Martin Viecha, VP of Investor Relations, introduces the Tesla Q1 2024 Q&A webcast with Elon Musk and other executives. They discuss the business outlook and make forward-looking statements, acknowledging potential risks and uncertainties. Elon Musk highlights challenges faced in Q1, such as the global decline in EV adoption, but praises the team's execution and record profitability in the energy business. He also mentions the expansion of AI training capacity and upcoming new products.

The company has accelerated the launch of new vehicle models and expects to reach a capacity of over 3 million vehicles. They have also released FSD Version 12 for all cars with cameras and are seeing increasing usage. The company believes that the vision-based approach with end to end neural networks is the right solution for scalable autonomy. The subscription price for FSD has been reduced to $99 a month and a purpose-built robotaxi will be showcased in August.

Elon Musk discusses the progress of Tesla's AI infrastructure and their plans for expansion. They have installed and commissioned 35,000 H100 computers for training and expect to have 85,000 by the end of the year. Efficiency in training is also a focus. Musk is confident in their autonomy roadmap and believes it is only a matter of time before they exceed human reliability. He also reiterates his belief that non-autonomous gasoline cars will become obsolete. Musk thanks the Tesla team for their execution and Vaibhav Taneja adds comments on the progress of the auto business.

In the fourth quarter, Tesla saw a decline in revenues due to seasonality and the uncertain macroeconomic environment. Auto margins also declined, but this was offset by cost reduction initiatives and revenue from Autopark feature and credits. The company is focused on reducing costs without sacrificing quality and has seen success in this area. They are also taking steps to increase demand for their products through lower prices and financing options. The Energy business has also made significant progress, with record margins of 24.6%.

The company expects a significant increase in energy storage deployments in 2024, which will contribute to overall profitability. There may be fluctuations due to external factors, and operating expenses increased due to AI initiatives, future projects, and marketing. The company had negative free cash flow in the first quarter, primarily due to inventory build and elevated CapEx spending. A reduction in headcount and focus on CapEx efficiency is expected to improve profitability and allow for increased investment in AI. The company is optimistic about the future and thanks the team for delivering good results. The status of 4680 and current output is questioned.

Tesla's production of the Cybertruck has increased by 18-20% in Q4, reaching over 1K a week. They expect to stay ahead of the ramp with cell production and plan to beat supplier costs by the end of the year. Optimus, their humanoid robot, is currently able to perform simple factory tasks in the lab and they hope to have it in limited production by the end of the year and available for sale by the end of next year. Tesla's AI inference efficiency is far superior to any other company and will benefit them in various ways.

The third question asked about the pathway towards regulatory approval for unsupervised FSD in the U.S. The team discussed how some states have already adopted autonomous vehicle laws and how this will pave the way for broader adoption. They also mentioned the importance of having a statistically significant amount of data showing the safety of autonomous cars compared to human-driven cars. They compared the future of autonomous cars to elevators, where the technology will eventually become the norm and it will be strange to see someone manually operating a car.

Elon Musk explains that using a Tesla car in the future will be as simple as using an elevator. Tesla will operate a fleet of cars, some owned by Tesla and some by users, and users can choose to rent out their cars to others or keep them exclusively for themselves. As the fleet grows, there will be a constant feedback loop for improving the self-driving capabilities. In the future, there may also be an opportunity for Tesla to offer powerful inference services similar to AWS.

The potential for distributed inference in Tesla cars could result in a significant amount of AI compute power. There are multiple layers of safety validation in place, including training neural networks, replaying critical events, and using simulation systems. QA drivers in different cities also contribute to collecting real-world miles and evaluating safety improvements.

The process for testing and improving the autonomous driving system involves multiple stages, starting with internal testing and then moving to early users and finally external customers. The team constantly monitors and collects feedback to improve the system, and the new V12 architecture allows for automatic learning and adaptation based on data. There are also advanced models being developed that will further enhance the system in the near future.

The speaker discusses the improvements and quirks of the car's capabilities, and the importance of careful releases to customers. They also mention the use of scaling laws in AI, including model size scaling, data scaling, training compute scaling, and architecture scaling, to predict future performance. This is based on past data and experimentation.

During a Tesla earnings call, Lars Moravy and Elon Musk discussed the company's plans to launch a $25,000 vehicle and the progress of the Cybertruck ramp. They also mentioned their mission to accelerate the launch of affordable cars and their focus on solving autonomy for a large fleet. Musk believes that when full self-driving is achieved, it will be a major asset value appreciation in history. Moravy also mentioned that some legacy automakers have contacted Tesla about potentially licensing their Full Self-Driving technology in the future.

Elon Musk and his team at Tesla are in conversations with a major automaker about licensing their Full Self-Driving (FSD) technology. They plan to unveil their robotaxi in August and are working on the next-generation vehicle and semi. The semi is expected to be available to external customers in 2026. Tesla is also ramping up production at their Lathrop factory and has a second GA line to increase their exit rate. They have good visibility on orders for their large projects and thank their customers for their trust. Analysts have a few more questions for the team.

Tony Sacconaghi from Bernstein asks Elon Musk about the new vehicles that were mentioned in the presentation. He wants to know if they are tweaks on existing models or completely new models, and how they compare to the Model 3 Highland update. He also asks a personal question about Musk's involvement with Tesla and if he plans to lessen his involvement in the future. Adam Jonas from Morgan Stanley asks about the expected growth rate for 2024 and if there is room for potentially lower sales. Musk clarifies that they expect higher sales this year compared to last year.

Elon Musk responds to a question about the potential copying of Tesla's next-generation cheaper vehicles by Chinese competitors. He points out that Tesla has done better than its competitors in China and believes that the company should be thought of as an AI or robotics company. He also emphasizes the importance of autonomy and the advancements in Tesla's FSD technology. He believes that those who do not believe in autonomy should not invest in the company.

In this paragraph, Elon Musk and Ashok Elluswamy discuss Tesla's advancements in AI and the potential for fully autonomous cars. Musk emphasizes the importance of AI in the company's growth and mentions his desire to obtain 25% voting control. He expresses confidence in Tesla's ability to achieve autonomy even without his involvement. He also mentions potential risks associated with advanced AI technology.

The speaker discusses the recent headcount reductions at the company and explains that these are necessary to prepare for future growth. He compares it to pruning a tree and assures that the company is not sacrificing anything significant. He also mentions that the company has had a long period of prosperity, but small inefficiencies can accumulate over time.

Elon Musk discusses the need to reorganize a company for different phases of growth, comparing it to the growth of a human body. He also mentions the progress of Tesla's FSD licensing discussions with OEMs and the importance of demonstrating the effectiveness of their approach to self-driving technology.

Elon Musk and his team at Tesla are discussing the potential for licensing their self-driving software to other car manufacturers. They believe that eventually, all cars will need to be smart cars to stay competitive in the market. However, they are aware that it may take some time for traditional car manufacturers to integrate this technology into their products, with a potential deal taking up to three years to come to fruition.

Elon Musk and other Tesla executives discuss the possibility of signing a deal this year and integrating it into their cars, which could take up to three years. They also mention their approach to pricing and how they believe offering a great product at a great price is key to driving sales. They emphasize the importance of both value for money and affordability for customers.

Elon Musk and his team are focused on improving the affordability and value for money of their cars, especially for those living paycheck to paycheck. They are constantly working to make the cars better and more cost-effective, with the recent Model 3 update being a prime example. They also plan to expand into new markets in the future.

Elon Musk and other Tesla executives discuss the company's plans for expanding into new markets, particularly in China. They believe that their neural net-based autonomy system will work well in any market with regulatory approval, and will only require some country-specific training. They also mention supply constraints that may have impacted first quarter deliveries, but are confident in the company's growth potential in 2024.

Elon Musk and his team discuss the challenges they have faced with recent attacks in the Red Sea, ramping up production of the Model 3 and Cybertruck, and other activities. They are confident that these issues will not recur and expect Q2 to be better. The team also mentions the complexity of logistics and the recent simplification of the sales process. They then discuss the potential of Tesla as a leader in AI for the physical world and the implications of distributed inference. They estimate that a full robotaxi could be used for about 150 hours a week.

Elon Musk and Ashok Elluswamy discuss the potential for using the idle compute in self-driving cars for other workloads, similar to how Amazon Web Services monetized their excess compute. With millions of self-driving cars on the road, there could be a significant amount of useful compute that could be harnessed, potentially reaching 100 gigawatts.

Elon Musk and his team discuss the benefits of using Tesla cars as distributed compute nodes, with Ashok Elluswamy highlighting the intelligence and control that Tesla has over the cars. They also mention the built-in thermal management and distributed access to power, which can be used for running workloads without draining the battery. This distributed power and cooling is often underestimated and can be costly, but with Tesla cars, it is already paid for and can be shared among users.

Elon Musk and Lars Moravy discuss the progress of Tesla's 4680 ramp and its relevance to the Cybertruck ramp. They mention the importance of being prudent with capacity expansions and highlight the partnership with cell suppliers. Musk explains that the decision to produce internal cells was a hedge against the high demand and cost per kilowatt hour from suppliers.

In the last question of the conference call, Ben Kallo from Baird is unable to unmute and ask his question, so Martin Viecha tries to move on to the next question from Shreyas Patil of Wolfe Research. Patil asks about the potential for cost savings in Tesla's next-gen vehicles, and Lars Moravy confirms that many of the engineering improvements made in the on-box manufacturing process will be transferable to other products. They also discuss the use of 4680 cells as a hedge against rising battery costs from other manufacturers. Elon Musk reiterates the importance of experiencing FSD 12.3 in order to understand the company.

The speaker asks if there is a cost advantage for Tesla in selling their 4680 cells to other automakers, to which Elon Musk responds that there has been a decline in orders for batteries from other automakers and their suppliers have excess capacity. Vaibhav Taneja adds that the supply chain for the 4680 cells has helped reduce costs for Tesla and they are also inserting themselves in the upstream supply chain. Elon Musk predicts a boom and bust cycle in battery cell production and mentions complications with government incentives.

Elon Musk and Vaibhav Taneja discuss the incentive structure and demand for cells produced in the U.S. versus outside the U.S. Martin Viecha, who has been with Tesla for seven years, announces that he will be moving on from Investor Relations and thanks the team for their strength and teamwork. Elon Musk thanks Viecha for his analysis and contribution to Tesla's success.

Martin Viecha expresses his gratitude for working with the interviewer and thousands of shareholders over the years. He thanks them for all the interactions, even the challenging ones, and looks forward to the next call in three months. He will be on the other side, listening in. Vaibhav Taneja also thanks Martin for his time.

This summary was generated with AI and may contain some inaccuracies.