### Q&A Breakdown
1. Analyst Name and Firm:
Question: Can you give us some insight how robo taxis have been performing so far and what rate you expect to expand in terms of vehicles, geofence, cities, and supervisors?
Response:
The robo taxis have been doing great so far in Austin. Customers really love the experience; it’s super smooth, very safe, and overall a great experience. We already did the first phase of expansion in Austin and will continue to expand to probably more than 10x our current operating region. We’re also testing in many other cities. In the US, the next area to expand will be the San Francisco Bay Area. We are working with the government to get approval and, meanwhile, launch a service with a person in the driver’s seat to expedite it while waiting for regulatory approval. We’re also testing a lot of other cities in the US, including Florida and Nevada.
2. Analyst Name and Firm:
Question: What are the key technical and regulatory hurdles still remaining for unsupervised FSD to be available for personal use? Can you provide a timeline?
Response:
We believe this will be available by the end of this year in certain geographies. We are being extremely careful about it, and we do not want to rush. It’s not something we’re willing to roll out broadly without ensuring safety first. But I am confident that by the end of this year within a number of US cities, it will be available to end users. The hardware used in the Austin robotaxi vehicles is the same as in customer vehicles. We even delivered a car autonomously from the factory this quarter. So, essentially, it’s just a software update away.
3. Analyst Name and Firm:
Question: What specific factory tasks is Optimus currently performing, and what is the expected timeline for scaling production to enable external sales? How does Tesla envision Optimus contributing to revenue in the next two to three years?
Response:
Optimus is still in its development phase with Optimus Version 3, which we believe is the right design. We expect to have prototypes within three months and will begin production at the beginning of next year. Predicting production ramps is challenging when everything is new, but I would be surprised if we’re not producing about 100,000 Optimus robots per month in about five years.
4. Analyst Name and Firm:
Question: Can you provide an update on the development and production timeline for Tesla’s more affordable models? How will these models balance cost reduction and profitability, and what impact do you expect on demand in the current economic climate?
Response:
As mentioned, we started production in June and are ramping quality builds throughout the quarter. Our focus right now is to maximize production rates, particularly in North America. This will delay the broader availability of the more affordable models to Q4 to avoid complexity. The goal is not to negatively impact revenue or gross margin, but to make a car everyone loves at a more affordable price.
5. Analyst Name and Firm:
Question: With the FSD trials that Tesla has been offering to consumers and the attention on self-driving more generally, are you able to comment more specifically on what you’re seeing with FSD subscription trends and take rates and help us better understand how large FSD revenue may be currently?
Response:
There has been a marked improvement in FSD adoption, particularly since launching version 12 in North America. We’ve also made subscription more affordable, which has resulted in a 25% increase in adoption. Despite a greater understanding that a car on FSD is 10x safer, we still need to educate the broader audience. Many don’t fully grasp how advanced the technology is. We are actively working to demonstrate the capabilities so more people try it out.
6. Analyst Name and Firm:
Question: You’ve talked about the opportunity to put non-Tesla owned vehicles into the robotaxi network. Just talk about the gating factors to enabling that and what timeline we should expect on personally owned vehicles in the robotaxi network.
Response:
We are focusing on making sure it works well with cars fully under our control first, given the paramount importance of safety. I am confident that by next year, Tesla owners will be able to add their cars to the network, assuming they meet criteria we set, akin to checks for ride-sharing platforms like Uber.
### Sentiment Analysis Table
| Analyst Name | Firm Name | Sentiment Score (1–10)|
|————–|—————–|————————|
| Emmanuel Rosner | Wolfe Research | 8 |
| Adam Jonas | Morgan Stanley | 9 |
| Dan Levi | Barclays | 7 |
| Mark Delaney | Goldman Sachs | 7 |
| Will Tamberrino| Truist | 6 |
### Conclusion & Risk Identification
Sentiment Score Conclusion:
The overall sentiment on the earnings call was positively inclined, with an average sentiment score of 7.4, highlighting a broad sense of optimism about Tesla’s future, particularly regarding advancements in autonomous technology and establishing the robo taxi service. There is strong enthusiasm for planned production scaling and improvements seen in key innovations such as Optimus and FSD.
Key Positive Takeaways:
1. Expansion of robo taxi services in Austin was positively received, showing smooth performance and increased geographical reach.
2. Progress in autonomous driving technology, aiming for unsupervised FSD by the end of the year in select US cities.
3. Development of a more affordable Tesla model could expand the consumer base.
Concerns or Red Flags:
1. Regulatory and technical challenges still exist for full-scale deployment of unsupervised FSD.
2. Economic conditions, such as the termination of the IRA EV credit in the US, pose potential risks to sales figures.
3. Tariff costs are rising, and there is uncertainty around future impacts on manufacturing expenses.
4. The ramp-up for new models may face challenges due to supply chain complexities and the need for innovation adaptation.