Tesla, Inc.

Good afternoon, everyone, and welcome to Tesla's second quarter 2025 Q&A webcast. My name is Travis Axelrod, head of investor relations, and I'm joined today by Elon Musk, Babab Taneja, and a number of other executives. Our Q2 results were announced at about 3 p.m. central time in the update deck, be 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? Thanks, Travis.

So we've had a very exciting quarter. We're able to successfully launch RoboTaxi, so providing our first drives with no one in the driver's seat with paying customers in Austin. And as some may have noted, we've already expanded our service area in Austin. It's bigger and longer, and it's going to get even bigger and longer. We were expecting to really It greatly increased the moisture in service area to well in excess of what competitors are doing. And that's hopefully in a week or so, couple weeks. Yeah, couple weeks. Couple weeks or so. And then we're getting the regulatory permission to launch in the Bay Area, Nevada, Arizona, and a number of get the approvals and we prove out safety, then we will be launching autonomous ride hailing in most of the country. And I think we'll probably have autonomous ride hailing in probably half of the population of the US by the end of the year. That's at least our goal, subject to regulatory approvals. I think will technically be able to do it. So assuming we get regulatory approvals, it's probably addressing half the population of the US by the end of the year. But we are being very cautious. We don't want to take any chances. And so we're going to go cautiously. But the service areas and the number of vehicles in operation will increase at a hyper exponential rate. So add some other notable things. Model Y in June became the best selling car in Turkey, Netherlands, Switzerland, and Austria. It is, I believe, the best selling car of any kind in the world still. And autonomy is a big factor there. So even without supervised Even with just supervised self-driving, it's a huge selling point. And it's worth noting that we do not actually yet have approval for supervised FSD in Europe. So our sales in Europe, we think, will improve significantly once we are able to give customers the same experience that they have in the U.S., This is, I think, a very important point to convey. We've been working with our main country regulator, which is the Netherlands, and I think we're close to getting approval with the Netherlands. Then it's going to go to the EU. It's quite a you know, Kafkaesque. In fact, Kafka had no idea that something like the EU could exist. Beyond Kafkaesque, it had challenges with bureaucracy. But we will get the approvals. And I think we'll get, you know, some people in Europe will have an experience similar to have the US in most of Europe, you know, this year, hopefully, at least partially in this quarter. And then we also have some regulatory challenges in China, which we're hoping to unblock shortly, because we also cannot provide supervised FST in China currently. But we're going to unblock that soon. That's another major. It really is the single biggest demand drive. And then within the US, as we get confident about safety different geographic areas, we will loosen up on how much somebody has to be laser focused, have their eyes laser focused on the road. You know, that's been a common complaint. In fact, it does create an odd safety issue where people will sometimes disengage autopilot then do something, change the radio, or maybe look at the phone, drive with her knee, and then re-engage autopilot, which obviously is less safe than simply keeping autopilot on. So anyway, that experience will improve in the next several weeks. Because of our focus on Austin with no one in the driver's seat, production release of Autopilot is actually several months behind what people experience on a Robotex in Austin. So now we have the Robotex in Austin launched, we'll be providing, adding back those elements so that there will be a step change improvement in the Autopilot experience for people outside of Austin. This is really As you can tell, this is very much sort of autonomy is the story. We need the physical product without which you cannot have autonomy. But once you have the physical product you need, the autonomy is what amplifies the value to stratospheric levels. We also launched the Tesla Dyna, which has been a huge hit. It actually got worldwide attention, which is unusual for a Dyna. Diners don't typically get headline news around Earth. But this is a pretty special diner. And if you're in the LA area, it's worth visiting. It's sort of a shining beacon of hope in an otherwise sort of bleak urban landscape, frankly. So it's really quite a lovely experience. Great job by the team there. On the full stop driving front, continue talking about that. We have we're continuing to make significant improvements just with the software so. The. We're expecting to increase the parameter count. Actually, at this point. I think we think we can probably 10 X that almost 10 X the power frame. Yeah, roughly 10x the parameter count. This is actually a very tricky thing to do because as you increase the parameter count, you get choked on memory bandwidth. But we currently think we can 10x the parameter count from what people are currently experiencing. So not just the 4x, actually 10x increase in parameter count. And yeah, so there's still a lot of improvement on the existing hardware to happen. Energy is growing really well despite headwinds from tariffs and various supply chain challenges. The mega pack is expanding capacity quickly and we have upgrades to the mega pack that will make it even better. And we had record power multipliers gaining Q2. So I think batteries are just going to be a massive thing. The scale of batteries, battery demand is, I think, not that many people appreciate just how gigantic the scale of battery demand is. The way you think about it is that the U.S. sustained power output for the U.S. grid is around one terawatt. But average usage is less than half a terawatt. If you add batteries to the mix, you can run the power plants 24-7 at full capacity, thus doubling, more than doubling, the energy output per year of the United States just with batteries. But that's again, big deal. It's a really big deal. Optimus. So we're revolving to Optimus design and really getting Optimus to the point where it is a phenomenal design. To run Optimus version two right now, sort of two and a half. Optimus three is, It is an exquisite design, in my opinion, and will be an incredible, as I've said many times before, predicted it will be the biggest product ever. It's a very hard problem to solve. You have to design every part of it from physics first principles. There's nothing that's off the shelf that actually works. So you're going to design every motor, gearbox, power electronics, control electronics sensors, the mechanical elements. We also got to train Optimus to use its lens and its sensors with a neural net. But we'll be applying the same techniques that we applied for our car, which is essentially a four-wheeled robot. And Optimus is a robot with arms and legs. So the same principles that apply to optimizing AI inference are the car applied to optimates, because they're both really robots in different forms. And Tesla, it is important to note that Tesla is by far the best in the world at real world AI. Like a clear proof point for that would be if you compare, say, Tesla to Waymo, Waymo's got, you know, the car is best doing with God knows how many sensors. And yet, isn't Google good at AI? Yes, but they're not good at real-world AI. Tesla is actually much better than Google by far, much better than anyone at real-world AI. And by far, Tesla has the best inference efficiency. I think a key figure of error for AI is, what is the intelligence per gigabyte? people talk about parameters blah blah blah but i think i'll just talk about stop talking about parameters and talk about gigabytes because with the parameters you can have four bit parameters eight bit parameters 16 bit parameters but the actual constraints in the hardware are how many gigabytes of ram and how many gigabytes per second can you transfer from ram therefore it is not a parameter constraint there's it is a there's a byte constraint and tesla has the highest intelligence density of any AI by far. And I have a lot of insight into this with XAI. XAI is, you know, Grok is the smartest AI overall, but it's a, you know, Grok 4 is a giant beast, you know, sort of at the terabyte level. And so it's kind of important to know Tesla has the best And intelligence density will be a very big deal in the future. It is now. So with Optimus 3, which is really the right design, it's like it doesn't have, at this point, there's no significant flaws with the Optimus 3 design. But we are going to retool a bunch of things. It'll probably be prototypes of Optimus 3 end of this year and then scale production next year. We're going to try to scale Optimus production as fast as it's seemingly possible to do so and try to get to a million units a year as quickly as possible. Do you think we can get there in less than five years? That's my sort of guess. That that's a reasonable aspiration is a million units a year. Five years, it seems like an achievable target. But in conclusion, so far 2025 has been very exciting year. A lot of major milestones. We've made clear progress, demonstrable progress in autonomy. A lot of naysayers said we would not achieve, but it's worth noting that we have done what we said we were going to do. Doesn't mean we're always on time, but we get it done. And our naysayers are sitting there with egg on their face. So great, great, great progress by the Tesla team. Yeah, I do think if Tesla continues to execute well with vehicle autonomy and humanoid robot autonomy, it will be the most valuable company in the world. It's a lot of execution between here and there. It doesn't just happen. But provided we execute very well, I think Tesla has a shot at being the most valuable company in the world. Obviously, I'm extremely optimistic about the future of the company. The best way to predict the future is to make it happen, and we're making it happen here with the Tesla team. So I'd just like to say thanks to all of our supporters, and I think we've got an incredibly exciting future.

Great. Thank you very much, Elon, and Fedlock has their remarks as well.