's good news. But otherwise, in this city, it's just ramping unsupervised. Those or we already know, and these are still right away. Well, services and others really the what really hit the gross margin in a big way because it's at an all-time record, and that's for Q1, which is very unusual.

>> Yes.

>> Beat. I mean, it's it's a big number. It's a Q1 last year was a billion one less. So, yeah, it's really good. But you know, the the actual revenue from auto sales is amazing. Just amazing.

>> Hey, this is a good sentence, guys. Says, "A major focus is increasing awareness of the safety and convenience provided by FSD supervised as we evolve our sales strategy to position FSD supervised as the product with promising early signs."

>> Doesn't say advertising, but at least that we're going to focus on it. Something for everybody. Exactly what Nick said.

>> How many cars can you make with 40 gigawatt hours of 4680s?

>> Jesus, a lot.

>> 4680s in production. Is that new, or did we already know that it was in production?

>> We've never made so many.

>> They're starting production. The the the new the the new batteries were starting production last quarter, I thought.

>> Were in, were starting in full production last quarter.

>> Which new, new batteries?

>> 4680 says production. Jeff.

>> Oh.

>> Started production for the new mega pack factories on track for later this year.

>> Okay, here it is. It says I was worried that it said early ramp for Cortex 2 in production, but in the sentence, it actually does say Cortex 2 is now online and has started running training workloads. Great.

>> Yeah, they said that they said that it was that half the factory was operating training workloads. I think they made it post to that to that. Okay, this is. Yeah, it's all. Anything here that was a really negative thing you guys spotted that you thought was a negative?

>> No, I think.

>> So far so good.

>> Just like last time, the deck was perfect.

>> Just, it's all on, it's all on the call.

>> How can you mess it up now? How can you mess it up?

>> I go back to one thing as well. I like to analyze the breadcrumbs that Elon drops for us. And he described 2025 as the year of whatever heavy grunt work, groundwork, or something. And he said he's setting up for an epic 2026 and a ridiculous 2027 and 2028. This is already setting up to be very epic just for 2026. So looks like, you know, he's become much more reliable in his time frames and promises. Would you all agree?

>> About the stock or the company?

>> I mean, I mean, delivering. He's delivering the impossible.

>> With impossible timelines and doing so many different things at the same time. I'm going to go to Jeff Lutz on this because you've got experience of what it takes to pull all this manufacturing stuff off at the same time. Multiple Giga, multiple products that have never been done before. Self-driving cars, humanoid robots. Come on. Can you explain what it would take for one enterprise to build all of these factories to do all these different things at the same time, and then refine lithium and whatever else on the side?

>> Can I start with the breaking news unless you guys already covered it?

>> Sure.

>> CyberCab production has started.

>> Yahoo.

>> Where did you get that from?

>> Tesla's, uh, X page.

>> Okay.

>> 10 minutes ago. So, so yeah.

>> I think we saw that too.

>> That's exactly what I predicted three months ago.

>> What exact? Go ahead and explain.

>> I said that starter production would be towards the end of April.

>> That's exactly what I told Herbert five minutes ago. He's like, "No, it's pilot production."

>> Yeah.

>> Oh, they just, they just literally announced it. So, I mean, look at their earnings deck. Their earnings deck says pilot.

>> Yeah. So, we had this brainstorm, uh, back in January, and everybody had a guess, and actually the whole brainstorm ended up converging over the end of April, but I, I actually came out with the end of April first, and I was pretty sure of it. So.

>> I mean, it's close. It's close.

>> The answer, James, I mean, they said April, so it's, it's fine. It, this is good. Uh, yeah, I've never seen a product portfolio as strong as Tesla. And then when you put SpaceX into it, it's crazy.

>> Uh, so I, there's nothing like this. There's no comp. There's no other company like this. There's no other company. If you just look at the last 10 years and you look at what, like, look at Apple. I mean, look at the other $4 trillion companies. I think you can arguably say that Nvidia's portfolio was was groundbreaking as it relates to AI infrastructure. Yes.

>> But in terms of product portfolio, there, there is nothing like the the auto, the energy, the AI,

>> robotics. There's nothing like Tesla's portfolio. And to do all of this concurrently is extremely difficult. Um, and so, yeah, I think it's okay to be critical on some of the short-term commits. Uh, longer term, I, I, I think they're doing, and this is, this is why Tesla's got a 300 whatever PE. It's not on their current earnings.

>> And all those things you mentioned are all NFO1.

>> Like, yeah.

>> Like that's what you pay them for, right? Like the Palantir gets their valuation because there is no other Palantir. There is no other Tesla FSD. There's no other CyberCab. There's no other company making profitable EVs the way Tesla is. There is like SpaceX, the satellite, you know, like the end of one. That's why you pay forward for that because there is nothing else.

>> Agree. Yeah. And there's so much FUD out. I mean, they even lie about the auto business. The, the, there really isn't, we don't know of a sustainable strong EV auto business outside of Tesla. Xiaomi may be creating one, but we don't know of another one in the world. And in terms of in terms of stationary energy, and and what they're doing is very special. I mean, other companies are are linking batteries together and shipping it. I get it. But there's there's something there's something more to what Tesla's doing with with Mega Pack and in the future Mega Block and what they're going to be able to do with solar. I just, I don't know. How do you look at the portfolio of this company between energy generation, energy storage, auto AI, AI, physical real world AI, and then if you put the SpaceX portfolio on top of it with Starlink and what they're doing with, um, getting product to orbit, 90% of the of the mass to orbit, I mean, this is insane. So I mean, this is what you're, this is the value. The valuation is on what Tesla will do, but it's also on Elon, his leadership, and what business will he.

build next >> synergy. Yeah.

So this post here has a lot of good uh post comments. So one is uh demand for our vehicles continue to grow in APAC and South American markets with a rebound of demand in the European markets and North America. Great.

As trade and geopolitics become more uncertain, we're further regionalizing and vertically integrating critical supply chains. Um, >> that's unbelievable. It's not that's such a big sentence.

Good progress with Megaactory in Houston. Start of production on track for later this year. So, at this point, everything we're hearing for Cortex, Megaax, everything is on track. Cybercaps, Tesla, Semi, they're saying volume production of course.

question, Herbert, on on battery production, domestic >> battery production. If you're going to have 80 or 100 gawatt hours of assembly in the US and you're going to have 7 gawatt hours of LFP, I what what's the plan? Is the plan is the plan is that the spot price has been so low globally that we'll just import it and pay the tariff. But I that's not been the the spot price has been I I have to check it recently, but I I thought it's actually been going up. Um, anyway, just what's like where's the other 80% of the supply coming from?

>> This is the statement. Yeah. Battery vendor cell availability continues to be a limiting factor as you're saying on ramping vehicle production.

>> Well, LG LG Yeah. Aren't LG putting up an LFP plant? Half their plant is going to LFP according to the >> it's going to take him it's going to take them a year to finish assembly and a year to ramp it.

>> But they they've been building that almost for two years.

>> Uh yes. I think that I think these were I think it was different product though. I think it I thought this was GM and pouches but I could be wrong. But anyway, it it's going to it's going to take them at least a year. They got a ramp. So they'll, you know, they'll probably import batteries for a period of time. I mean, they they know what they're doing in their supply chain. They understand their supply chain.

I >> Well, they just said they're constrained, so they just said it's a constraining item.

>> Yeah. Yeah. Okay.

>> Yeah.

>> Yeah.

>> Okay. That's a good that's a good call out. That's one negative. Everything else seems to be fairly on track.

>> So, back back to free cash flow because at the end of the day, that's everything. The estimate was minus 1.9 billion and they came in at 1.4 positive. That's a huge swing. And I know Alexander that got your attention as well.

>> Well, most of that swing is in gross margin, >> believe it or not. I mean, if you earn more higher gross margin than anticipated. If you look at the projected gross margin, it was very significantly below where we are. Very significant.

So you think it's all FSD, pure margin business coming in?

>> Well, no, but the order margins are are better. Uh, and that that extra margin that we're talking about FSD comes in services.

>> So it's auto margin has improved because their cost of goods have gone down. They said as much.

>> But the $3.5 billion swing in free cash flow, that is substantial. That's what I'm trying to get at. What did Wall Street miss?

>> Well, yeah. So, it's half half a billion in services, at least maybe a billion in maybe a billion in um margin. There's one and a half billion right there.

>> The first production cyber cab, >> what is the overhead? How do they How do they do an overhead?

>> There's a picture. Number one, it's glossy. Oh, which I find interesting. And uh second thing, if uh Farzad's watching, no, no steering wheel.

>> Are you watching? Farad, are you watching?

>> He's yelling at the screen right now.

>> I've never hit him on this one, so this is my my first time. Which one you talking about, Jeeoff? What page is it?

>> It's not. You have to look on X. Sawyer has it up.

>> Not this one.

>> They have the They have the groundbreaking for the FAB.

>> Is this the one?

>> Yeah.

>> Yeah, that's it.

>> Wait. Yeah. So, it's glossy. Number one, >> he stops insulting you. Look at that. Uh Jeff says, "Watch your mouth." It is shiny >> and no and no uh >> no for our Iranian friend.

>> Yeah, I mean they >> Elon did or they just said on the deck, right, that they're going to replace the Model Y's with the summer cabs.

>> Well, I don't think they can. I think that'd be a mistake to replace all of them. You You have to have something with four seats. Like people have kids and stuff that they don't want to like be separate as families, you know? No, maybe they remove steering wheels like >> a car or put the kid in the trunk.

>> Not all of them. I I think this one I've been trying to get to this early because I think this is the most important sentence. One of the most important sentence. Uh Jeff, take a look at this. says, "We're excited about Tesla's positioning in 2026 with tailwinds persisting for the auto business, our continued progress in FSE supervised, the ramp of robo taxi, progress and optimist ahead of mass production, progress of optimist optimist ahead of mass production, and the growth of our energy production capacity.

I I think it's the volume of robot of cyber cabs because if we're getting the volume production in 2026 that means that we have to start production now like what what it says. So I think that's bullish.

And >> what is volume production? What what number are you guys thinking? 5,000 a week or you something a little >> I don't know.

>> Well, it'll follow it'll follow the curve of the cybert truck or maybe a lot faster. Uh but we'll go to Jeff our manufacturing expert for this one.

>> So two questions for you Jeff. One is what's the ramp again for Cyber Cab now that we're alive quarter to quarter like 20,000 in the first quarter 30 in the next but the most important thing is can you tell us that there's no way in hell Tesla would manufacture these things and stick them in a parking lot they are going into the fleet that's the most important part do you agree with those two statements

>> yeah Tesla is not a I hope you can hear me

>> yes we can a lot better

>> yeah te Tesla is not a company that carries a lot of channel inventory. And remember what's unique about CyberCap is they're these don't ship to you or I, they're shipping to Tesla. So from a quality perspective, they're going to have much better control and they can actually be a little bit more liberal with the ramp up. They can I mean they can take some chances I think a bit. Uh and so here's my take on the the ramp. I it to me success would be hundreds per month in in April and then maybe a thousand per month by the end of June. So you start getting into the thousands and then all of a sudden I I would what I've been predicting is by the end of the third quarter that they could produce the entire Whimo fleet in a month and then within six months they could produce whatever the Whimo fleet size is in a week. And I think that's the kind of scale you're going to see that and they're they're number two is gonna pass number one um pretty quickly I would say in the next three to six months on on on autonomous cyber gaps and yeah so it's hundreds to a thousand and then thousand to 10,000 uh and that's that'll be the kind of launch I think that they have on this this year. Remember, they're they want to balance building uh not too many at this very high. This is the highest price point in history that they'll ever have of cyber cab is today. The the first day of production is the mo should be the most expensive cyber cab they ever build and everything from here should be downstream. So everything under that curve, they're going to not say minimize supply, but they're not going to they're going to want to make sure they get the cost down to really take up the huge numbers and bring up more capacity. So that means they have to solve interstation yield issues. They have to solve uh interstation cycle time issues and they have to get rid of all the queuing and and really get this thing flowing through the factory and then the big numbers will really come. both big numbers in velocity and then really small numbers in cogs.

>> Yeah.

>> C can I build on that? Uh because I I think um we started talking about it for a second, but I think I don't care so much that Cyber Cap started. I care about like what it's going to do like you were just saying uh about the fleet. They're not just going to have these sitting there on the lot. So to me, I don't really care like how fast the ramp is. They're going to build these. Even if it's a slow ramp, they're not just going to sit there. And that's a forcing function to grow the fleet that's out there already. And so one way or another, that fleet's about to grow now. And I think that's what's extremely exciting because at the end of the day, that's what matters. And as that production happens, the fleet just grows bigger and bigger. And so I I won't be surprised if by the end of May, call it June, we have more robo taxis out there than Whimo just by the nature of they have to put these somewhere. Like I don't know, I think that forcing function is everything.

>> Yeah, I agree. you know that they spent less on um capital expenditures or they they had a capital expenditure lower than their projected capital expenditure. If you exclude the SpaceX investment, it's only if you include the SpaceX investment do they even get close to the capital expenditures that they projected because they projected 20 billion for the year. If I recall correctly, they only spent 2.5 million. If you add the SpaceX investment, it's 4.5 million. Still not at the level that they projected. So, something else is coming. I don't know what it is, but some other fairly significant C and it must be the Terraab.

>> It must be what they're putting into the terraab. Well, I I would hope it wouldn't be a a lot in year one given given what year one is. I mean, it should be clearing a lot of clearing a lot of the lot and starting probably starting to hire I would say starting to hire people, but I don't think that would show up in capex.

>> Cap not capex. So yeah, I would hope. Yeah, the the the big numbers for Terraab are going to be the lithography equipment and all the equipment inside of the factory. The small numbers should be the >> the construction of the factory. So it should be this thing that stair steps over the next three or four years. But yeah, it should some something should start hitting this year. And I agree.

>> Well, they spent of the 20 billion they forecast, they've only spent 2.5 unless we want to add the two billion that they did in SpaceX equity investment. I it's unclear to me.

>> Would you put that into >> I mean it's part of the if it's part of the 20 you're that means >> well I did you do you think that they had that in mind at the beginning of the previous quarter

>> because otherwise

>> they announced it at the end of January. They so sorry they announced the 20 billion capex at the end of January. The SpaceX investment was two weeks prior right? No, no. SpaceX investment was only this last just a few weeks ago.

>> No, the two billion. I thought it was two billion in XAI from Tesla on January 16th or 17th, right?

>> I believe so. That's what I remember.

>> I'll start screaming. Yeah, that's my recollection that they bought into XAI, right?

>> Anyway, their capex is on track to what they're projecting, four four and a half billion, 20 billion a year. Look at your inventory. So, what do we think is going to happen on this earnings call? What should we be expecting? I think the earnings report gives away a lot of it. I mean, there's nothing but goodness, nothing but catalysts, and everything is coming to fruition all at the same time. I think that's kind of staggering.

>> Yeah. No, I agree. I I want to see Elon come out like Alex Karp and roast shorts. Roast >> again. I was up I was up through the night watching the markets as usual and uh I was your tweet and I was like dude you should be sleeping not up all night. So I think as as Larry said maybe he doesn't need to sleep and maybe he was up all night cuz he's in a good mood. Let's not jinx it though. Let's not counter chickens.

>> Yeah. when he's up all night, he's he's on a energy jag and he often comes out fighting in the morning. So, you're right. It was January 28th, so maybe the maybe that is included in the 20 billion, in which case they are on track. You're right. Not quite on track, but nearly on track.

>> Herbert, what time is the call start? 5:30 or 5?

>> Uh, two. Yeah. 5:30 Eastern.

>> Yeah.

>> Well, this is an outstanding report. It was also, did you guys see the Goldman Sachs safety report?

>> Um,

>> Tesla versus Whimo. I have a slide on it. Slide nine if you want to look at it. But now they're beginning to wake up and say, "Whoa." Uh, basically they're slapping down the whole the skeptics. This slide nine if you can. We can come back to space if we want later. This one, uh, they talk about how, you know, the fleets are in expansion mode, but what they did, they took the data that you and I have looked at, Herbert, and they broke it down and they compared the incident record and miles per incident from all the Nitsa data. And it's the first time I've ever seen, correct me if I'm wrong, Goldman Sachs digging into instant data

>> between Whimo and Tesla. And basically, they said robot taxi has a massive advantage in safety. And the more they scale, the more it'll become obvious. And they said as well, it's not just an EV company. It's a true leader in autonomous driving AI from Goldman Sachs. So, Tradfi is waking up. Congratulations after all these years. That was that got my attention.

>> Can you dumb this down for me? Why don't we have February and March data for Tesla?

>> Oh, we do.

>> The answer the date is zero.

>> You can't see it.

>> Oh,

>> yeah.

>> There is no there's not been an incident since January 15th.

>> Okay. But in October, November, December, we had more.

>> Yeah. That was that was when they made that big hoo-ha about it. But notice that nobody's talking about the last three months.

>> This December here, there was five and that was the big ooh and all of them are fender benders >> or zero mph or something bumped into it.

>> Um, all those different instances. And thank you as well, Herbert, for doing such a great job breaking all that down.

>> All those nits accidents. It's important.

>> Get zero. There's a big elephant in the room that I want to get off my chest and I've been talking about this for, you know, three months now. The whole SpaceX Tesla thing, the synergy, the comp plans. I think I think it's an interesting story because not only the crazy synergy you're going to get with Tesla and things like Terraab funded by the SpaceX IPO that's massive but at the same time we have you know the superpower super voting shares from SpaceX very important he doesn't have that with Tesla but when you look at the comp plans and you break down the comp plans and you break down the comp you know relative valuations between SpaceX and Tesla especially in light of the earnings report today. It would be madness for a Tesla shareholder to submit to a merger, unless of course the stock price went up many multiples like a 2x right now. It would have to be 800 bucks. That would be the comparative valuation I'd place on Tesla today to merge as an equal with SpaceX. And I've done the math and I've compared the comp plans and done the future forecasts. I do believe after 2030, SpaceX with space-based data centers could be a force to be reckoned with. We also had breaking news today as well. China is getting in on orbital data center startups and China have pumped $ 8.4 billion into credit lines to build up their own kind probably another 100 like EV makers be 100 space-based data center startups in China. So the space race is on which I think is extremely important. Everybody now knows there's only one way to embrace AI and that's put all the compute in fusion solar powered space data centers. So a lot to talk about here. Everybody seems distracted.

>> Fastest sequential growth ever for this is me just looking at the data for FSD subscription.

>> Exactly. That's big and everybody's talking about it now. I mean, I I think FSD has opened up a whole world. I would I would nearly mandate anybody who's hard of seeing or hard of concentrating or under 21 or likes to drink and drive or or is over a certain age should have FSD. Like literally, it's it's a super for safety. And I know from family experience, too. But I expect a huge uptick in that. And that's just all pure gravy. Larry, can you imagine the free cash flow if FSD penetration starts hitting at China, South Korea, >> even Europe? Even Europe, but Apac had record sales this of of vehicles this year, this quarter, record sales in the quarter. Um, so >> I mean it it's important to get FSD into APAC because APAC is growing faster and Europe is you know but but Europe would add a significant amount and it may change the sales dynamic in Europe but >> already >> Yeah. Yeah. So it makes a huge difference. You're right. You're right. You're right 100%.

>> Alexand over taxing.

>> Yeah. As a fellow European, how price sensitive would Europeans be to hundred euro a month or $100 a month for FSD?

>> Well, first of all, insurance is expensive in Europe. So, if that helps with insurance premiums, you know how the Europeans are. If you have an arbitrage where you gain some money on one corner and get some and then safety, I mean, American roads are less safe than Europeans, but Europeans are obsessed with safety. Safety statistics are coming out monthly. People being obsessed about it. It has always been one of the selling points of certain brands in Europe and now you will suddenly have this enormous jump in safety, right? Um I I mean I I can only always encourage elder people to use as soon as possible FSD because it just makes a complete difference in your comfort of driving and in the safety of your own lives. And if you love your mom and dad and grandparents, ask them to subscribe to FSD. So I do believe in in Europe it's going to be a gamecher. There is nothing comparable out there. Um Bosch, Mercedes, BMW, I mean for the showcase they are still there but there is nothing comparable. Whimo is only starting in now in a couple I think they're starting in London now. So the fact that Teslas can now be on supervised FSD in the Netherlands and soon in other countries will just bring the whole market from an autopilot situation to FSD 14.2 two at least maybe.3 by then it is incredible the biggest jump in technology with one turn of a button and uh I do believe there has a very sensitive cleon tell for it also you have to know in Europe lots of cars I think it's a third of the car market is actually companies buying for their employees cars a company wants to have their employees in the safest cars they cannot take the legal risk of having them in cars that are less safe. So there will be a whole dynamic of companies having to consider Teslas because otherwise they're actually running a legal risk of putting their employees in less safe cars. So this will take all a couple of months, even short years, but this is going to be a very very trigger heavy contribution to to income. And I just I mean you may or not like Dan Ives. I love the guy. I think he doesn't dress as well as me, but close to it. But um but in in um he just had the courage to go on CNBS and tell them we now have an AI company. We now have a robotics company. This is not a car company. And we need people carrying this that message to the non-believers and there's still so many out there. I'm actually saluting all these shorts that told me this week how proud they are that they are in the black with their short positions. I hope that's still true by tomorrow. Yeah, it's interesting drive driving records just to hammer home. I was surprised how bad the driving records are in places like France, Poland, Romania, Norway. Norway have bad drivers. Maybe there's too much snow and they crash all over the place. Um, but some of the driving records are not as good as you would imagine in Europe. Anyway, back to you, Herbert. I was going to say that Tesla short the shorts and the queue were out in force, weren't they, Alexandra? They were attacking you. They were like left, right, and center. So, is this James? Is this like, you know, like they're being cornered and they're out in forest? They're afraid or >> You saw my tweet making fun of the JP Morgan guy and I was so grateful for him. I'll send him a Christmas card. You know, he torpedoed the price down to 330 for us uh with that report of Q1 earnings. I mean, how do how do these SCOPs >> how are they even gainfully employed? And I'm very grateful for them, don't get me wrong, but literally, how do they have a job? It's bizarre. I Alexander, once again, you're close to them. And Larry, I hear you breathing under your breath there. You're shocked as well. How do they have a job? Or are they scops literally to depress the price because they're on the other side of the trade? It's uh you know, you have to think they get paid for bad advice because you you know, you take some of them, they're right at the bottom of the list. And they're talking for big banks, major banks, ma major >> and they're Yeah. And they're right at the bottom of the list, not just on Tesla, but >> and the overall, you know, results. And yet they they they keep their jobs for like year after year after year. You know, in sales you get bounced if you're, you know, less than top 10. Here it seems that you get rewarded for being the bottom one%. I mean, it's just incredible. Just incredible. By the way, am I wrong? This is the first quarter in a long time that quarter over quarter we're ex we we're showing significant growth over the previous year. Q1 2025 was just on 14,000. We we're like we're like 16% better than last year Q1. That's a hell of a thing compared to where we've been. >> Yeah. First quarter upon quarter growth. Yeah, I think so. >> Now, how do I sound >> better? >> You sound perfect. You look perfect. That hair, those gloves, everything's good. Everything is good. >> It's a lot of information there. >> Making sure. making sure you you're reassured. See that I'm the mother in me is coming out again. >> Have we covered this already as well? There's notes in the account that uh Tesla recorded $2 billion equity investment in SpaceX as well during Q1. >> Yes, of course. And and I mean we know that we know that point number seven in our stuff. Yeah, >> exactly. So this has all been there. Now let me just reply to you while we have we have what 40 minutes left and I don't want to use 40 minutes beware but at least three four minutes and then Derry can com complement what I'm missing. I'm I'm always going onto this merger idea with two three reasons for urgency. Okay, I hear you. I mean wouldn't it be nice if Tesla was already I don't know how many trillions more and SpaceX has the time to be trillion on that topic. I actually think Larry is the right person because he invested in both. He knows the SpaceX story much better than any of us who are not invested in SpaceX and can defend it. I'm coming from the stuff that has caused me sleepless nights for the last five years and you all helped me to get over it, but I'm still traumatized. So, the first one is, is Elon better off under a Trump presidency? Yes. How long will the Trump presidency last? Another two years. How long does a good merger take to get through on every point? Can take up to one to two years. So the sooner the better. Would this merger happen under a Democrat president? Who knows? Do you want to take that risk? No. So that's my first point. The second point is SpaceX has a double share class. I haven't seen the S1 on how this would be maintained, but they're certainly going to remain a double share class because that was always the issue with Tesla. While it is beautifully fair that one share one vote, all retail that I've ever spoken to would like to give all their votes to Elon. And the easiest way to do that is by Elon having higher share voting power. And so SpaceX has the ideal configuration to be the surviving entity. And the sooner we have that, the less issues there will be on future votes. I mean how many hours, days and nights we've all spent on convincing people of being able to vote or voting the right way. I mean we always won. Good thing but there were some uphill battles and especially in the times to come where it gets gigantic. It gets galactic. It gets just I don't want to have to fight again and again and again for every shareholder vote just because we have a single shareholder uh situation. So that shareholder vote configuration of SpaceX, the sooner that applies to the whole structure, the better. And then the third point for me is that I have the feeling sensation that Elon would be in a much safer space in terms of protection from government from foul players from whatever else in a space combined company. The United States and maybe for their golden dome and maybe for so many other depends on SpaceX so much depends less on Tesla. We have seen last year how little protection in the end the state the federal government could give Tesla when we had all these crazies out in the streets. Right. I do believe that a combined entity will shield the security of our investments, our company much more because the government is much more engaged in keeping SpaceX >> happy and safe than Tesla happy and safe. I I can't put it in better words, but and now from an operational point of view, I let I let Larry defend our position.

>> Yeah. One thing you hint at one point I made a video three months ago about SpaceX and Tesla merger and my we covered this before a month ago. I said the trigger for it would be >> an Orwellian government which is sector we're saying but now we have a second trigger. Can you share that slide for one second Herbert down there? This is the big news. This is exactly what Alexandra is saying >> that China is now putting$ 8.4 billion dollars into space startups to build data centers in space. This is it. This is the new nuclear arms race, my friends.

>> And there's two games in town. It's USA and it's USA with SpaceX >> and then there's China. That's it.

>> So with the rest of it, >> so let me pick up. I mean, you're you're absolutely right, James. You know, our our the horse we're backing, the horse we the United States are backing is basics. We have a second opportunity with Jeff Bezos's company. Um, you know, it's more than possible that they will also enter the they've said they're going to enter the um, you know the satellite network of of data centers and and and he certainly has the means to do it and I think that's a good thing. But turning to the reasons for the merger, I think everything that Alexandra said is correct and everything that you've said, James, is correct. But I think that one of the one of the key elements of my assessment of the situation is that I still assess that SpaceX is grossly undervalued at 1.75 trillion. So, while I'm absolutely aligned um 100% with you, James, that Tesla is grossly undervalued currently, and I'm very relaxed about it, by the way. I'm I'm not in the same camp as many people who need urgently the share price to go up. I I could care less, but it is it is undervalued, and I'm I will stipulate that. But at the same time, I believe SpaceX is grossly undervalued. Firstly, the valuation of XAI is ridiculous given the valuation of their competitors and those in the same line of business.

>> Agree.

>> Yeah. and and and secondly um the the valuation of SpaceX does not take into account its absolute leadership in the space race today and where they are in the development of Starship. The value of that is not the profit they're going to make on Starship, although that's going to be reasonable. you know, a couple of billion, tens of billions maybe, but what it enables them to do. And so, while we'll have Jeff Bezos to come into that game, and we'll have a few others to come into the game, the absolute advantage they have with Starship is the same absolute advantage that they've earned for the last 10 years from Falcon 9. They they will have a cost of launch that will be so ridiculously better >> than every other company on earth and every other nation on earth >> because they're so far ahead that it's going to take years for either Bezos or China to catch up to them. And that is the enabling capabil that's the enabling factor in data centers in the sky. So personally I think SpaceX is grossly undervalued in the same way as Tesla is grossly undervalued. The only problem is it's very hard for me to persuade the Tesla you know followers because they know the Tesla story intimately. The the SpaceX story I had to develop like brick by brick with Herbert. I had to develop brick.

>> Yeah, it's a black box to them. Once I, you know, once I had Herbert understanding it, he got it and he, oh my god, I didn't realize that.

>> So, that is the huge problem. The problem is not that.

>> Sorry to interrupt you. We have breaking news. L just confirmed we don't have 25,500 limit.

>> We don't have the 2500 limit. It is how do you say it?

>> It's been there for months.

>> Me too. Me too. But >> for months. I know.

>> But it's first time Tesla said it. Guys, it's breaking news. Go on, Alexander.

>> It is breaking news. But I bet you didn't move the stock.

>> Can I Can we please Can we please just have a moment? We have some real in the comment. There is somebody who said Alexandra is on the Epstein lift list.

>> Oh my god.

>> Oh my god. You know, this is going out of hand. We have some real bears here in the comments. I please want everybody in the comments to just relax.

>> Herbert, do you have a moderator? Block these people.

>> I mean, there is about 10 people in there that just >> I think anybody accusing somebody of being on the Epsian list is deserving of being blocked because there's there's no there's no redemption from that.

>> It's not happening on my channel, Herbert, because I got four moderators in there and it's clean as a whistle.

>> Throw them out, Herbert. I'm so fed up with these I'm sorry. careful very busy.

>> Uh, don't forget Elon made accusations about someone else.

>> Come on.

>> Maybe it's one chess move. That was a brilliant move. If you dig into that, the reason behind that is brilliant. But anyway, let's move on from that list.

>> The one you're referring to.

>> No, no, no, no, >> no, no. Alexandra,

>> YouTube comments. YouTube comments.

>> Yeah, I know. I know. I know. So here is >> who who did Lars reply to? So Lars replied to >> Farzog.

>> Yeah, cuz I I told him there's no 2500 and then he asked you, can you please clarify >> that's the case? And L said no.

>> There you go.

>> Mean he meaning he can't clarify.

>> Can you please clarify if he applies to suffering or not? He said no. Okay, >> that's it. There is no I'm just trying to give a great job on it. GP did a great job on this. Yeah.

>> Jeez. All right. I'm just going to jump in next time because Alexander, I'm over here like like just trying to let Larry finish. I'm like, "Guys, this just came out." You're like, "Guys, breaking news." That's how you do it. I'm taking notes.

>> Sorry I interrupted you, Larry. Please go back.

>> No, no, it's fine. It's fine. I mean, I think I've had my say. All right. You know, it's extraordinarily difficult to explain the whole SpaceX >> opportunity because just if you're not a Tesla follower, if you don't really understand Tesla, there are so many components of the of the case to be made for Tesla. And the same is true of SpaceX. There are so many components in that. And I would I I I just I have to say that the opportunity of bringing those guys like Johnson into overall control is just magical. So I just wanted to say that you've got Gwyn, you got Brett, you've got really really outstanding guys just as you have in Tesla and they kind of complement them each one another very well. So I Anyway, >> let's bring it back to numbers. Can you share that slide, Herbert? I know you're busy with other stuff.

>> While you share, we do have another breaking news. Um,

>> this is too much of a day.

>> I know I'm This might be the biggest one of the day.

>> Go.

>> Farzod post. I hereby relinquish my crown. Steering wheel and pedals are for losers. Only an idiot would say Cyber Cab would need a steering wheel and pedals. I mean, seriously, who would ever say such a thing?

>> No way. He's eating his shoe.

>> I don't believe that. Wow, that's impressive. Anyway, back to this. Larry and Alexander. Th this comes back to my >> We won. We won. We won. And Jeff, you jumped on the train just on time. I love it.

>> Yes, I know. So back back to back to valuations because at the end of the day I'm all about multiples and I want us to think in terms of multiples. Anybody chime in here. So per the comp plan for Tesla which I went through with a fine tooth comb 100 times. It's going to 8 12 trillion and that's before any massive pees etc. That's just base and that's a 6.1x from where we are today on the stock.

>> Put that aside. Now I also have the SpaceX comp plan. Okay. And I look at the amount of extra cheddar Elon can make. A trillion under Tesla, 300 billion under SpaceX. He already has a lot of SpaceX anyway, but that would take the SpaceX valuation per my math to about 6.6 trillion. That's a 3x. So you get double the return holding Tesla over SpaceX if they launch the IPO at 2 trillion. This for me as an investor, I like the orange, not the blue. I I disagree with that. I think that the reason the SpaceX uh comp plan is so um muted for Elon is simply because he has control and he didn't need a higher comp plan. So I think honestly if Tesla goes to the the 8.5 trillion I do believe we'll see SpaceX close to that number if not above that number.

>> So I don't have I don't have the bylaws for the Yeah. Go ahead.

>> I have done the um the I've done the the calcs in terms of valuation and the SpaceX valuation is nutty. It goes to beyond the 10 trillion mark >> post 2030.

>> Post 2030.

>> It's crazy.

>> We're not We're not going to we're not going to see that over the next 3 to 5 years. That's my point. So I'm interested in the game for the next 3 to 5 years. I do everything in three to five years. Let me first get back on the compensation plan. Let me first get the compensation plan because that's what you're you're trying to use as a base. You cannot use that as a base.

>> First of all, they were not made at the same moment. Second, in if in any way the certificate of formation in Texas and the bylaws in Texas, which I have no insight on and and Larry cannot give to me because they are under NDA and I understand that. So, as soon as we have those, I will show it to you in words and you don't have it either, James. Nobody has it. But as soon as we have that, I'm nearly certain that they have the same writing. What happens in a case of a merger whether it's a merger of equals or acquisitions or whatever is all the operational goals can fly out of the window or can be maintained with new numbers but all the market cap goals will be adjusted to reflect the combination of the two companies.

>> Okay. So they have all latitude to adjust these and they you cannot take them as a reason of saying okay that market cap that was set when was it a year and a half ago for SpaceX is now an indication of how much SpaceX will be worth at a certain point in time which is the same point in time than the November 2025 compensation plan we voted it. It's not comparable. It's different moments in time. It's different. And at the merger, they will all be put back to zero.

>> And it's and it's a different holding requirement. Much different holding requirement.

>> The holding requirement in Tesla is 5 years. That isn't the same in SpaceX. So the discounted value of those that stock is very significantly different. Anyway, I I think that it's the wrong metric. I'm with 100% with Alexandra. I think it's the wrong metric. And I think just saying that the stock's going to be worth this because of that, I think it's it's it's ludicrous. The opportunity the the opportunities the the shots at goal at SpaceX is very significant. The number of shots at goal are larger at SpaceX than they are at Tesla. Tesla have two gigantic shots at goal and then a few minor ones.

>> SpaceX SpaceX has three or four really major shots at goal.

>> And so, you know, you've got XAI, you've got X, and you've got uh Starship and you've got data centers in the sky and you've got Starlink. You've got such enormous potential that it's just staggering. Anyway,

>> plus the fact that you are then one of the top three, if not the top mega cap in the world, which will make you >> fulfill your capital needs because they will need to they will need to >> get a lot of money from different ways. But we we'll see how we get there. But by being up there, you have a completely different condition and quickness and ways of getting to that money much more than if they stay separated.

>> Exactly. And and either way, it's going to be fantastic because the synergy and I made I made a video as well called Virgin Tams. I think it was suppressed by YouTube because nobody ever saw it or because the name Virgin Tams, but I meant Virgin total addressable markets. Things like like space is the ultimate addressable market. It's vast. Beyond vast. So we totally agree, Larry. And then autonomous vehicles and AI agents and you know all this stuff humanoid robots the the terraer >> the most important the most important argument for integrating the two companies is because you don't want to have these separate things. You have to start building products that are totally and fully integrated in ways that we can't even yet imagine.

>> Yeah. But when you when you have those teams then all of these things are going to you know fall out of it. I mean data centers in the sky didn't happen by mistake. They happened because we can see a path to a 20 $20 a ton to to low earth orbit. And when you get to that number >> bingo you know the whole world opens.

>> I'll challenge you again. Let me let me just jump in one last one and I promise I won't say any anymore then. that the biggest gift that Elon could give us >> is to do it early because then Tesla stock will profit from the NASDAQ 100 inclusion and all that because it will be from the announcement on in the lock and lock step and so >> if he really always said wants to do a good present to a good gift to to um to retail investors that is it the announcement as early as possible >> and I have one other thing before James shoots me I didn't we agreed >> the moment the not the moment the S1 falls but the moment we have clarity on the pricing of SpaceX Tesla stock's going to I mean I I said on the other day on Randy show that I think we're going to hit 550 when the SpaceX um in in roughly late May, early June when the SpaceX >> S1 is is published and when we see the pricing, I think Tesla's going to rapidly equilibrate with the SpaceX earnings.

>> I'll lap one there. As soon as we get 2,000 cyber cabs, robo taxis, whatever in the market floating around, we get to $500 new alltime high. And that could happen within four weeks. So, that's line in the sand right now. But I do want to also talk about one other elephant in the room that Elon has in his belt tool belt and that's AGI ASI timeline. We already got that from the Gro plan. The Grock 5 equates to AGI Gro 6 and Grock 7 are ASI artificial super intelligence. People don't know what this means when >> a conglomerate has this AI power at their fingertips to create new metals, new sources of fusion energy, new whatever cooling panels for data centers in space.

>> The mind melts and he's alluded to the fact that the rate of change that we are about to witness even for things like optimist learning are off the hook. This is why I always been warning people the future's very bright. Buckle in. Get through the pain and the lumps of the volatile stock price, but it's just going to take off of next two or three years. It's going to be absolutely insane. And people can bookmark this and then throw muck at me if I'm wrong, but I tell you, it's there's nothing like it.

>> So it 10 years.

>> As a James, as a Tesla investor, this is what I learned when I had Larry on on kind of walked me through the SpaceX story. Larry guy.

>> Yeah, great guy.

>> Drinking wine.

>> What what he taught me that as a Tesla investor that I didn't understand that now I do. So, as Tesla investors, we're all sitting here going, "My gosh, Tesla stock is about to skyrocket. We're about to solve robots, which we have. It's roll out now. Then we have Optimus, SpaceX. We're talking about data centers in the sky. We're talking about moon cities on the moon. We're talking about, you know, Dyson. These are going to take decades." That's actually not true. What he walked me through was that Starlink just by itself Starlink alone is equivalent in size to the robo taxi opportunity and it's happening at the same year and by the time that robots are in place SpaceX AI data centers will be in place and that's the same size at TAM as the robots. So these are actually truly mergers of equals at the same time. So, it's not like, oh my god, they're going to dilute us.

>> And you've left out and you've left out X AI and X >> and and I've also left out uh which you guys did also, which is uh SpaceX mobile >> mobile direct. That's Starling. That's that that's where the money is coming from from Star.

>> That's not even added into the whole story yet.

>> I would I would counsel you guys. I'm going to be doing a show with Roden in the next day or so. about India. That's all I'll say about that and then that will that will open your eyes open your eyes as to what the real opportunity is in Starling. So I

don't want to say more than that, but I mean, it is incredible what value SpaceX is about to unlock.

Now, I'm not underplaying Tesla. I have a huge investment in Tesla. It's my biggest single investment. I have a huge investment in Tesla. But I mean, I have never seen a company like SpaceX in my life before. And I've, you know, I'm 80 years of age. I've seen it all. I've seen it all.

Can I tell you what I think everyone's missing about SpaceX? And I'm joking a little bit here, but kind of serious. Imagine Elon no longer CEO, Gwen CEO, Ernie's call, Gwen the polished. Elon does what he'll. Hallelujah.

Imagine.

Oh my goodness.

Yep. But they do fantastically well together.

And good communicating woman.

They do fantastically well together, you know. They really, really do well together.

She can be the COO of Tesla. That would be great. I did a full show with Larry on Gwen. Just Gwen. Oh my god. Great. Um, guys, we've got 15 minutes. Lady right after me. Right, Larry?

Right after you. Right after you. You're the queen. You'll always be the queen. You're

See how my jealousy got matched? Doesn't match you. Does not match you in any way.

I'm just brightening it up. Okay, we got 15 minutes to go. We got 15 minutes and I think what we need to do is talk about the questions because one of the things that I am disappointed with is that they have not.

No Optimus. Why have they not shared the date of when Optimus is going to be.

Yeah, here. And that is the first question. When will we have Optimus V3 reveal? Do you think that on this earnings call, they will actually tell us an actual date?

Yes.

No product announcement on the earnings call. Forget about.

No, they won't tell us a product announcement, but they'll give us, they'll tell us when an event is going to be held.

They'll probably say Q2, which is loose enough.

I mean, that's not good enough. They they said Q1.

End of end of May, maybe end of May.

It reminds me, it goes goes back to what was it, 88 to 1010 for the Wii robot event.

He needs everything to be perfect. You only get one shot at this in history. V3 is everything.

So, he's wants it to be perfect. And I totally agree with that. People should be patient.

Can we reflect on that for a second?

We know it's there.

That's such a great point you just brought up because you remember everyone was freaking out about, oh my god, they're delaying it by two months and everyone the stock went down. Everyone was freaking out.

And it's like, all right guys, it was literally no big deal. Look where we are now.

Y.

What, how do you guys respond to the people say, "Well, you guys launched Robo Taxi June, almost a year ago, and all you have is 13 cars. If they have one prang, one accident, they'll be crucified by mainstream media." That's the.

I am not aware of another company that has ever launched into a new city fully unsupervised.

Mhm.

They just.

You're right. You're right. You know, Waymo was two years supervised. Two, two and a bit years supervised. um in in both cities they started with the one in in Scottsdale, Arizona and the others in um in the Bay Area and they were two years supervised in both of those sites. So you can't begin to compare where they are now. It's a few years later. By the way, there is a senior d uh u senior executive of Google who's a director of SpaceX. You guys know that?

Nope.

Well, Google's an investor in SpaceX, right?

Yeah. And so on the board of directors of SpaceX, there is a Google, a very senior guy at Google from Google. Just thought I'd let you guys know.

Okay. Uh second question is, um, what milestones are you targeting for unsupervised FSD and robo taxi expansion beyond Austin this year? How will that drive recurring revenue? So, more details. I'm sure they'll answer that prior to this question though, right? I think it might be the 155 version, version 15 we need. So, and then when do you expect FSD unsupervised to reach customer cars? I I don't know. Not sure that's important. I mean, some of you do think it's important, right? Because that you are saying that in order for true robo taxi to happen, you have to have customer cars to be part of the equation.

Yeah, you do. That's but but you don't have to have them in the early days or the early years. I mean, you need them. They are the pro, that's where the profit lies, by the way. Being able to expand your your um your fleet on demand on peak hours because all the money is made in peak hours. All of the money.

I I take umbrage with the way Herbert said that though.

In order to have true robo taxis, you have to. No, we. What do we have now? When I go to Austin, I take it. Is that not a true robo taxi? Is that fake?

True robo taxi service to really cover the whole thing, including peaks and ser peaks. And uh.

Here's the thing, Nick. If you go to Austin and I go to Austin very often, my office is there. When I go to Austin, I know that I can't get a robo taxi at peak hours. I know it.

Hi, CERN.

So, if you don't have the ability to ex to have this elastic supply, you can't make money. And that's why Waymo will never make money. Never make money in this business.

Yeah. But I I do think that I mean, I agree with you and trust me, I'm not going to buy another Tesla until I can put my I bought FSD. I want to put that thing to work before I buy another Tesla. But so I'm with you on that. But I do think that they'll be able to scale and do everything just fine managing their own fleet for a while. I I think for us to be part of it, it won't be this year for sure. The reason the reason you're right, absolutely right, is because prices are so high relative to what they could charge if they were able to scale, you know, in peak hours. The problem is until they do that scaling in peak hours with customer cars, they will not be able to provide a 24-hour reliable service. They will always be known to be unavailable in peak hours.

Or they'll just have a lot of assets not being utilized that sit on standby.

That is the other way to do it.

We have uh 10 minutes and so before we do that, go ahead.

Yeah. Uh you guys have done a great job covering the results. I just wanted to highlight a couple things. Uh FSD subscriptions up 180,000 this quarter.

Yeah. Uh, of course, we know that that was bumped up by the, you know, last chance to purchase FSD. But what's interesting now, Herbert, if you go to the next slide, is almost 14% of all vehicles ever delivered um have FSD uh subscription.

Wow. Wow.

And then if you look at it for this quarter.

Hold on a second. Ever delivered, even the old versions from a decade ago?

Looking at cumulative uh deliveries. Yes.

Wow. That's amazing.

Yeah. And and then amazing on the for this quarter, the incremental take rate was over 50%.

Wow.

Now, of course, that's heavily skewed by the fact that a lot of people who didn't buy a car this quarter purchased FSD, right? They purchased FSD on their car that they bought, you know, a year ago, whatever. So, that will come down, I'm sure, in the second quarter.

I don't think so.

Well, perhaps.

Because they've had these deals before. No, I think I think it's an appropriate call out. Just I mean, they've had these deals before like, oh, this is it on FSD and and we never saw the kind of growth that we saw this. I don't know. May not come down.

No, I think you're right. I think you're right. I think it's what what we could call a catalyzing event. I think the catalyzing event wasn't the disc, the the the offer this quarter. I think the catalyzing event was the offer this quarter plus what's happening in terms of FSD.

And then of course, in Q2, we're going to of potentially the bump up in Europe, people in Europe being able to purchase or subscribe to FSD.

So, that's another positive thing for this quarter.

And then if you just look at margins uh real quick, uh total gross profit 21.1%. Uh net profit uh 6 and a half. So, nothing nothing too amazing there.

How many quarters do you have to go back to get to that level of profit though?

The 21%.

Yeah. Back in like Q3, Q2, Q3 of 2023.

There you go. There you go.

That's amazing.

Yep.

No, it's right here. Q4 2022.

224. Okay. Yeah.

And that's with the ZEV credits, right?

Yeah. And now credits went down. If we back that out, near the next chart, um, if you just look at auto gross margins on the next page.

Uh, gross margin with the credits 21.1, but without 19.2, which again is the highest it's been.

Since uh, you know, 2022, 2023.

Huge, huge, huge issue, huge opportunity. I mean, it's amazing. And then on the next page, the uh gross profit per vehicle delivered, X credits, and X lease is now over $8,000 again.

Amazing.

Wow. Does that include FSD?

No. Or yes.

Um, FSD is part of services and other. So.

It's not. That's incredible. Shout out to Jim Farley. This is a great slide. This is an important slide. Yeah.

It's the most important news of the quarter though. It's the most important news of the quarter in terms of auto. Of course, the auto is less. Yeah, but I mean, it's amazing. It's an amazing job.

And finally, the last slide is looking at gross margins per business line. Um, autos, service and other fine, but the energy one bumped up to 39 and a half percent. So something.

Interesting or unexplained is going on there for the quarter.

Yeah, I had a concept on that, sir. Could there be juicy transfer pricing within Tesla for me?

Good question. Good good theory. I don't know.

That's a small number. Again.

I said that for a week now and I was every time yelled down that no, no, no, that's not enough.

No, we're talking about um the the shortfall, the six gigawatt shortfall. It's not enough. But.

I don't know why you would be paying yourself more for Megapacks than than the market.

You're not paying yourself. You're not you're not paying anything. You're using them yourself.

No, no, no, no. You you have to you have to you have to account somehow.

Uh, but but but I think there's um an accounting requirement in terms of how you price what you sell yourself.

Correct. I I don't know that there is in the United States. I know that in in the UK we had very tight control of what we could pay pay ourselves. I we we did it ourselves and and we had to price it at the lower of the uh average across the customer base. Well, I do hope one of the the financial analysts asked that question because they are the only ones being able to.

To um jump now on unanswered questions because ours are in there through say so if if they have something in their brain, they may not that I have much hope, but they may actually ask that question.

I I didn't quite realize this. Gene Muner posted FSD miles driven grew 93% quarter over quarter. That's crazy.

Is that real? Where did he get that number from?

He said looking at the chart in the deck. He said FSD subs grew 16% quarter over quarter. FSD miles grew 93% quarter over quarter. That's wild if that's true.

I can check that right now.

Yeah.

The 16% I validated. That's the the highest quarter on sequential quarter growth ever for FSD. Uh the miles tells you that people are using it as a percent of their driving miles.

More.

I'd like to take credit for that for throwing a lot of shade at everybody for not using it more. Dylan.

We're at 9.7 billion. By May 12th, we'll be at 10 billion, maybe sooner at this rate. So, it's really going exponential with the miles. But that's really.

This is what page where are you guys?

It was 28.

Oh.

I think is a 50 miles driven quarter over quarter is incorrect. I think it's probably 93% year-over-year if if that's right. It's not up. Yeah, it went Yeah, it went from 8 to 9 quarter over quarter, but year over year. Wow.

I think he's got his Q and Y over Y is mixed up.

Yeah, I think so too.

Don't blame me. His Gene Monster. He's the one that made the mistake.

Stop spreading spreading.

Did you see that? Farz inc increased his tip to 100 bucks. Serbert, you're getting.

Can you guys Can you guys hear this? No, we cannot hear you. No, we cannot hear anything.

Can you hear the music?

No. No, sir.

No, we cannot hear the music. But I I just wanted to let you know that you got another hundred bucks from Fazette and I think you should share that with the group.

Yeah, I want some of that. I want some.

You have no idea. There is no. There is never anything.

If Arzo is not dropping 10k in here, what are we doing here?

Yeah, exactly. I'm going to play. I'm think I'm going to play German Union here in the Herbert Ang production company. I know I have CERN with me very quickly and Jeff.

Nick, I'm sure is going to join us as well. And.

Okay, hold on guys. Hold on. We got to team player. So.

This is critical.

Look how he's not he's not talking.

This has to be solved. We got to figure this out. Uh.

I think.

We don't do anything. We sit here look pretty.

I'm I'm going to jump on it myself.

Yeah. Now.

It's working now.

Yeah. I'm going to push play. That's all you got to do.

Have lunch. I'll be back after.

Louder. Louder.

That's good. That's good.

Yep. That's as loud as it gets.

Have a good earning.

That's good. That's good.

I better turn it off though because um that music is going to be.

Monetized.

Yeah. But at least we know it's working.

It's music. There's no monetization on music.

You think so?

No, I because it's it's not copyright. They wouldn't be able to play it if it's copyright. They're going to buy copyright for themselves. I think.

They can do it. You can play whatever you want with copyright as long as you're not monetizing it.

Yeah, I see.

Oh, I see.

Wait, he's giving you another hundred bucks? I mean, come on. We're at 350 bucks now.

Are you kidding? No, seriously. Okay. Well, then I'll I'll I'll spend it to you guys.

Two, three, four, five, six, seven of us. 700 bucks, mate.

Keep on going, Farzette. Keep on going. Farz.

Is the champagne room of Tesla broadcast. Okay.

Actually, it's not champagne. This is not champagne. This is uh this is a very fine French wine actually.

Yeah. No, this is a very fine French wine.

It's from the French Laundry.

Let's give a shout out to Elon Liv Pedto was a big deal. He answered uh her 15 10 questions and.

That was so cute.

15-year-old who passed away. Elon answered her questions.

Yeah. S such a sad such a sad story.

Yeah. But he really saved the story. I think he made those parents very happy in a very difficult moment.

Well, it's a very difficult man. Yeah.

So, we will Yes, of course. DK will have to buy you. Oh sh.

Another hundred bucks. I can't believe it. Keep on going. Keep on going.

You're okay. But what about the mods? Yeah, you're right. You're right.

It says the last one. Leave me alone.

We owe you. We owe you.

No, no, no. Keep on going. Yeah, that means you're stiffing me and Tesla boomer mama and.

Right.

Nick out to how do I add to it? I want to give a 100 bucks.

It's contagious. How do we do this?

Okay, with with.

And you and your pay.

Do we have any update on the lawsuit Elon Musk against OpenAI scam Ultimate?

No. No. They are starting with a jury selection.

But he said today that he Sam Alman said literally that he's very worried Elon's going to drop the case. He literally said that.

Yeah. He's very.

He cannot be trusted. He's a path.

What he meant was I'm a I Right. What he meant was I don't want Elon to drop the case because then I want to have my chance to tell the story. What he's saying?

Before the call starts, we're at 401. We'll see what happens after. We were at 403.

I know. I just want I just want to be honest here before it starts 401. So.

I'm focused on the AA stock right now.

I'm focused on how many.

$300 today.

Unbelievable.

Classic.

Yeah, but Uber should be down too, right? I mean, this is the end.

Charzone said he's out of money, but if he buys a fleet of cyber cabs, he can make his money.

Thank you, for sure. All right.

Herbert, you're going to spoil us so much.

Thank you so much.

I have to send tips to Hadukan and Drk.

I do have mods. You see, my mods took care of everything, you guys. My god. All right.

Is this it?

No, not yet.

It felt like it was it.

Oh, and all these other people jumping in. Thank you so much for helping Herbert get even richer. Not true. Thank you.

I I just I just want you to buy me a drink when we meet one day.

We have to meet each other.

You bet, buddy.

Yeah. Every time I I'm in Seattle, you you bail on me.

I will take care of Oh, what? What?

Your excuse last week. Super Bowl.

Oh my gosh. Look at that. Or somebody else at 99 bucks. I mean, you people. Okay, so this person's chipping in four far. Okay, so that gives us Oh my god. Okay, wait. What's going on? It's hopping, guys.

Who's gonna drop?

Let's get a thousand. Come on. Let's go to four figures. If you drop a,000 to pay all of you.

All right.

I'm going to start taking my shirt off.

You know, we're going to get this party going.

All right. Well, let's let's wait to see what happens with the call. Oh my god. It sounds like it's going to be.

The most tipped stream ever, right? I Yeah, people don't usually tip.

We're going to start Oolie fans next. Let's go.

James.

Yes.

I said they tip James. They don't.

Shout out to Nick. Nick Gibbs and Larry drinking wine. Nick about to take a shirt off and account.

I'm empty. So, this is my excuse.

Somebody told me to kick live on the stream.

Yeah. Okay. I'm I'm live. Thank you. Thank you.

Hey, I didn't even know you could do that. That's great.

No, I knew it. But uh thank you. Click live.

Well, they're late. They're never late.

Tell me to click live. I did it. I did it. Back to back to Nick saying that this is one of the best earnings at least decks we've seen. I really agree. It's a perfect setup for the future.

So, I think we should, you know, emphasize.

Like I said, he they themselves are saying that 2026 is looking a good setup. So, as long as macro macro macro.

I mean, just just and and sorry you weren't here for the beginning, sir, unless you were listening in, but.

Talk about a setup.

Everyone, and welcome to the first quarter Q&A webcast.

My name is Travis Axlerod, head of investor relations, and I'm joined today by Elon Musk, the above Teneeda, and a number of other executives. Our Q1 results were announced at about 3 p.m. Central time in the update deck 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 use the raise hand button to join the question queue. Before we jump into Q&A, Elon has some opening remarks. Elon.

Uh, thank you. So, uh, I think we've got a very exciting year ahead of us with 2026. Uh, we're going to be substantially increasing our um investments in the future. So, should expect to see significant uh, a very significant increase in capital expenditures. Uh, but I think well justified for a substantially increased future revenue stream. Um, and obviously Tesla's not alone in this. I think you've seen u most if not all um certainly the major technology companies uh substantially increasing their capital investments um and uh and we're going to be doing the same. I think it's uh, it's it's going to pay off in in a very big way. So we're investing in and improving um our core technologies, battery, powertrain, uh, AI software, AI training, uh, chip design, uh, manufacturing expan, uh, you know, laying the groundwork for significantly increased manu uh manufacturing production. Um, we are also uh strengthening our supply chain across the board, batteries, energy, AI, silicon, everything. Um, and uh, laying the groundwork like I said for what we expect to be a significant increase in vehicle production in the future and of course uh, a very significant increase, well uh, actually releasing Optimus, um, but increasing our internal production for testing um, and then probably being able to have Optimus be useful outside of Tesla sometime next year. Um, as you've heard me say a few times, I think Optimus will be uh our biggest product, not just Tesla's biggest product ever, but probably the biggest product ever. Um, and uh, and I remain convinced of that conclusion. Um, so, uh, on the RPL side, it's always, I think, worth noting that a Tesla car is incredibly incredible value for money and the they're all autonomy ready, depending on what uh, uh, part of the world you're in. The uh, supervised full self-driving is getting extremely good. Um, we have uh just started production of Cybercab, um, and will begin production of our semi-truck soon. Um, now I should say uh, whenever you have a new product uh with with with a completely new supply chain, new everything, uh, it's always a stretched out curve, so you should expect that initial production of Cybercab and semi will be very slow, but then ramping up and going kind of exponential towards uh, the end of the year and certainly next year and uh, in fact, we'll be ramping up production of of all vehicles uh, and all factories uh, to the best of of our ability through the balance of this year. Um, on the energy front, uh, the United States and the whole world will need a lot of energy storage to meet growing electricity demand. Uh, demand for our Megapack is very strong. Uh, and we're excited to begin production of Megapack 3 later this year in our new world-class factory outside Houston. Uh, for full self-driving and robo taxi, version 14.3 was a major architectural update and and we have a whole pipeline of of major improvements to full self-driving that that we believe will um lead to unsupervised full self-driving um being available anywhere in the world that uh it is legal to do so. Um, and then and then there's a version 15, hopefully later this, hopefully by the end of this year, but certainly by early next year. Um, and that will be a complete overhaul of the software software architecture and will run on AI4. Um, that's uh, and and that at that point, we're really just uh increasing the safety level of FSD above human safety level even more, meaning I think even within version 14, we're significantly safer than than human, but B15 will will take that to another level. Um, we've expanded Robo taxi to Dallas and Houston, uh, using the same software source in the Bay Area and um, the limiting factor for expansion uh, is really uh, rigorous validation, making sure things are completely safe. We don't want to have a single uh, accident or injury with uh, the expansion of robo taxi and we have to the credit of the team not had a single one to date. Um, and then Optimus, we're preparing Fremont for starter production later this year with with Optimus. Again, totally new supply chain, totally new technology. So therefore, it's the production curve is always very slow in the beginning, but uh, we'll ramp up to significant numbers next year. And we're constructing a second Optimus factory in at our Giga Texas location. Um, and that will probably start production around summer next year. Um, the V3 Optimus design is uh, almost ready to demonstrate. I think we want to just make sure it's like polished. Like it works functionally, but uh, there's some aesthetic elements uh, that need to be finalized and um, I think probably middle of this year, we should be able to uh, show it off. Um, we're also a little hesitant to show V3 off because we find our competitors do a frame by frame analysis whenever we release something and copy everything they possibly can. So, I think there's some value to, you know, not showing new technology until it's uh, close to production. Um, the uh, congratulations to again to the uh, Tesla AI chip team for taping out AI5. That's going to be a great chip. I think probably the best AI inference chip for edge compute that exists. Um, and certainly unequivocally the best value for money. Um, team did a great job and we're already uh, have a lot of momentum for designing AI6 and we've begun to discuss ideas for Dojo 3. Um, so this is all very exciting. Um, we've we've also uh, uh, finalized plans for the uh, chip fab, the research chip fab on the Giga Texas campus and will start construction of of that this year. Um, in conclusion, uh, Tesla's working on a lot of large ambitious projects. They're all very, very challenging, but I think they're going to be revolutionary. Um, and this is what the team does best. Solve the hardest problems and build amazing products. And I'd like to thank the Tesla team for all the hard work. And thank you to all of our supporters.

Great. Uh, thank you very much, Elon. Uh, and Veov also has some opening remarks.

Thanks, Travis. So, 2026 has had an interesting start, not just for us, but I think the world in general. On the autos business, we have seen a resurgence in demand in EMEA and certain countries like France and Germany showing over 150% quarter over quarter growth in deliveries. In APAC, we witnessed growth in South Korea and Japan again in terms of deliveries. Even out here in the US, we've seen a slight growth in terms of quarter over quarter deliveries. On the auto backlog front, we ended the quarter with the highest Q1 order backlog in over two years. Whilst the recent increase in gas prices has had a positive impact on the order rate, this improvement started before the uptrend in gas prices. This is due to the work done by the Tesla team in bringing more compelling and affordable vehicles to market. 10 years back when we launched Model 3 in the US with a promise of $35,000 starting price, which if you adjust today for inflation translates to about $48,000 in today's dollar terms. The starting price of Model 3 today is way less than that while the product is way more compelling from where it started. Given this setup, we're focused on increasing our overall production volume, something that we already started in Q1. This volume increase is evidenced by the Giga Berlin reaching a record output of over 61,000 units in Q1. We plan to keep growing volumes further, not just in Berlin, but across all our factories. Our biggest limiter continues to be our battery pack capacity, and we are actively working on resolving that. Auto margins excluding credits improved sequentially from 17.9 to 19.2%. and 2%. Note that we have had certain one-time benefits from warranty throws around $230 million and some relief on tariffs. We have not realized any benefit from the recent Supreme Court ruling on IPA tariffs as there is still a lot of uncertainty around the final outcome. Both tariffs and sustained high interest rates continue to add to our automotive cost. Interest rate subvention costs are recognized upfront. If interest rates continue to rise, our cost of subvention will continue to impact auto margins. On the FSD adoption front, we continue to see improvement, reaching nearly 1.3 million paid customers globally. The bulk of the growth came from subscriptions, while upfront purchases only increased 7% as we removed the purchase option in some markets in Q1. We recently received approvals for FSD in the Netherlands. This sets us up well for an EU-wide approval later in Q2, and you know, we're just gated by how the regulators go about it. Additionally, we've also received approvals in China. uh the broader approval is still not there, but we're working with the regulators in the country and we're hoping that we can get approval by Q3. With these approvals coming through, we expect the broader adoption of the software in the existing fleet and incremental demand for our vehicles. With all this in mind, we have evolved our vehicle sales strategy where we now emphasize FSD as a product and vehicle as only the delivery mechanism. As we have noted previously, the energy storage business is inherently lumpy, tied to customer deployment timelines. In Q1, we deployed 6.8 gigawatt hours of energy storage, a 38% sequential decline. However, we still expect 2026 deployments to be higher than 2025. We set yet another record with gross margins in this business over 39 and a half percent due to some one-time benefits from certain tariff recognitions of more than $250 million from certain tariffs which we had paid in prior quarters on a normalized basis. We continue to expect energy compression from here with increasing competition and tariff impacts. As previously discussed, tariffs in this business can have outsized impacts as most of the battery cells are procured from China. Our order backlog for this business is robust, and we're doing our best to build not based on not just based on existing demand, but also on expected demand. Services and others improved sequentially from 8.8% to 9.2%. This includes a collection of efforts meant to support our customers like service centers, used cars, paid supercharging, part sales, insurance, and even our robot taxi business. We're making deliberate investments in the infrastructure to help the robot taxi in the future. We grew the robot taxi fleet quarter over quarter, and we expect to keep ramping the fleet as we accelerate and get into other geographies. On operating expenses side, we did increase sequentially from a full quarter stock-based compensation expense for the 2025 CO compensation plan for which one milestone is still deemed probable. Additionally, our spend on AI-related initiatives, including expense on development of our own AI5 chip and new products like Cybercab, Semi, Optimus, and Megapack, etc., continue to be at elevated levels, and we expect this trend to continue for the full year 2026. Net income was impacted from mark-to-market charges on on our Bitcoin holdings, which depreciated 22% as compared to the last quarter, and the unfavorable impact of FX, primarily from our large intercomps. On free cash flow, we ended the quarter with just over $1.4 billion. As Elon mentioned, we are in a very big capital investment phase which is going to start now and would last a couple of years. So, based on that, our current expectation for 2025-2026 is over $25 billion of capex, and you know, just to remind you, we are paying for six factories which were going to go into operation, and some have already started, some would go into operation later part of this year. We're further increasing our investment in AI-related initiatives, including the AI infrastructure to support robotaxi and the launch of Optimus. We've already started placing orders for the research semiconductor fab in Austin and for solar manufacturing equipment. While this may seem a lot, and we will have the impact of negative free cash flow for the rest of the year, we believe this is the right strategy to position the company for the next era. We'll make such investments in a very capital-efficient manner. We are actively working on our mission of building a future of amazing abundance. However, that requires not just a lot of investment, but an immense amount of execution. The future is going to be great, and the whole Tesla team is rising to the occasion to make this a reality. I would like to end by thanking the Tesla team, our customers, investors, and vendors for having confidence in us on this journey. Thanks.

Thank you very much, Ev. Uh, now we're going to go to investor questions starting with a question from say.com. The first question is uh, when will we have the Optimus 3 reveal? Uh, which we already uh touched on. Um, but the rest of the question is uh, when will Optimus production start since we ended the Model X and S production earlier this uh, then mid-year, and then what's the expected Optimus production rate exiting this year and what are the initial targeted skills?

Well, as I was saying, um, what we found is that when we've unveiled various Optimus versions, we Optimus versions, we found out how competitors literally do a frame by frame analysis and copy everything we're doing. So, I think we want to push the Optimus 3 um, unveil maybe closer to production. Uh, startup production is um, we're assuming is somewhere, you know, some somewhere around the late July, August time frame. Um, and um, I mean, just just to inject some reality into these questions, since these questions are are not, you know, who did this question does not fully understand what happens with a production line. Um, the the the last uh, SX production will be in early May. Um, but you have to look at the entire upstream portion of the production line. So you have to start with, you know, sales, battery packs, um, you know, motor production, all the parts production. And so we've been dismantling the SX production line um, you know, from the, you know, more base level parts, bas, more basic level parts to as you get to more larger sub assemblies, you you start dismantling the line from the small parts first, not not from the final assembly first. So the final assembly line will um, that'll be dismantled next month and the after the last of the uh, SX vehicles done. Now, you can't you can't dismantle some gigantic production line like overnight. It takes at least a few months to do so. Um, and then uh, you you've got to install a new prod line. Um, and you've got to provide all of the the wiring and communication uh, te, you know, test out the machines uh, of of the new production line for Optimus. So that that also takes several months. Um, so frankly, if if we're able to go from um, stopping production on one line, dismantling that entire line, reinstalling a whole new line and turning that on in a matter of four months, uh, that is an insanely fast speed. Uh, I I don't think any other company on earth has ever done that before. Just to put things into perspective and inject some reality uh into uh the the situation here. Um, I don't know what the production rate of Artimus will be this year. It is impossible to predict these things. Um, the When you have a uh brand new product in an entire new entirely new production line and and you have 10,000 unique items, all of which have to go right in to ramp production, it'll move as fast it will move as fast as the least lucky, slowest, dumbest part in the entire 10,000. Um, and this is a Optimus uh is is a completely new product with a completely new production line. Um, so uh, it's uh, it's just literally impossible to predict. Um, ex except that I I I think it will be quite slow at first, um, as we iron out the 10,000 plus unique items that have to be sold for Optimus to um, reach volume production. Um, initial skills will be obviously, we're going to start with with simple skills um in the factory and and then build up from there.

Great. Thank you, Elon. Uh, the next question is, what milestones are you targeting for unsupervised FSD and robo taxi expansion beyond Austin this year and how will that drive recurring revenue?

Um, well, we we certainly hope to be have uh unsupervised FSD or robo taxi um operating, you know, in, I don't know, uh, a dozen or so states by the end of this year. Um, initially, you know, we're we're taking it very, we're taking a very cautious approach to the rollout here. Like we we haven't had any injuries and certainly no fatalities to date with the unsupervised unsupervised FSD and robo taxi expansion. We want to keep it that way. And so um, I don't I think probably uh, unsupervised FSD or robo taxi revenue will not be super material this year, but I do think it will be material, it'll be material probably in a significant way next year.

Great. Thank you very much. Uh, the next question is, when do you expect FSD unsupervised to reach customer cars?

Um, pro I'm just guessing here, but probably in the fourth quarter. Um, it's it's difficult to release this like to everyone everywhere all at once because we we do want to make sure that they're not unique situations in a city that you know, particularly complex intersection or, you know, actually they tend to be places where where people get into accidents a lot because because they're just, you know, perhaps there's an like I said, an unsafe intersection or bad road markings or um, you know, a lot of weather challenges. So so I think we would release unsupervised gradually to the customer fleet, you know, to yeah, um, as we feel like a particular geography is confirmed to be safe.

Great. Uh, and uh, the next question is, how will hardware 3 cars reach unsupervised FSD?

Uh, unfortunately, hardware 3, I wish it were otherwise, but hardware 3 simply does not have the capability to achieve unsupervised FSD. Um, you know, we did think at one point it it would have that, but uh, relative to to hardware 4, it has only 1/8 of the memory bandwidth of hardware 4 and and memory bandwidth is one of the key uh, elements needed for unsupervised FSD. It's just generally a thing that's needed for for AI. If you're doing an auto aggressive transformer, memory bandwidth is the chill point. So, um, you know, for for customers that have bought uh, FSD, um, what we're offering is essentially a trade-in, like a discounted trade-in for cars that have um, AI4 hardware. Um, and um, and and we'll also be offering the ability to uh, upgrade the car to replace the uh, computer and you also need to replace the cameras, unfortunately, to go to hardware 4. Um, so to do this efficiently, we're we're going to have to set up uh, like kind of micro factories or small factories in major um, metropolitan areas in order to do it efficiently. If it's because if it's done just at the service center, it's it it is extremely slow to do so and inefficient. So we we basically need like many production lines to to make the change. Um, and um, I I do think over time it's going to make sense for us to convert all hardware 3 cars to hardware 4 because that's what enables them to uh, enter the robo taxi fleet and and have unsupervised FSD.

And for what it's worth, um, in the meantime, we're going to also release uh, a V14 version for hardware 3. Uh, this will be a distilled version of the same V14 software that we released for hardware 4. Uh, and people should be able to start the drives from park state uh, and basically have all the features that V14 uh, for hardware 4 has, and that's expected to come uh, end of June.

Great. Thank you very much. Uh, the next question is, what enabled you to finish the AI5 tape out early and were there any changes to the original vision? Last week, Elon said AI5 will go into Optimus and the supercomputer, but one month ago said it would go into the robo taxi. Has AI5 been dropped from the vehicle road map?

Well, the reason AI5 tape out finished early was because the team worked incredibly hard to make it happen and um, just over time, we we we gathered a lot of momentum. Um, but we we did have to work every weekend for 6 months straight, including every holiday. So it was uh, a lot of sacrifice by the team and and I was there, of course, myself every weekend. Uh, and uh, you know, fortunately, we didn't encounter any major, we we didn't make any major mistakes that at least that we're aware of that required um, pushing out the tape out. So that that just the team just did a great job and worked incredibly hard is the reason. Um, uh, yeah, I do expect that AI5 will go into Optimus and into the data center um, because it's it's it's looking like we'll be able to achieve um, unsupervised self-driving with uh, AI4 that is far greater than human safety levels. So, um, which means it's it's it's not certainly not immediately needed in in the car. Um, at some point, I think it will make sense for us to switch to AI5 in the car, but that's but there's not a a pressing issue to do so. Um, so but at some point the AI4 hardware is going to get like so old that it's like, okay, uh, you know, the only reason they're keeping the factory open is for AI4. Um, we we are planning an AI4 uh, upgrade uh, to use newer generation RAM. So it'll it'll go from uh, 16 gigabytes to I think 32 gigabytes per SOC. So a total of 64 gigabytes. Um, and um, probably a 10% increase in compute in in sort of into trillions of operations per second and in memory bandwidth. So that's uh, AI4.1, AI4 plus, probably uh, goes into production middle of next year, I think. Depends. It's it's depends on on Samsung's doing the modifications for us. So, it sort of depends on on when they're able to finish that, finish those modifications and bring it to production.

Great. Uh, the next question is, now that FSD has been approved in the Netherlands and is expected to launch across Europe this summer, can you discuss your robo taxi strategy for the region?

Well, we're probably jumping the gun here on um, robo taxi in Europe since uh, it is uh, took us an immense amount of time just to get supervised self-driving approved in Europe and, you know, these uh, we don't control the regulators, you know, it's uh, we push as hard as we can, but but that's it's ultimately up to the to the governments in Europe and the EU to decide what uh, what to do. Um, so, uh, yeah, as it is, we've only been approved in the Netherlands. We expect to be approved in a lot of other countries and I think the um, supervised FSD goes to Brussels for EU review um, in May. Yeah. So um, obviously then the the next thing beyond that is to um, aim for unsupervised self-driving or robo taxi in Europe. Uh, I actually don't know what the time frame for that is and would be somewhat at the mercy of the regulators as to when that approval would would take place. And from a technology standpoint, um, what we deployed in Netherlands and Europe is the same uh, exact architecture uh, and the training procedure and so on, except it had more Europe data. Um, and I suspect the same thing will be true for unsupervised FSD as well. Whatever we use to solve in the US will work in other places in the rest of the world too, provided we were able to add the data from the local regions.

Great. The next question is, given the recent Nitsa incident filings, can you

Update us on the robo taxi safety data? If safety validation remains the primary bottleneck, why not deploy thousands of vehicles to accelerate removal of the safety driver?

>> Shark, do you want to take that?

>> Yeah. We are increasing the amount of our QA fleet, but we also want to use the customer fleet to give us useful metrics back so that we can scale it safely. As mentioned, we are absolutely focused on safety and so far we have zero incidents, and that's what the Nitsa filing also shows. In addition to safety, we are also solving some of these so-called scaling issues. For example, you do not want the robot taxi to be stuck blocking intersections or dropping people off at slightly incorrect locations and so on. So we are simultaneously solving the long tail of safety by monitoring the metrics across the entire Tesla customer vehicle fleet, which is close to driving 10 billion miles on FSD in the next few weeks, and also scaling up the amount of QA fleet that we have across the entire US to accelerate our safety validation while also scaling the rest of the factors that can throttle the increase of unsupervised vehicles.

>> All right. The next question is, is V14.3 still the last piece of the puzzle to enable large-scale unsupervised FSD and robo taxi, or do we have to wait until V15?

>> Well, no, I think 14.3 is the last piece of the puzzle for unsupervised FSD. Now, the question is like degrees of safety, like how safety and convenience, I suppose. We have a lot of known improvements, like major architectural improvements that we know would improve the probability of safety significantly. So I think it's not going to make sense for us to deploy, you know, unsupervised FSD or robo taxi at large scale when we know that there are major architectural improvements to the software that can improve safety. So I think we're going to want to finish writing that software, validate it, and release it before going to large-scale unsupervised FSD, depending on what large scale means. I mean, we are, of course, as I mentioned earlier, doing unsupervised FSD in three cities and will expand to, like I said, probably a dozen states or more later this year. So it kind of depends on what your definition of large scale is. But I do think it wouldn't be right for us to go to very large scale unsupervised FSD when we know that there are software improvements in the pipeline that would improve safety.

>> Yep. And I'd like to note that the version of robo taxi that's running in Austin, Dallas, Houston, etc., are essentially 14.3 variants. And it's obviously safe, that's why we're able to launch in those cities, and we continue to expand based on the V14.3 base for a while until V15 lands. And V15 is going to be a major upgrade.

>> Yeah.

>> Great, thank you. The next two questions we've already answered about robo taxi rollout and the data that we're observing. So we will end on the last question, which is, what is Tesla doing to scale the energy generation business with solar residential roof deployments have stalled? Will Tesla move to regional solar and battery farms, perhaps coupled to superchargers? And will we deploy solar through utilities?

>> The overall US residential solar market is going through a bit of a correction after the loss of the homeowner tax credit last year, but we still see strong demand shaping up for the second half of the year. Tesla introduced a lease product this year that allows us to capture the tax credit ourselves and offer competitive pricing for homeowners. We've also debuted our own solar panel with superior performance and aesthetics, as well as our own best-in-class mounting system that gives us a fully integrated home energy ecosystem. We believe, we strongly believe that solar and storage markets globally will continue to grow at both residential and utility scale, and we will continue to invest in that growth.

>> Great, thank you, Mike. So now we're going to move on to analyst questions. The first question is going to come from Will Stein at Truist. Will, please feel free to unmute yourself when you're ready.

>> Uh, can you hear me?

>> Yes.

>> Yes, we can.

>> Great. Great. Thanks for taking my question. Um, considering the various parties involved in the TerraFab project, I'm hoping you can provide some details for investors about which party is going to take responsibility for each aspect of that project: funding it, designing it, building it, operating, taking production, and the like. We'd love to hear some more details.

>> Yeah. So, we're still working out the details of the TerraFab deployment. In the near term, Tesla will be building the research lab on our Giga Texas campus. This is something we expect to be probably a $3 billionish initiative and capable of maybe a few thousand wafers per month. But it's really intended to try out ideas in the research lab, both in terms of maybe we have some ideas for improving the fundamental technology of how chips are made and some of the new physics we'd like to test out. But we also want to test out the ability to see if something is working in production. So you need kind of like a few thousand wafer starts a month to make sure that a production process is sound. And then SpaceX is going to take care of, like, the initial phase of the scaled-up TerraFab. And that's what we've figured out thus far. You know, any intracompany thing has to be approved by both the SpaceX and Tesla board of directors. It's got to go through conflict resolution. It's kind of a lot of, unfortunately, a lot of complexity because we've got to make sure Tesla shareholders are served and SpaceX shareholders are served and strike the right balance there. So it takes a while to work through the independent director reviews on this. So that's basically what we've figured out thus far: Tesla's doing the research lab, SpaceX doing the initial part of the large-scale TerraFab, and then we've got to figure out the rest.

>> Yeah.

>> And what about Intel's involvement?

>> Yeah, so Intel is excited to partner with us on some of the core manufacturing technologies. So we plan to use Intel's 14A process, which is state-of-the-art and in fact, not yet totally complete. But given that by the time TerraFab scales up, 14A will be probably fairly mature or ready for prime time, 14A seems like the right move. And we have a great relationship with Intel, a lot of respect for the CEO, the CTO, and the new team there. So we think it's going to be a great partnership.

>> Yeah. And the other thing on the research fab, I think we've said it before, we plan to do memory, logic, everything in the same place, including masks, because we want to have a quick iteration loop so that we can see and basically scale the technologies which we're trying to bring up. Yeah, I think this will be unique in the world, or at least I'm not aware of any place where you have the lithography mask creation, and then logic, memory, and packaging under one roof in one building. That's about the fastest I could possibly imagine doing recursive research and development and being able to try out some pretty radical ideas, some of which have, you know, it's kind of long shot stuff, but if some of these long shots pan out, it would be radical improvements in the way chips work.

>> Great. The next question is going to come from Pierre at New Street. Pierre, please feel free to unmute yourself.

>> Hey, thanks a lot for taking my question. Um, a quick one first on FSD adoption. So you have 180,000 new paying users this quarter, and I compare that to your overall install base, it might be 15%. But then if I shrink that to the US or to North America, where most of them are, it's probably more like 30-35%. And I'm trying to, and I compare that, you probably sold about 100,000 cars in North America in the quarter. So you're winning twice more FSD users than you're selling cars. And then if I add to that picture the fact that I guess it's mostly hardware for owners who subscribe to FSD, it sounds like most drivers in North America who have hardware for would already be using FSD. Is that the right way to think about it? And the kind of success FSD is meeting today, is that the right way to think about it?

>> Yeah, I think you're thinking about it the right way, Pierre. And the other thing which I'll share is that, you know, you can't just look at one quarter versus the other quarter in terms of churn, but we are actually seeing churn of subscribers also coming down, which again is a reflection of the product is getting better. And obviously, if subscriptions are going up, that is a good metric. The other thing also to note is that we are seeing customers actually drive longer, which again, you could correlate it that's why you have lesser churn because people are liking the product. And if I mean, I've said this before, if I just use my own personal behavior, right? I literally get in the car, I press the button, and it just goes. And earlier I used to park, now I don't even have to park. And that is the experience which we want everybody to gain. And that's why you're starting seeing it in the numbers come through.

>> Excellent. Thank you. And if I may, maybe a quick follow-up, completely different. It's more on the Optimus architecture. And you talked about the partnership with XAI and Grok. And I was wondering if you can share with us anything about how the system to intelligence is going to be implemented. Is that going to be on-board on chips inside Optimus, or if we should think about, like, your fleet of like a million Optimus being produced a year actually driving very significant inference demand in data centers as well for system-to-thinking?

>> Well, we think we can put a lot of intelligence locally in the robot. And certainly needs to be enough intelligence that if the robot gets disconnected, like if it's a bad cellular signal, there isn't Wi-Fi, you know, Optimus can't just get stuck. It needs to have enough local intelligence that it can still do useful things, even if it loses the connection, kind of like the car. The car does not need any cellular or Wi-Fi connection to be able to drive safely. Now, I guess you can think of, like, Optimus needs kind of a manager to tell it what to do. And broadly speaking, like, if you know, otherwise it's going to keep doing the same thing it did before. So, you know, I think you need kind of an orchestration AI, which, you know, Grok would be good for orchestration. And then for Optimus's voice, you know, having a low-latency intelligent voice AI, Grok is actually very good for that. So if you want to talk to Optimus and have kind of a Grok-level conversation, you kind of need to connect to a Grok-level AI for that. But I would expect the amount of interaction, apart from, you know, the voice stuff and asking complicated questions of the robot that necessarily needs a large AI model to answer, the Grok would probably have about as much interaction with Optimus as a manager would have with the people on their team. So meaning, Optimus could probably work for you several hours without any management oversight.

>> Great. The next question is going to come from Dan at Barclays. Dan, please feel free to unmute yourself.

>> Great. Good evening. Thank you for taking questions. Um, Elon, your chip suppliers generally generate pretty good economics on the chips they sell. Your approach has historically been on vertical integration. Part of that has been to get better economics. So I know the longer-term goal of TerraFab is to get the supply you need, but how much of TerraFab is also motivated to get better economics on your midterm chip purchases? And how long is it going to take to ramp to get to a yield that achieves that type of economic par?

>> Um, no. I mean, TerraFab is not some sort of mechanism for to generate leverage over our chip suppliers. It's just literally, we don't see a path to having enough sufficient quantity of AI chips down the road as we scale production to high levels. The just the rate at which the industry is growing in logic, but even more so in memory, is just doesn't, you know, we just anticipate hitting the wall if we don't make chips ourselves. So that's the reason for the TerraFab. I think that we do have some ideas for how to make maybe radically better AI chips. These are kind of research ideas there, you know, which means like long shot, but if long shot pays off, it's a maybe a giant improvement. And it's just easier to do that if we have our own research lab and are developing our own production technologies. So, and if you look sort of long-term at, you know, say, having AI satellites making chips for those, there's just no way in hell the existing industry can keep up with that. It's impossible.

>> All right. And our next question is going to come from Mark at Goldman Sachs. Mark, please feel free to unmute yourself.

>> Uh, yes. Good afternoon. Thank you very much for taking my question. Uh, recognize the importance of FSD, and that FSD can help to drive vehicle sales, and it's nice to see some of the improvements in the FSD technology more recently with version 14. However, I'm also hoping to understand if the company's view on new vehicle models has evolved. And I ask given that Elon, you posted on X recently that Tesla could develop a family vehicle. There's also been some past discussion about a compact vehicle.

>> Well, I mean, Cybercab is the compact vehicle. It's actually, I mean, it's very roomy, but it's a two-person vehicle. And we do think probably most of our production long-term will be Cybercab because 90% of miles driven are with one or two people. So it would mean that you'd want the vast majority of your production to be Cybercab. Then, but over time, it's going to make sense for our whole lineup to be autonomous vehicles of different sizes. And I did talk a bit about this when we did the kind of AI Day in LA at Warner Brothers and showed, like, this is our current lineup and this is what, some idea of what our future lineup will be, which is that it's going to be almost entirely autonomous. In fact, long-term, the only manually driven car will be the new Tesla Roadster. Speaking of which, we may be able to debut that in a month or so. It requires a lot of testing and validation before we can actually have a demo and not have something go wrong with the demo. But I think it will be one of the most exciting product unveils ever. I'm not sure. I don't think it moves the needle massively from a revenue standpoint. So, but it is very cool. I think it might be one of the most spectacular demos ever.

>> All right. And Mark, did you have a follow-up question?

>> Uh, yeah, thanks, Travis. My other question was on batteries. And the company mentioned batteries as a constraint on its growth. Can you speak more to how Tesla expects to resolve this? And to what extent that might come from ramping up your own LFP and 4680 battery cell manufacturing, or is this something that you'd expect to resolve primarily with increased sourcing from suppliers? Thank you.

>> Yeah, so at the moment, I think the limiter is not the cells themselves, it's the battery pack capacity. And, you know, we're, like I said in my opening remarks, we're actively working on resolving this. There's more capacity being added as we speak. And I'll let Lars add a few more things to it.

>> Yeah, thanks. As you guys may have seen in Berlin, we started launching a Model Y battery pack with our in-house 4680 cells a few months ago, and that is ramping up nicely, adding to Berlin's output and helping with the demand surge that we've seen in Europe. As well. We're adding additional capacity in our Reno facility, sort of retooling it as it's been building packs now for almost 10 years, in order to put in some more efficient lines and get additional output out there. And then, you know, we continue to have growth in China as well, ramping in-house LFP module production and battery packs associated with that. So all of those things are happening now and in the next months, and that's, you know, really plans we laid out a few months back to increase that output with the growing demand.

>> All right, thank you guys. And our next analyst is going to be Colin from Wells Fargo. Colin, please feel free to unmute yourself.

>> Oh, great. Thanks for taking my questions. Um, you moved the safety driver in Austin and you're now expanding into Dallas, Houston. What are the key safety metrics that you're tracking that gives you confidence that robo taxi is safe enough to expand? Is it sort of miles per intervention, miles per accident, per fatality? And where do you stand on that now?

>> Sure.

>> Yeah, we track basically all the metrics that you mentioned. We have a pretty large QA fleet spread across all of the United States. And then we look at any intervention that could happen and then sort of simulate both in practice and also in our simulators that are very, very good nowadays using neural networks, what would have happened. And then based on all these analyses, we in the end make the call to expand. And so far, all of the expansions have gone according to our expectations.

>> Yeah. A lot of what limits wider deployment of robo taxi are actually not safety issues, but convenience issues, or the car basically gets paranoid and gets stuck. Like sometimes it gets because it's programmed for maximum safety. So the problem is that then it sometimes just gets scared to do things. So like it sometimes gets scared to cross railroads, for example, or it'll get stuck at a light where the light never changes from red. Or I mean, there was one kind of amusing situation where a whole bunch of robo taxis got stuck in the left turn lane in Austin because, I kid you not, a Waymo had crashed into a bus. And so they could not turn left because the Waymo crashed into the bus. And so you had this long line of like, I don't know, a dozen or more Tesla robo taxis that were waiting for the bus to move, but the bus was never going to move because the Waymo crashed into the bus. So that obviously drives people crazy if there's a whole bunch of robo taxis blocking the whole road. So it's a ton of things like that. That's the single biggest thing is just the car being scared to move or getting kind of stuck in situations like that. We've also had literal infinite loops where, you know, the car might want to make a turn into a road, but there's construction, and then it goes around the block, tries to turn into the road with construction, goes around the block, tries to turn into the road. And so you have to stop the infinite looping, literal infinite looping. So those are actually, and those are by far the issues that we have to resolve as opposed to direct safety issues.

>> Got it.

>> Great.

>> And then did you have a follow-up?

>> Yeah. Just last year I asked about, you know, FSD and camera and the issues with sunglare, and you noted that there was a breakthrough with direct photon counting that addressed this issue. But a month ago, there was a Nitsa filing saying that they haven't received an update when the solution was deployed and the number of vehicles. Is this, did it require a retrofit of the camera? Is this fully deployed? I guess I was just curious since the filing mentioned it.

>> Yeah. First, I want to say we did change the cameras some months ago, and those are out. And the Nitsa filing is referring to like older vehicles. We always work directly with Nitsa on all of the issues that they raise with us, and they're asking for quite a bit of information, and we're complying with that in as timely a manner as possible. And so we expect to resolve that and any of the other investigations in short order.

>> Yeah. And we have also implemented stricter measures for the visibility of the camera. So in recent software builds, if the camera is not able to see things clearly because of residue buildup or what have you, then the FSD won't be available for those cars.

>> It just needs to clean the inside of the windscreen.

>> Great. Unfortunately, that is all the time we have today. We appreciate everyone's questions and we look forward to talking to you next quarter. Thank you very much and goodbye. Where is Herbert? Herbert, put that camera on.

>> I'm here.

>> There he is.

>> There he is.

>> Yeah, that was great. So reactions, guys? Well,

>> Go ahead. What's your thinking?

>> I wouldn't call a decline in the stock great.

>> Well, okay. So, what's the reasons? It was in robo taxis. Robot.

>> It was them. It was them. They are pathetic. I hate to say it. It's just we've got to be honest. Their delivery is awful. Everything they say is awful. They can say the same things and just say it in a different way to sit there and say, "Well, it depends what scale means."

>> Mother.

>> I don't remember when it will.

>> I don't remember when it will go in Europe. Like what?

>> Yeah. And I mean, like, don't sit here and say, "Well, it depends what scale means." Okay. Why don't you tell us what scale means? What it means?

>> No. Okay. I disagree with you guys because this is what we want Elon to do. Stop saying dates and numbers when he doesn't know. And so now you can see about four times he actually did say, "I really don't know." Somebody pointed out that last year he said, "We will have 5,000 Optimus by the end of this year." Now that he says, "We really can't. We really I don't care about the stock today."

>> No, but this is objective.

>> I mean, he has a point, Herbert, but you can't always say everything is good when it's not.

>> Yeah, I'm not saying that. I prefer that he does not answer a question he does not know the answer to. We finally got him to do that, but he did. He still did.

>> What do you want? The stock price to go up when he talks? Is that what you want?

>> I don't care. I don't care.

>> I'm asking. I'm asking.

>> Yeah.

>> Yeah.

>> I This is a voting tool. Okay. It's I don't throw the scaling thing at me or machine, all that. Look here. This is objective. Okay. It's their delivery. For example, he said, "We don't know. It depends what your ideal scale is. We're going to need V15, all this stuff." Okay.

>> It's not. It depends what your definition of scale is. Define it for us.

>> Define us what that means. You're an engineer. All right. Engineers use data. They use numbers. They don't talk in ambiguity. And that's what he's doing. That's what I mean. The CFO. Oh my goodness. Like the way he, everything they said, they could have said in a whole different way. The earnings deck set him up for success.

>> Hold that. Hold that. Sorry about that to interrupt you, but Waymo is always like that. I mean, you can look at, I don't know how many. So he wasn't worse today. He wasn't better either, but he wasn't worse today than he was. I mean, you know, if you bring it down to what they actually said, $25 billion capex, that is $5 billion more than before. That means they have this quarter spent only two and a half. So therefore, three quarters now, $22.5 billion to be spent. That will obviously bring free cash flow way into the negatives. It's just not possible because you will have to deduct on average $9 billion every quarter. Well, $7.5 billion every quarter. So that's just not possible. So that's good. We have now a very clear expectation of $7.5 billion capex on average per quarter. I mean, this is just horrendously big. But you know what, Alexander? If I go to you and I say, "Hey, Alexander, I have your money and I'm going to spend more of it than what it is." And that's just what's going to happen. And I don't tell you, but here's the thing. Here's the ROI expected on that revenue. Here's our plan for how we're going to spend that. Is that it will come back very quickly? This is the best investment we can do. Now, and I mean, we all know what they're spending on, Cortex One. I mean, there are seven factories going up. They're turning around production lines from cars to robots. They're trying to do that in short weeks. Yeah. So, you know, there is a lot of reason for this money, and we know exactly what this is for. But I agree with you, for somebody who is not like us on the topic of Tesla every day and can connect the dots, you listen to this and you go, "Oh my God, what a headache. Nothing's working. Everything is late." And you know that that's just the impression you get from what came out.

>> And I, I, I can sum up the call too. First of all, they did sound very low energy, which is normal. Second of all, the questions were not very exciting. Third, there was a whole bunch of dampeners like the capex spend, $25 billion. Wall Street will go, "Oh god, no negative cash flow. That sucks." Then there was some delays. People thought they'd turn off the SNX line and the next day the Optimus production line will be up. When they hear the four months, they thought that sucked as well. Then the safety, 14.3 versus 15 versus last piece of the puzzle versus why not everywhere. And then they talked about more safety, possibility of better software and a rewrite. And people are kind of confused. So they weren't altogether clear.

>> Yeah. And

>> more questions than answers now.

>> And then, and then there was a lot of disappointment because people are hoping for AI5 and cars. I think it's a good idea that AI4 is fine in cars. That means they'll be able to scale robo taxi now without waiting for AI5, which is good news. But people, they're just disappointed over silly stuff. And then the hardware 3 stuff, and it's like it was no good news. They should have, the question should have been spun around the deck and the positivity.

>> It's not the question, it's the answers. The way they answer, Nick is right. I mean, the answer to the question of hardware 4 versus hardware 5 is, look, the great news is hardware 4 is going to do fine.

>> Yeah.

>> You know, as the cost of hardware 5 comes down, we may go to hardware 5, but hardware 4 takes us.

>> Takes us deficient here, it goes.

>> Yeah, but there was no good news, you know. All they had to do was say, "The good news is the good news." But there was none of that. It was classic Tesla quarterly.

>> You can see it every quarter. I mean, I spoke with Randy some time ago. Every time before the call, the stock goes up. In the call, the stock goes up. I mean, you can make so much money here. I think we have to have a plan of sending them pizzas before whatever they have to eat before they do that. I mean, there's something prior to this call. Prior to this call.

>> Prior to the call, I asked everybody here, what is the most important metric? And everybody said it's robo taxi. And what I heard from this call is that AI4 is good enough, we don't need to wait for AI5, that we are going to roll out to 12 cities, 12 states by the end of this year, and that there are no safety issues. In fact, the concern why we're taking slow is because of number one, we don't want an accident, but two, it's like these operational things. That is the good news.

>> I vote on, I vote for you to be in the call next year. Next quarter.

>> I'm just saying to you that that is not the point. That's what matters.

>> No, no, no, it's not because they didn't actually answer the question that people want to know around robo taxis. The way they answered it makes it seem like Austin or D. I'm telling you. Okay.

>> Let me speak. Dallas, Houston, Tampa, Orlando, all these cities are going to look like Austin.

>> And that's pathetic. That's no good. That's not usable.

>> That's the problem.

>> What are you talking about?

>> That's the impression they left.

>> Well, and you have to understand, we come from two earnings calls ago or three. Was it saying, "Oh, by the end of the year, 2025, half of America, hundreds of thousands." The last time, last time it was like we're doubling, what was it, every week or every month, but we're doubling all the time. Now we're to where we're actually

>> 12 states.

>> In five. No, no, it's not five, 12 states. 12 states.

>> Who cares if it's one car?

>> He said 12 states. He said 12 states.

>> If it's 12 states and one car, why does that matter? Who cares? It's irrelevant.

>> Well, it depends what your definition of scale is. He was he he got you confused when he met me. He's talking global CEO, all with him. He's the CEO. What's No, you should have these questions.

>> Yeah. Yeah. That part is a miscommunication.

>> I mean, we should really learn. We should really learn. The better the deck, the worse the call. There's just an inverse relation.

>> Just the way it works.

>> Well, if you want to know why the stock was up 5% and now it's down 1%, that's why.

>> Right there.

>> Yeah. Now, the phrase that I love the most, which obviously gives them a lot of headaches, it was about TerraFab, which is this joint venture between SpaceX and Tesla. And he goes, "Oh, these difficulties now because now Tesla board has to decide which part Tesla is doing, which part SpaceX is doing, and that the shareholder is protected." I mean, I hear that. I hear that, Larry. I go, please merge. The same merch.

>> Thank you, Alexander. That's that was the point I made. I said, "Guys, you got to get beyond this. You can't run a TerraFab, which is going to be the biggest single project both companies have ever done. You cannot run it as two separate companies with all this stuff going on." Read my piece. I mean, it's very clear.

>> And you're right. And the thing is, I can just see the board having their responsibility. And you have to know, there are some board members that are on the boards of both, right? What do they do now? What do they do now? You know, whatever. And then you have obviously Tesla being the public company and having to answer to these big investment funds and whatever. And having to protect the Tesla shareholders. So, what a headache. Merge the thing. Let's get over with this. The quicker the better. I'm saying it again.

>> Well, I say we take over the quarterly call. That's it.

>> Oh, yeah.

>> Give us the numbers, please.

>> I'm ready.

>> I think there's a couple of things to kind of look at from the call. One is on the capex. I think the stock took a hit.

>> Yeah. Yeah. As soon as as soon as they said we're going free cash flow negative and we're actually going to spend $5 billion more in the year in the current year than we told you 90 days ago.

>> Yeah, that's right.

>> Um, so that was an inflection point. I think they could have pre-announced capex, by the way. That's something they could have done. Or, you know, Meta and Amazon both really took it hard.

>> On their prior brilliant thing.

>> This was brilliant. Oh yeah, that's what it felt like. Um, so I kind of feel like

>> Your tweet, Jeff, is hilarious.

>> Um, the robo taxi piece. So let me break down the robo taxi answer. So it is correct that Elon is not giving near-term guidance anymore. And we said, hey, why that's an issue. But I mean, ideally, you would want him to give near-term guidance and you'd want it to be accurate. That's the perfect case. So, in the, and then the next, I guess, I guess not giving guidance is maybe the next best case versus giving guidance and missing continuously. But now it leaves questions of, okay, what did they find? This is just, you know, the answer was, hey, we there's things that in the rewrite that will improve safety, but there's always going to be things that improve safety. The question is, what threshold are we at in relative safety? And where did we think we were going to be? Or did we find new edge cases that we just don't have a solution for yet? So, I mean, I think there could be a couple more double clicks. And I recommend people on X just continue to ask the company very poignant, good questions about robo taxi expansion because that was a clear change from the prior call. And then, but on the good news side, I did not have Optimus start of production in 90 days on my bingo card. Now, you can say start of production can mean anything. It's not that big of a deal. It actually is kind of a big deal. But let's see what it turns into. I there was nothing really in the last several months. They've kind of gone silent on Optimus. And you heard Elon doubling down on that on the call of like, we're going to continue to stay silent basically till around the point of production.

>> Yeah. So some point at the end of this quarter or the beginning of Q3, they will probably reveal Optimus. And I would say some point in Q3, maybe it's not July, maybe it's just some point in Q3, they will start production. And that is a different Tesla once though. Once there's a couple hundred or thousands of Optimus working at scale in their factory, I think that is a different company. But the robo taxi piece of it, I think, really needs to get cleaned up because it's not clear. And then finally, I do agree with the feedback that it's delivery. There's so much good. There's so much good news. And even in these challenging things like hardware 3. I mean, it could be like, the good news is we're going to take care of people with hardware 3 because this has been this big overhang in cloud and the company. Are they not going to take care of us? Is there going to be these class action lawsuits? The answer is, there's a technical solution coming. It's going to be door A, or it's going to be this upgrade voucher for a new vehicle purchase, or it's going to be this upgrade. We're trying to figure out what the upgrade on existing vehicles looks like.

>> But Jeff, it was incumbent upon them to have that answer ready for this call.

>> It was incumbent on them. They didn't do it. They should have done it.

>> I think, I think the way I'd spin it is, they're planting a huge garden with tons of different vegetables, and these seeds are just under the surface and they're about to sprout. There's so much goodness happening, but they didn't spin that at all. It's like it was all doom and gloom from their words. So I agree with everybody here. I think the questions could have been structured a little bit better, and they could have been answered with a little more enthusiasm instead of putting the brakes on excitement because when I read that investor deck, it was like, wow, incredible. And then you get a dose of reality as safety stall. We go, you know, the complexity, Alexander, you mentioned regarding the TerraFab. Um, I know, and I know nothing about what was it, AI3 or Intel technology 14A, A14 routine. We got to dig into that.

>> Here's the reality.

>> Yeah.

>> They don't plan these calls.

>> No.

>> They do a really good job of printing up the quarterly report. What they could do is they could script and plan these calls because they know exactly what questions are going to be asked. They don't because Elon doesn't have the interest in the time to sit down with them to plan these calls, and he takes all these questions. So nothing's changed over the years. You could almost trade, buy before the drop, sell the moment the call starts, and that's it. I mean, you could just do it. But nothing's changed, and it's not going to change. Be ready for it.

>> And by the way, the stock is only down $3 from where it opened today. So it's not like it's catastrophic. And the way it typically works that I've seen over the years is Wall Street takes three days to digest the deck. Forget the call. And then when they start unraveling the deck, they'll see all the goodness. But that free cash flow is going to hurt.

>> Okay. I mean, go ahead. No.

>> I mean, free cash flow, pre-cash flow that's negative because of capex being a negative is the dumbest reasoning ever. I'm just $9 billion every quarter and that brings the free cash flow down. So what was I saying last year that we're going to see negative cash flow this year and just expect it. In fact, I want them to increase it. Now, they did 25. Maybe next month, the quarter they'll say I'm going to do 50. I hope so. Let's say that very much so. So we're at 25. Amazon is at 200. Alphabet is 175 to 185. Meta is at 135. Microsoft is 144. Announced Apple is around 13. Nvidia has announced it and then there's Tesla now at 25. I'm, you know, if this shocks the people, well, be shocked. I don't think the capex was, I mean, like, I hear you and your numbers are spot on, but I don't think it's analogous with how much profits they're printing.

>> Yeah. Yeah.

>> Okay. Can I ask you this?

>> It was a terrible.

>> Yeah.

>> It was terrible.

>> I'm going to say good night.

>> Okay. Yeah. Well, we're going to shut this down very, very soon. I just want one last question here, guys. This Okay, it was a bad call. The stock is falling. They could have done a better job, but just be very objective about this. Did you hear anything that was absolutely bad for the company? Bad. Very negative.

>> That's what I'm asking. He's really fed up with managing Tesla the way he needs to because it's an it's difficult to run this as a public company with the goals he's setting and especially now in this joint venture while SpaceX is not a public company yet. I think he was really frustrated there and I'm not saying it was bad, but I think it gives us an insight into how much frustration this generates. Okay, maybe TerraFab is a little, sounds like it's not as fast as he wants it to be because

>> No, not as easy to structure. He feels like he has to fit it now into legal boxes and attribution and stuff that.

>> Let's go through it though. The most important thing is robo taxi and Optimus. Was there something bad about robo taxi that we heard?

>> Just okay, what let's let's let's talk about it. Yeah, they pulled near-term guidance for um, he was asked straight up about robo taxi deployment, volume deployment, and they basically pulled that guidance and said that there are edge cases and safety issues that they need to solve with architecture changes and software, and once those are built and tested internally and released, then they would scale to greater heights. So, I mean, that's always been, they've always talked about new architectures in the future, but in the prior quarter, it was doubling robo taxis every month starting from about 200, 250 right in that month. And now there's no guidance. And now it's, hey, we need to do more things before we actually get to that point that we were talking about in January of prior. So, I mean, that's negative. At the same time,

>> Except that he did say, "Depends on your definition of what scale means." What is scale? So I don't know if people got these numbers when they

>> when he said

>> cars in Austin to have a real service.

>> But so when he says, "We don't," when he was talking about that, I he was referring to like global scale. But some people are interpreting to say, well, that was a confusion because he goes, "Depends on what definition of scale is." Now, you guys might be saying, well, that means Austin is going to stay at one car or 20 cars, not a thousand, 2,000 cars. You sit there and say, "It depends on your definition," and then you don't follow it up with what I mean by scale. That's a problem.

>> But I think when you listen to how he said it, when he said it, he was referring to like global rollout.

>> We have to wait.

>> Yeah, I agree. We have to listen to it again.

>> The bottom line is we don't know, and he didn't specify, and so he didn't prep. He didn't have the answer. And I'm not sure that is true that they don't have the answer. It's just he didn't know what the answer was at that moment, and he didn't give us the answer. So, yeah, you know, the call was bad because, you know, he walked into the room because he was in some other project dealing with it, and he doesn't accord much value to the current share price. That's the bottom line. Here's what I thought was bad, Herbert. And it's going to piggyback off what Jeff said. It's one, you created more questions that leave more uncertainty for everybody. And if you're going to sit there and say, "Hey, like it's they essentially plug the fifth," is what they did. Said, "Well, there's always, you know, if I know there's another safer version, whatever." It's like that's like your get out of jail free card because you can play that card forever. So then we're never going to get FSD because you can always have another version that's going to be safer because you're always going to learn more. It's always going to get better. So you can play that card all day. He sat there and he made his point about the recursive loop, which I've actually talked about that, right? That's a real problem that happened. It's not a safety problem. It's just it lacks the attention. It lacks memory bandwidth to remember, hey, this road is closed, or hey, there's a parade going here, or hey, there's construction here. That's all it is. But it's on and on. The cogent thing would have been to say, "We think that we will have that part of the puzzle solved in the next few months, next month or whatever, but it's not going to slow down the pace of us rolling out as you can see by Dallas and Houston." Like that builds confidence while you're being, while you're explaining everything. It's just that's what's bad about it. And I think it's bad too because this creates less confidence in the software. And when you create less confidence in the software, that means less people using it potentially, which means less lives potentially saved. And it goes on and on. Like it's just I want more people to use it because I think that this is the most important AI project in the world. I don't think there will be another one that's more important than this. So to me, that's that's what I care about. That's why I think they made a big mistake on they created more.

>> And two hidden things that I think are very important too, and then we got to wrap. Optimus is expected to be useful outside Tesla starting 2027. That was very positive. And yes, he did confirm 14.3 is the last piece of the puzzle, but there's always going to be improvements and enhancements available. But having that hearing that regarding 14.3, I thought for me that was huge. And the fact that again, AI4 is sufficient to run a car, not Optimus, they are very big things that are buried in there that have huge value, but people don't appreciate any.

>> Okay, that's it.

>> He had great news and he buried in this kind of.

>> Now, let me, let me just put out, if you wanted to get to June, July for this announcement of the merger that I'm the only one to defend so early, but here we are. And you didn't want Tesla stock price very high. That is a call you would have done because that allows Tesla to increase with this implicit premium to where SpaceX is. And with SpaceX, we are only hearing the best news ever. And higher SpaceX is. And the longer Tesla stays compressed in my scenario, and I may be wrong, and you can then all shoot on me, and then I have to eat my crown, the same way that father has to eat his steering wheel. But if I'm not wrong, it will be that we have this implicit premium to bring us in line with the SpaceX merger of equals. And then all the good news come, and the good news on one side pull up the other side, and the good news on the other side pull up the other side. So why would you throw now as many good news as you have there? You may actually damp everybody and be very, very cautious and very, very life is difficult and these poor hard work guys.

>> It's not it's not a style to play that game. So I don't know. He's not as intentional as that. Anyway, guys, I'm going to bid you all farewell.

>> We'll close it down as well.

>> Thanks everybody. Gang.

>> Thanks.