(Austin, Texas) Every quarter I write about Tesla’s earnings calls, and this time I asked Grok to help come up with a headline. I laugh because in this call Elon Musk talked about the growth of cells into a baby. You’ll never guess the funny headline Grok came up with: “Tesla’s Metamorphosis: Elon Musk’s Plan for a Leaner, Meaner, and More Efficient Future”
This first earnings call of 2024 took place on April 23. I am highlighting some of the best and most interesting parts of the call for you. So take a little breather in your busy day. Let’s hang out for a few.
Tesla’s Roadmap
Elon talked, sharing his opening remarks at the start of the earnings call. He shared an inspiring vision for the future of all-electric and autonomous vehicles on earth. Despite facing various challenges, including global EV adoption pressure and other manufacturers’ shift towards plug-in hybrids, he said Tesla remains committed to its goal of electric vehicles dominating the market. Elon highlighted Tesla’s achievements and future plans, emphasizing rapid progress in AI and the expansion of Tesla’s AI infrastructure.
The Tesla team successfully navigated a tough environment in Q1, with energy storage deployments reaching an all-time high. Elon announced an acceleration in the launch of new models, including more affordable options, that will be produced on the current manufacturing lines. This welcome move is expected to increase vehicle production capacity to over 3 million units.
Regarding Full Self-Driving (FSD) Version 12, Elon expressed confidence in the vision-based approach with end-to-end neural networks as the solution for scalable autonomy. Tesla has reduced the subscription price to $99 per month to encourage more users to experience FSD.
Tesla’s core AI infrastructure is also undergoing significant expansion, with plans to install and commission 85,000 H100 computers by the end of the year. Elon stressed the importance of not only increasing the number of H100s but also ensuring their efficient use for training.
As with many Tesla earnings calls, some of the best information comes after the opening remarks!
Biology Lesson in Tesla Restructuring
You may know that some employees were laid off from Tesla. Nearly 10% of the company. Elon explains the Tesla restructuring using a biology lesson, which most people loved hearing,
“We are not giving up anything that significant that I’m aware of. We’ve had a long period of prosperity from 2019 to now and so if a company sort of organizationally is 5% wrong per year that accumulates to 25% – 30% of inefficiency.
We’ve made some corrections along the way, but it is time to re-organize the company for the next phase of growth. And you really need to re-organize it.
It is just like a human when we start off as one cell and become a zygote, a blastocyst, and you start growing arms and legs and then briefly you have a tail and then you shed the tail and then you’re a baby and you know, you basically have to be different.
The organism of a company is kind of like a creature growing and if you don’t reorganize it for different phases of growth, it will fail and you can’t have the same organizational structure if you’re 10 cells versus 100 versus 1 million versus 1 billion versus 1 trillion.
We humans are around 35 trillion cells, it doesn’t feel like one person but you’re basically a walking cell colony of roughly 35 trillion cells depending on your body mass and about 3 times that number in bacteria.
So, anyway, you’ve got to reorganize the company for a new phase of growth or it will fail to achieve that growth.”
Cybercabs: Ultimate Multitasking Machines – Earn Money While You Sleep and Share Your Ride with a Tap
On the call, Elon explained that in the future, you can add (or remove) your Tesla to the robotaxi network (using Tesla app) when you’re at work and you can choose to share your car with friends or family or 5-star customers only.
The new term “Cybercab” was applied to this vehicle. I think this blends an iconic image (a cab) with the modernistic cyber mystique. This name has a charming vintage feel while also being easy to pronounce. Cybercab rolls off the tongue, while Robotaxi feels more awkward.
Cars will soon work like elevators. You hop in, it takes you where you want, you don’t think twice about it. Tesla will be operating the fleet of Cybercabs and you will be able to decide if you want to have your Tesla inside the fleet for a day or a month or a year.
To help explain the concept, Elon compared it to an AirBNB.
“And something I should clarify is that Tesla will be operating the fleet. So, you can think of like how Tesla, think of it as combination of Airbnb and Uber meaning that there will be some number of cars that Tesla owns itself and operates in the fleet. There will be some number of cars and then there’ll be a bunch of cars where they’re owned by the end user. That end user can add or subtract their car to the fleet whenever they want, and they can decide if they want to only let the car be used by friends and family or only buy five-star users or by anyone at any time they could have the car come back to them and be exclusively theirs like an Airbnb.
You could rent out your guest room or not, any time you want.”
Tesla’s Idle Computing Revolution
Every Tesla car has a computer inside itself that’s capable of computing and inference.
Elon hopes that one day soon you can opt to rent out your Tesla computer to do distributing inference whenever it’s idle, when you’re sleeping, for example.
Elon envisions a future where the fleet of Tesla vehicles could collectively form a massive distributed inference system with their idle computing power. This would allow for efficient use of resources and potentially generate revenue for Tesla owners by participating in tasks like AI model training or other computational tasks. The idea is to leverage the vast number of Tesla vehicles worldwide, harnessing their collective computing power for various AI-related tasks.
The concept of distributed computing is not new, but applying it to a fleet of Tesla vehicles is a novel approach that could have significant implications for AI research, development, and deployment.
So, your Tesla can make money for you when you’re sleeping. This is analogous to Amazon’s Web Service which is currently the biggest cloud computing service provider in the world and the most profitable business segment for Amazon. Elon explained, “I think it’s analogous to Amazon Web Services, where people didn’t expect that AWS would be the most valuable part of Amazon when it started out as a bookstore. So, that was on nobody’s radar. But they found that they had excess compute because the compute needs would spike to extreme levels for brief periods of the year and then they had idle compute for the rest of the year. So, then what should they do to pull that excess compute for the rest of the year.
That’s kind of — yeah, monetize it. It seems like kind of a no-brainer to say, OK, if we’ve got millions and then tens of millions of vehicles out there where the computers are idle most of the time that we might well have them do something useful.”
Name any other car that has those potentials and capabilities. Let that sink in.
Elon’s Tesla Future: Increased Involvement
“Tesla constitutes the majority of my work time. I work every day of the week. I’m going to make sure Tesla is very prosperous.” – Elon
Indeed, Elon or any of the executives at the earnings call are not obligated to answer questions. The format of the earnings call is a choice by Tesla. Being able to ask Elon Musk directly if he plans to remain involved in Tesla less in the next 3 years was a question that was asked. Elon is the heart and soul of the company, and Tesla, Inc. is like his own child. Of course, he will stay involved and maybe even increase his involvement. You see, Elon was always deeply passionate about autonomous cars and with this happening now, he is going to show MORE, and not less involvement.
“We are putting the actual auto in automobile.” – Elon
Elon is happy to always allow cars to have a bright future with autonomy at Tesla. If he IS VOTED out of the company one day, he will not support Optimus development which is out of his control because there is a risk that the robot could veer towards malice. For context, a judge in Delaware used her power to take away his shareholder-approved compensation plan. If that compensation is not legally returned to Elon, he will not own enough shares of Tesla to make an impact on Optimus development and he could even be pushed right out of the very company he built as a worst-case scenario.
Autonomy: Tesla’s Future Licensing
In the future, 3 years ahead, the only cars that you will drive will be genuinely smart cars with autonomy. All cars will need to be smart cars or they will not be purchased. At that point, Tesla will license their autonomy software to all other surviving companies. Elon explains,
”Yeah. So, it is a case of having them use the same cameras and inference computer and licensing our software. Once it becomes obvious that if you don’t have this in a car, nobody wants your car. It’s a smart car. I still remember in fact, when Nokia was king of the hill, yeah, and the cellphone is crushing. And then I saw them come out with a smartphone that was a brick with limited functionality. And then the iPhone and Android, people still do not understand that all the phones are going to be that way. There’s not going to be any flip phones. There will be a niche product or home phone.”
My thoughts
Tesla cars need to be affordable to the vast majority of people. Tesla is doing this and this is good news as more and more people will be able to afford to buy a Tesla.
This price is already dropping right before our eyes. For example: My 2024 Model Y is vastly better than my 2022 Y and it cost me less to purchase by around $18,000! The single motor Model Y is only $29K with gas savings and with point of purchase $7500 rebate. An incredible value.
It is indeed exciting that we are headed for an electric vehicle and autonomous future!
Isn’t it crazy that many carmakers are pulling back on their investments in EVs? Only Tesla is investing the most in future growth. This includes their AI programs, production capacity, Supercharger & service networks as well as new product infrastructure.
The future is not only electric but also autonomous. Since the launch of FSD V12 earlier this year, I have personally driven across Austin, Texas over 100 times and V12 is indeed an incredible advancement. I have now produced over 60 FSD Tesla podcast episodes (Gail’s Tesla Podcast), constantly spreading the word to my viewers (in the 100,000’s) about Tesla autonomy. I’ve shown that FSD Supervised is for every driver, no matter their knowledge of tech or their ability to understand how it actually works. In fact, if you want to just say that it works like magic, that’s totally acceptable because that is how I feel about it too!
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