Tesla Q1 Earnings: Robotaxi in 2024, Cybertruck in 2023, Record profit

April 20, 2022

By Gabe Rodriguez Morrison

Tesla continues to simplify the manufacturing process

Financial Results

Tesla just reported first-quarter results for 2022 and beat analysts' expectations on the top and bottom lines. Despite factory shutdowns, inflationary pressures and semiconductor chip shortages, the automaker delivered 310,000 vehicles, up 81% YoY.

Revenue also rose 81% to $18.6 billion from $10.39 billion a year ago, thanks to higher average car prices and increased vehicle sales, the company said.

For the period ending March 31, 2022, Tesla reported $3.22 earnings per share. Since posting a record profit, shares have risen as much as 6% in after-hours trading.

Tesla vehicle deliveries since 2018

Challenges This Quarter

In its letter to investors, Tesla said supply-chain problems and raw-material prices costs have increased “multiple-fold”.

"Our own factories have been running below capacity for several quarters,” Tesla said in its shareholder deck. The company did not give detailed guidance on deliveries going forward, but said it expects 50% annual growth on a multi-year basis, and warned that supply chain constraints are likely to continue through 2022."

Tesla said that a spike in COVID-19 cases caused a temporary shutdown of the Shanghai factory and shortages in the company’s supply chain.

Tesla had its most profitable quarter

“Although limited production has recently restarted, we continue to monitor the situation closely,” the company said.

The ramp-up in the newer Texas and Berlin gigafactories will also depend on supply-chain obstacles, Tesla said.

“Factory ramps take time, and Gigafactory Austin and Gigafactory Berlin-Brandenburg will be no different.”

The company also stated it would release its Full-Self Driving to all U.S. customers that opted for the $12,000 package “before the end of this year.”

Energy

Tesla’s solar deployments dropped by 50% YoY to 48 MW this past quarter. The company deployed 846 MWh of battery storage systems, up 90% YoY, but down from the previous quarter. The company said declines in solar deployments were caused by supply chain constraints on certain components.

Insurance

Tesla says they are the 2nd largest insurer of Teslas in the state of Texas, and could be the largest by the end of next quarter. Tesla is now a fully integrated provider of insurance in the states (list of states) where they have released their insurance product.

Cybertruck and Robotaxi

On the earnings call, Elon confirmed Cybertruck production to begin in 2023 and a vehicle built for autonomy, without a steering wheel or pedals to be produced in 2024 which would be "a massive driver of Tesla's growth."

Elon also reiterated his stance on Tesla's optimus robot, saying that it has more potential opportunity than the car business over time.

When asked about raw materials and scaling to extreme size, Elon stated that Lithium mining is the limiting factor to production. He later said that "Tesla will likely need to help the industry on this."

When asked about the future of EV affordability, Elon stated that the robotaxi will provide the lowest cost per mile of transport ever, a 5x-10x reduction, making it accessible to everyone. Based on their projections, it appears that a robo taxi will cost less than a subsidized bus/subway ticket.

Earnings Overview

Twitter user @DBurkland put together this overview of everything that was discussed during the earnings call.

Opening remarks from Zach Kirkhorn

Per unit vehicle costs increased due to inflation, raw material costs, and supply chain constraints
Slight shift towards more profitable vehicles like the Model Y
Energy business continues to be impacted by macro conditions more than vehicle business (chip constraints)
Achieved record operating margin over 19% amidst construction of 2 new factories (Giga Berlin & Giga Texas)
Tesla has reduced debt (excluding product debt) to nearly 0
Lost 1 month of build volume lost due to COVID-related shutdowns at Giga Shanghai (will dramatically affect Q2 delivery numbers)
Inefficiencies of ramping process at Giga Berlin & Texas will affect bottom line
Tesla still believes 50% YoY growth w/ vehicle production in 2022 is still achievable

Opening remarks from Elon Musk

Record deliveries and production even with many headwinds
Even with COVID shutdowns in Giga Shanghai Elon believes they still have a shot at 60% YoY growth for 2022
Two new factories opened in Q1 and exponentially ramping (Giga Berlin & Giga Texas) with higher production volumes achievable by end of this year
Just crossed 1m units in the last year however long way to go as Tesla aspires to produce 20m units per year (only 5% towards their goal)
Elon never more excited for Tesla and their future then he is now
Robotaxi
- Highly optimized for autonomy (no steering wheel or pedals)
- Numerous other innovations
- Fundamentally optimized for lowest fully considered cost per mile, accounting for everything (very powerful product)
- Expect to reach volume production of Robotaxi in 2024
CyberTruck
- On track for volume production in 2023
Optimus
- Elon surprised people weren’t more excited for this but he thinks folks will fully understand its capabilities & impact will be greater than FSD or vehicle businesses
Energy
- Battery & solar production will improve as supply chain issues are resolved

Q&A

FSD Development Progress

Elon has never seen more false dawns than with the development of FSD. Real world AI has to be solved for (nobody has solved yet) and with our roads designed for humans, NNs & cameras have to be solved in a way that is on-par with (and exceeds) the capabilities of humans. Elon still believes they will deliver on FSD in 2022. Best way to realize this is participate in FSD beta program and experience it for ourselves as they’ll be expanding the program later this year. Still targeting new FSD release cadence of every 2 weeks.

Giga Shanghai Shutdown

Production is coming back with a vengeance and Elon expects weekly production records to be broken as they work to catch up. Still possible to match / exceed Q1 numbers however Q3 & Q4 are expected to be record quarters in terms of production. Elon believes Tesla will easily be able to produce 1.5m vehicles this year.
It’s important for new factories to target limited configurations during ramp and that is why both Giga Berlin & Giga Texas are hyper-focused on producing the Model Y.
Ramp period (5k per week) takes typically 9-12 months from start of production however it’s possible for Tesla to ramp sooner based on their experience.

Price Increase

Elon says it is understandable that there are many folks questioning price increases especially amidst record profitability however the price increases are there to account for an increase in raw materials costs and potential supply chain constraints in the future (since vehicle deliveries are a year out).

State-based Dealership Laws

Tesla would love federal-based laws that allows direct sales across the country however congress is not willing to take up this sort of legislation at this time (so Tesla is approaching it on a state-by-state basis)

800V Battery Architecture

Tesla is not ignoring the reality that they can go to a higher voltage however there is not any compelling reason to change at this point
Going from 400V to 800V might save them $100 per vehicle (however requires changing all of the backend infrastructure)
Switching to 800V might make sense down the road however Tesla needs to increase vehicle volume to absorb the cost of moving from 400V to 800V first
For larger vehicles where higher power on the battery side and/or charging side is required (where current requirements go up), savings can be seen by increasing voltage as it would reduce semiconductor needs (and thus save $)
- Tesla is considering different voltages for CyberTruck and Semi
- For 3, Y, and Robotaxi they see no need to switch

4680 Batteries

Tesla is working in all areas that they described during the battery day event and making good progress
Going to take several years to achieve the cost savings and performance numbers they described during battery day
4680 structural pack will be competitive with the best alternatives later this year and exceed the best alternatives next year
New chemistries hinted at however will be included in 4680 production later on
Based on Giga Texas factory construction, the 4680 production equipment cost 5x less than what it would have been with other battery cell designs
- Cost model well understood, rate and yield will be better understood as they ramp over next few years
Giga Berlin will transition to 4680s from 2170s later this year
Giga Texas has the capability to produce non-structural pack for 2170s (mitigation)
- Volume production for 4680s in Giga Texas targeted by end of Q3, for sure Q4
- Sizable cell inventory thanks to Giga Shanghai shutdown and allows them to be more deliberate in 4680 development (gives them some breathing room during ramp)
- 4680 production not a risk to achieving vehicle production target in 2022 however would be in 2023

Raw Materials Required To Scale

Tesla needs to think about tonnage of Nickel, Iron Phosphate, Graphite, Separators, Electrolytes for the world as a whole
Then take action on limiting factors that get in the way of the advent of a sustainable energy future
Tesla is thinking about mining & refining Lithium is a current limiting factor and responsible for cost growth per cell as of late (single biggest on a percentage basis)
Lithium only makes up only 2-3% of a Li-Ion cell (5kg per car)
Cathode (Nickel & Iron Phosphate) is the heaviest in terms of cost and raw materials composition of a battery cell
Exciting announcements on the raw materials topic in the months to come, Elon hinted to a follow up call / event
Tesla committed to recycling at all cell factories, recycling 50T per week in Reno (ramping to 150T) which is putting materials right back into their Cathode supply chain
As they are building new vehicles at new factories, Tesla is recycling everything they can from a raw materials perspective
Tesla figured out they can recycle cast aluminum wheels from retired ICE cars and throw it into their aluminum melting pot and use for vehicle body production for 3 & Y
Half of Tesla’s products were LFP-based in Q1 2022 which shows how nimble they are regarding battery chemistry
- Also looking at other cathode options to give Tesla further agility
Some of the challenges with Lithium market are not related to supply & demand fundamentals (frustrating to Tesla)

Giga Berlin & Texas Ramping related to Giga Shanghai

Elon thinks they need to ramp Berlin & Texas faster than Shanghai as they are more experienced now and have learned so much in the simplification of Model Y production
Body line for front & rear cast underbody + structural pack is 60% smaller than it would be otherwise in terms of equipment required
If you are waiting for the best Tesla ever you will be waiting forever as they are constantly improving

Robotaxi

Unveiling event sometime next year, Elon doesn’t want to go into too many details until then
Volume production in 2024
Sizable investment required to build robotaxi production lines

Prices Over Time

Elon wants to make EVs as affordable as possible however this has become very difficult due to inflation (40-50yr high)
Likely to continue for remainder of 2022
Long term contracts with suppliers have helped Tesla keep costs down longer than expected but eventually they run out
20-30% cost increase from suppliers over last year which is why Tesla has raised their prices
Lithium margins are practically software margins right now (Elon encouraging more to get into this business)

CyberTruck

Ignoring battery cells Tesla believes the CyberTruck is made of 20-30% less parts than a typical pickup truck

Giga Nevada

Room for expansion there and the plan is to expand production at Giga Nevada further
Majority of battery cells will be produced at Giga Texas going forward

COVID Shutdowns in China

Elon doesn’t think recent COVID shutdowns in China will negatively impact production elsewhere

Elon compensation

No plans or talks to increase Elon’s compensation further

3rd Party Access to Supercharger Network in USA

Tesla plans to provide 3rd party vehicle access to the entire world and remains committed to that
Tesla is pursuing a technical solution to address the difference in charging connector in the US (magic dock)
Growth of Supercharger network is being accelerated to match increase in vehicle production

Tesla Insurance

In state of Texas Tesla is the second largest insurer of Teslas and should be #1 in the next quarter
Working to get 80% of states access to Tesla insurance by end of year at which point they’ll look to expand to other markets
Having realtime feedback for driving habits (safety score program) is proving helpful to Tesla owners w/ Tesla insurance as it directly relates to a lower rate
When a crash happens it gives Tesla a new feedback loop to improve vehicle design, reduce costs, etc (End-to-end visibility)

You can also find outlines from previous earnings calls on his website DBurkland.com.

Tesla Holiday Update Wishlist - Charging & Safety Edition

November 20, 2024

By Karan Singh

Not a Tesla App

As December approaches, Tesla’s highly anticipated Holiday update draws closer. Each year, this eagerly awaited software release transforms Tesla vehicles with new features and festive flair. If you’re not familiar with Tesla’s holiday updates, take a look at what Tesla has launched in the Holiday update the past few years.

While leaked features like Blind Spot Monitoring While Parked hint at thoughtful improvements, the real magic lies in the unexpected. From potential features such as the Apple Watch app to a smart assistant, the possibilities are endless.

For this chapter in our series, we’re dreaming up ways Tesla could improve the charging experience and even add some additional safety features. So let’s take a look.

Destination State of Charge

Today, navigating to a destination is pretty straightforward on your Tesla. Your vehicle will automatically let you know when and where to charge, as well as for how long. However, you’ll likely arrive at your destination at a low state of charge.

Being able to set your destination state of charge would be an absolute game-changer for ease of road-tripping. After all, the best EV to road trip in is a Tesla due to the Supercharger network. It looks like Tesla may be listening. Last week, Tesla updated their app and hinted at such a feature coming to the Tesla app. A Christmas present, maybe?

Battery Precondition Options

While Tesla automatically preconditions your battery when needed for fast charging, there are various situations where manually preconditioning the battery would be beneficial.

Currently, there is no way to precondition for third-party chargers unless you “navigate” to a nearby Supercharger. If you need to navigate to a Supercharger that’s close by, the short distance between your location and the Supercharger will also not allow enough time to warm up the battery, causing slower charging times.

In Europe, you can navigate to and precondition for Qualified Third Party Chargers, but not for unlabelled ones.

Live Activities

While we already mentioned Live Activities in the Tesla app wishlist, they’d be especially useful while Supercharging. Live Activities are useful for short-term information you want to monitor, especially if it changes often — which makes them perfect for Supercharging, especially if you want to avoid idle fees.

Vehicle-to-Load / Vehicle-to-Home Functionality

The Cybertruck introduced Tesla Power Share, Tesla’s name for Vehicle-to-Home functionality (V2H). V2H allows an EV to supply power directly to a home. By leveraging the vehicle’s battery, V2H can provide backup power during outages and reduce energy costs by using stored energy during peak rates.

Tesla Power Share integrates seamlessly with Tesla Energy products and the Tesla app. We’d love to see this functionality across the entire Tesla lineup. Recently a third party demonstrated that bidirectional charging does work on current Tesla vehicles – namely on a 2022 Model Y.

Adaptive Headlights for North America

While Europe and China have had access to the Adaptive Headlights since earlier this year, North America is still waiting. The good news is that Lars Moravy, VP of Vehicle Engineering, said that these are on their way soon.

Blind Spot Indication with Ambient Lighting

Both the 2024 Highland Model 3 Refresh and the Cybertruck already have ambient lighting features, but they don’t currently offer a practical purpose besides some eye candy. So why not integrate that ambient lighting into the Blindspot Warning system so that the left or right side of the vehicle lights up when there’s a vehicle in your blind spot? Currently, only a simple red dot lights up in the front speaker grill, and the on-screen camera will also appear with a red border when signaling.

Having the ambient lighting change colors when a vehicle is in your blind spot would be a cool use of the technology, especially since the Model Y Juniper Refresh and Models S and X are supposed to get ambient lighting as well.

Tesla’s Holiday update is expected to arrive with update 2024.44.25 in just a few short weeks. We’ll have extensive coverage of its features when it finally arrives, but in the meantime, be sure to check out our other wishlist articles:

Wishlist 1 - Tesla App Edition
Wishlist 2 - Tesla Maps & Autopilot Edition
Wishlist 3 - Tesla Entertainment Edition
Wishlist 4 - Tesla Charging & Safety Edition

How Tesla’s “Universal Translator” Will Streamline FSD for Any Platform

November 20, 2024

By Karan Singh

Not a Tesla App

It’s time for another dive into how Tesla intends to implement FSD. Once again, a shout out to SETI Park over on X for their excellent coverage of Tesla’s patents.

This time, it's about how Tesla is building a “universal translator” for AI, allowing its FSD or other neural networks to adapt seamlessly to different hardware platforms.

That translating layer can allow a complex neural net—like FSD—to run on pretty much any platform that meets its minimum requirements. This will drastically help reduce training time, adapt to platform-specific constraints, decide faster, and learn faster.

We’ll break down the key points of the patents and make them as understandable as possible. This new patent is likely how Tesla will implement FSD on non-Tesla vehicles, Optimus, and other devices.

Decision Making

Imagine a neural network as a decision-making machine. But building one also requires making a series of decisions about its structure and data processing methods. Think of it like choosing the right ingredients and cooking techniques for a complex recipe. These choices, called "decision points," play a crucial role in how well the neural network performs on a given hardware platform.

To make these decisions automatically, Tesla has developed a system that acts like a "run-while-training" neural net. This ingenious system analyzes the hardware's capabilities and adapts the neural network on the fly, ensuring optimal performance regardless of the platform.

Constraints

Every hardware platform has its limitations – processing power, memory capacity, supported instructions, and so on. These limitations act as "constraints" that dictate how the neural network can be configured. Think of it like trying to bake a cake in a kitchen with a small oven and limited counter space. You need to adjust your recipe and techniques to fit the constraints of your kitchen or tools.

Tesla's system automatically identifies these constraints, ensuring the neural network can operate within the boundaries of the hardware. This means FSD could potentially be transferred from one vehicle to another and adapt quickly to the new environment.

Let’s break down some of the key decision points and constraints involved:

Data Layout: Neural networks process vast amounts of data. How this data is organized in memory (the "data layout") significantly impacts performance. Different hardware platforms may favor different layouts. For example, some might be more efficient with data organized in the NCHW format (batch, channels, height, width), while others might prefer NHWC (batch, height, width, channels). Tesla's system automatically selects the optimal layout for the target hardware.
Algorithm Selection: Many algorithms can be used for operations within a neural network, such as convolution, which is essential for image processing. Some algorithms, like the Winograd convolution, are faster but may require specific hardware support. Others, like Fast Fourier Transform (FFT) convolution, are more versatile but might be slower. Tesla's system intelligently chooses the best algorithm based on the hardware's capabilities.
Hardware Acceleration: Modern hardware often includes specialized processors designed to accelerate neural network operations. These include Graphics Processing Units (GPUs) and Tensor Processing Units (TPUs). Tesla's system identifies and utilizes these accelerators, maximizing performance on the given platform.

Satisfiability

To find the best configuration for a given platform, Tesla employs a "satisfiability solver." This powerful tool, specifically a Satisfiability Modulo Theories (SMT) solver, acts like a sophisticated puzzle-solving engine. It takes the neural network's requirements and the hardware's limitations, expressed as logical formulas, and searches for a solution that satisfies all constraints. Try thinking of it as putting the puzzle pieces together after the borders (constraints) have been established.

Here's how it works, step-by-step:

Define the Problem: The system translates the neural network's needs and the hardware's constraints into a set of logical statements. For example, "the data layout must be NHWC" or "the convolution algorithm must be supported by the GPU."
Search for Solutions: The SMT solver explores the vast space of possible configurations, using logical deduction to eliminate invalid options. It systematically tries different combinations of settings, like adjusting the data layout, selecting algorithms, and enabling hardware acceleration.
Find Valid Configurations: The solver identifies configurations that satisfy all the constraints. These are potential solutions to the "puzzle" of running the neural network efficiently on the given hardware.

Optimization

Finding a working configuration is one thing, but finding the best configuration is the real challenge. This involves optimizing for various performance metrics, such as:

Inference Speed: How quickly the network processes data and makes decisions. This is crucial for real-time applications like FSD.
Power Consumption: The amount of energy used by the network. Optimizing power consumption is essential for extending battery life in electric vehicles and robots.
Memory Usage: The amount of memory required to store the network and its data. Minimizing memory usage is especially important for resource-constrained devices.
Accuracy: Ensuring the network maintains or improves its accuracy on the new platform is paramount for safety and reliability.

Tesla's system evaluates candidate configurations based on these metrics, selecting the one that delivers the best overall performance.

Translation Layer vs Satisfiability Solver

It's important to distinguish between the "translation layer" and the satisfiability solver. The translation layer is the overarching system that manages the entire adaptation process. It includes components that analyze the hardware, define the constraints, and invoke the SMT solver. The solver is a specific tool used by the translation layer to find valid configurations. Think of the translation layer as the conductor of an orchestra and the SMT solver as one of the instruments playing a crucial role in the symphony of AI adaptation.

Simple Terms

Imagine you have a complex recipe (the neural network) and want to cook it in different kitchens (hardware platforms). Some kitchens have a gas stove, others electric; some have a large oven, others a small one. Tesla's system acts like a master chef, adjusting the recipe and techniques to work best in each kitchen, ensuring a delicious meal (efficient AI) no matter the cooking environment.

What Does This Mean?

Now, let’s wrap this all up and put it into context—what does it mean for Tesla? There’s quite a lot, in fact. It means that Tesla is building a translation layer that will be able to adapt FSD for any platform, as long as it meets the minimum constraints.

That means Tesla will be able to rapidly accelerate the deployment of FSD on new platforms while also finding the ideal configurations to maximize both decision-making speed and power efficiency across that range of platforms.

Putting it all together, Tesla is preparing to license FSD, Which is an exciting future. And not just on vehicles - remember that Tesla’s humanoid robot - Optimus - also runs on FSD. FSD itself may be an extremely adaptable vision-based AI.