In the early morning of July 24, 2024, Beijing time, after the U.S. stock market closed, Tesla released its 2024 Q2 financial report.
Musk said that while other companies are pursuing different parts of the AI-robotics stack, Tesla is pursuing all parts. This allows for better cost control, scaling up, faster time-to-market, and better product production, not only for autonomous vehicles, but also for autonomous humanoid robots like Optimus.
Tesla's Robotaxi product launch event has been postponed to October 10 to improve Robotaxi and add additional content to the product launch.
Tesla's energy storage deployment in Q2 2024 hit a record high, and the profit of its energy business also hit a record high. The energy storage business has become the main business from the edge and has become the most eye-catching part, and the "Third Chapter of the Secret Ambition" imagined by Musk is slowly unfolding. In Q2 2024, Tesla added 9.4GWh of new installed capacity in a single quarter, a year-on-year increase of 157.3% and a month-on-month increase of about 132%, setting a record for Tesla's new installed capacity of energy storage, bringing huge revenue and gross profit to Tesla.
In this issue of long-termism, we select Tesla's 2024 Q2 financial report and conference call minutes, energy storage business analysis, rubble villager, master station, Polaris energy storage network release, Liuhe commercial research and selection fine school, share with everyone, Enjoy!
Body:
The full text is 11,634 words
Estimated reading 23 minutes
Tesla's Q2 2024 earnings call: Autonomous driving is Tesla's biggest differentiator
When: July 24, 2024
Source: Rubble Villager
Word Count: 2,846
After the U.S. stock market in the early morning of July 24, 2024, Beijing time, Tesla released its 2024 Q2 financial report: Q2 revenue of $25.5 billion, higher than the expected value of $24.38 billion; earnings per share (non-United States GAAP) of $0.52, lower than the expected value of $0.62; overall gross margin (United States GAAP) of 18%.
Tesla held a 2024 Q2 earnings call, and CEO Musk and CFO Vaibav · Tania spoke.
Musk's 2024 Q2 summary
In Q2 2024, we will see a massive and accelerated adoption of EVs, with some stagnation in EV development as other companies struggle to build competitive EVs.
There are quite a few competitive EVs entering the market, most of which are underperforming, but the heavily discounted ones have made Tesla's situation slightly tougher. In our view, this is not a long-term problem, but a fairly short-term one.
We remain convinced that electric vehicles are the best choice for our customers and that the world will move towards fully electrified mobility, not only for cars, but also for airplanes and boats.
Despite many challenges, the Tesla team did a great job, and we achieved record quarterly revenue. In Q2 2024, the deployment of energy storage will hit a record high, and the profit of the energy business will also hit a record high.
We are investing in a lot of future-oriented projects, including AI training and inference, and a lot of infrastructure to support future products.
We won't go into too much detail about the product roadmap here, but we'll leave that to the product launch event, where we'll launch a more affordable model in the first half of 2025.
Tesla's biggest differentiator is self-driving.
On top of that, we have economies of scale and we are the world's most efficient producer of electric vehicles.
While other companies are pursuing different parts of the AI-robotics stack, we are pursuing all parts. This allows for better cost control, scaling up, faster time-to-market, and better product production, not only for autonomous vehicles, but also for autonomous humanoid robots like Optimus.
Regarding FSD and Robotaxi, we have made great progress in FSD in Q2 2024. With the launch of V12.5, we believe that customers will experience a qualitative leap forward in supervised FSD.
FSD V12.5 has 5 times the parameters of V12.4 and will eventually merge the highway and urban tech stacks. At the moment, the highway stack is quite old, and people often have problems on the highway, and in version 12.5, we finally merged the two stacks together.
Cumulative mileage (unit: 1 billion miles) with supervised FSD, with FSD V12 version in red
I've still found that most people don't understand how good this system is, and I encourage everyone to get a better understanding of it, try it out and let the car carry you around.
One of the things we're going to do to make sure that people really understand what the car is capable of is showing people how to use it when they deliver a new car and pick it up, so they can drive the car around the city.
Once people have used this feature, they will continue to use it, which is very attractive. I think that's going to be a huge demand driver, even with a supervised FSD, it's going to be a huge demand driver.
As the interval mileage increases, it will transition from supervised FSD to unsupervised FSD, which will be able to unlock the enormous potential of the fleet.
We've postponed the Robotaxi launch by a few months to 10 days, October 10th. This is something I'd like to make some important changes to improve the main content we're going to show Robotaxi and we'll be showing some other content as well. Pushing back the time by a few months allowed us to improve Robotaxi and add a few other things to the product launch.
The southern expansion of Gigafactory Texas is nearing completion and will house our largest training cluster to date. We're going to add 50,000 pieces of H100, plus 20,000 pieces of our HW4 or AI5 Tesla AI computer.
By the end of 2024, Dojo 1 will have about 8,000 H100 computing power
Optimus is already on duty at our facility, and the first production version of Optimus is expected to be in limited production starting in early 2025. This will be for Tesla, and we'd better figure it out on our own first. By the end of 2025, we expect to have several thousand Optimus robots in production and use them in multiple Tesla factories. In 2026, we will significantly increase production and will supply Optimus robots to external customers. This will be the second production version of Optimus.
Optimus sorting battery cells in the factory
The energy business is growing faster than any other business. We are really constrained by capacity, not by demand. We are ramping up production in the United States and are building a Megapack plant in China, which is expected to double capacity. It may not only be doubled, but may be tripled.
We are very excited about the overall progress that has been made. We're changing the energy system, the way people travel, and the way the economy grows.
We're all in it, and I think the future is bright.
For the car and Optimus, the importance of autonomous driving cannot be overstated. These numbers sound crazy, and I think that a mass-produced Tesla with unsupervised FSD would form an incredibly large fleet of self-driving vehicles.
I think that's going to take Tesla's valuation to a very crazy number.
ARK Invest thinks the valuation will reach $5 trillion, and I think they may be right. In the long term, I think the Optimus valuation will be several times that number.
I would like to thank the Tesla team for their strong execution and look forward to an exciting future."
CFO Q2 2024 Summary
Once again, the Tesla team rose to the challenge and achieved remarkable results in all aspects. In addition to these records, our vehicle deliveries increased sequentially. I would like to thank the entire Tesla team for their efforts to deliver this quarter's results.
In the automotive business, affordability is the top concern for customers. In Q2 2024, we offer low-interest financing solutions to offset our persistently high interest rates.
These scenarios have an impact on Q2 2024 unit revenue, and we have already launched similar programs that will continue into Q3 2024.
We now offer very competitive financing rates in most parts of the world. Now is the perfect time to buy a Tesla, and if you're still on the sidelines, hurry up and buy a car.
Our 2024 Q2 carbon emission allowance revenue hit a record high. In terms of net profit, our automotive margin was flat sequentially.
It is important to note that the need for carbon credits depends on the plans of other manufacturers for the production and sale of vehicles, as well as changes in regulations.
We pride ourselves on producing the most highly made vehicles in the United States, and we will continue to work to further localize our supply chain, not only in the United States, but also in Europe and China.
As always, our focus is on providing the most competitive products at reasonable prices.
We've stepped up our efforts to offer more models with an estimated range of more than 300 miles/483 km on a single charge. We believe that, along with expanding the supercharging network, this is the right strategy to eliminate range anxiety.
Since the revision of FSD pricing in North America, we have seen a significant increase in purchase rates, which we expect to be a driver of automotive sales as the feature set is further refined.
If the impact of the Cybertruck is excluded, the cost of a single vehicle decreases month-on-month.
Our material costs are on a downward trend, there are delays on the automotive side, and this decline will only show up in the income statement when the cars made with these materials are delivered.
As we enter the second half of the year, we are still increasing our production capacity for the Cybertruck and Model 3, and we are still affected by tariffs on raw materials and finished products to varying degrees, which is important. Our team is working hard to offset these effects, which unfortunately may impact costs in the short term.
We are excited about the potential of the energy business, which has been laid for a long time, and is receiving the desired results. The deployment of energy storage has more than doubled, not only for Megapack, but also for Powerwall, which has led to record revenue and profits for the energy business.
The energy storage business has strong inventories and deployments can fluctuate from time to time, with significant increases in some quarters and declines in others.
Confirmation of energy storage depends on a number of factors, including our logistics timeline for transporting energy storage units from one plant to markets around the world, customer readiness, and the construction of EPC projects.
In other businesses, the gross profit of services and other businesses increased sequentially due to the improvement in service utilization and the growth of collision repair business.
The impact of our recent layoffs is reflected in the organizational restructuring of the income statement and other items. Q2 2024 recorded expenses of approximately $622 million, which we have shown separately in our financial reports.
Spending on AI-related activities increased, legal and other expenses remained high, and our operating expenses (excluding surcharges) continued to decrease quarter-over-quarter.
In terms of capital expenditure, we saw a sequential decline in Q2 2024, and we expect capital expenditure to exceed $10 billion for the full year of 2024, and we have increased our spending to bring 50,000 GPU computing clusters online. This new cluster will greatly enhance our ability to expand FSD and other AI projects.
A newly built data center located at the southern end of the Texas Gigafactory
We returned to positive free cash flow of $1.3 billion in Q2 2024 and paid for organizational restructuring in the quarter, leaving us with more than $30 billion in cash and investments at the end of the quarter.
We are embarking on the next phase of our journey and all parts of our infrastructure are being prepared. It will take some time and it will be a rewarding experience for everyone.
Q&A session with investors
When: July 24, 2024
Source: Master Station
Word Count: 7,495
Q1: What's the latest on Roadster?
Elon Musk: Regarding the Roadster, we've done most of the engineering work. We still want to upgrade it a bit, and we expect production to start in 2025, which will be a special product.
Q2: When do you expect the first Robotaxi to hit the road?
Elon Musk: I think the question is asking when we will achieve unsupervised FSD, which I used to predict was too optimistic.
Based on current trends, the number of miles driven will increase significantly without human intervention, and we expect to reach unsupervised levels by the end of 2024. I would be very surprised if unsupervised by 2025 is not yet possible.
Based on this, combined with the growth curve of the number of miles between interventions, the probability of achieving it in 2025 is high.
Q3: The Cybertruck is an iconic product that has been raved by everyone who sees it. Do you have plans to expand the Cyber vehicle range, such as the Cyber SUV or Cyber Van car?
Elon Musk: I think we want to limit product announcements to specific product launches, not earnings calls.
Q4: Regarding the production status of 4680 batteries, what is the progress of capacity increase?
Tesla executives: In Q2 2024, Tesla's 4680 battery production will grow strongly, up 51% month-on-month, significantly reducing costs.
We currently produce more than 1,400 Cybertruck 4680 battery cells per week, and we will continue to ramp up production and further reduce costs to meet the cost parity target we set for the end of the year.
We are very proud of the fact that we have built the first dry anode process validation line for mass production, which is an important cyclical milestone.
We are moving forward with the mass production of dry anodes as planned, which will result in a significantly lower battery cost than existing solutions to meet the initial target of the 4680 product.
Q5: What about the progress of Dojo?
Elon Musk: I have a lot of admiration for NVIDIA's execution and hardware capabilities. We're seeing that the demand for NVIDIA hardware is so high that we're struggling to get enough GPUs, and I'm quite concerned about actually being able to get GPUs stably when we need them. It makes it imperative that we put more effort into Dojo to make sure we have the training capacity we need.
We will redouble our efforts to grow Dojo, and we see our competitive supercomputing center. I don't think we have a choice, NVIDIA is in too high demand and they will raise the price of GPUs to a level that the market can afford. We have to make Dojo successful, and we'll do it.
Q6: What types of accessories will Optimus provide?
Elon Musk: Optimus is a general-purpose intelligent humanoid robot, and the question is like asking what kind of accessories we will provide to a real person, it is designed to be able to perform human tasks, and it will use any accessory.
Q7: Do you think that if you don't advertise, people will lose the fun of owning a Tesla?
Elon Musk: We'll do some advertising.
Vaibaf · Taneja: Our basic belief is that we need to provide consumers with the best products at reasonable prices.
In the United States alone, we have more than 2/3 of our deliveries in Q2 to people who have never owned a Tesla, which is encouraging.
We have invested in advertising and other promotional activities and adjusted our strategy. Rather than completely rejecting advertising, we believe that it is a dynamic process and that we have not exhausted all the options and plan to continue the adjustment in the second half of 2024.
Q8: What is the latest schedule of the Mexico factory? What main vehicles will be produced initially?
Elon Musk: We are currently suspending the Mexico factory project.
I think we need to look at the situation after the election, and Trump said that there would be a heavy tax on vehicles produced in Mexico. If that's the case, there's no point in investing a lot in Mexico, and we need to see how the political situation develops.
We are significantly increasing the capacity of our existing plants, with the Cybertruck and Robotaxi being produced at our Texas headquarters, and the production version of the Optimus 2 in Texas by the end of 2025.
Q9: Is Tesla still negotiating FSD licensing with OEMs?
Elon Musk: There are several major OEMs that have expressed interest in licensing Tesla's FSD, and I suspect there will be more of these companies in the future, and we can't reveal the specifics of those discussions.
Q10: What is the latest progress in investing in xAI and integrating it into Tesla's software?
Elon Musk: Tesla has learned a lot from xAI, which will help drive FSD and build a new Tesla data center. With regard to investing in xAI, I believe that shareholder approval is required for any such investment. If shareholders support it, I will support that, and we see an opportunity to integrate it into Tesla software.
Q11: When it comes to your capital investment, AI R&D, AI engineers, how do you make allocation decisions between these different businesses? How do you convince Tesla owners that you're operating in a way that really benefits them? Specifically, there were some news reports this quarter that you were switching some of the AI compute chips that were originally used in Tesla to xAI, perhaps X. Again, a few quarters ago, I asked you about your ability to recruit engineers in this area. You mentioned at the time that these engineers really want to be involved in the projects that you're working on, and they're not at Tesla, they're working on xAI or maybe even at X.
Elon Musk: The article you mentioned about GPUs was 6~7 months ago. At that time, Tesla had no place to enable the GPU, which was a waste for Tesla. Let me be clear, this is not Tesla's support for xAI. Tesla's data centers were full at the time and there was no place to put them.
We have been working around the clock to complete the southern expansion of Tesla's Gigafactory Texas. You can't just order computing resources, order GPUs, and use them immediately, you need a data center, and the project will house 50,000 H100 GPUs. We're going to move these GPUs in and enable them, and it's all for Tesla's benefit.
Let me be clear, this is in Tesla's interest, not the other way around. The southern expansion project is now able to accommodate these GPUs, which was actually only achieved this week, and we're moving those GPUs there and bringing them online.
Vaibaf · Taneja: AI is a broad field, we focus on FSD and Optimus, AI and other applications, we are not involved in these areas, but other companies, such as xAI, are working on it.
AI is a broad field, not just for a specific application.
Musk: As for xAI, the main thing is that there are people who just want to work on AGI. When we try to bring them to Tesla, they're only interested in doing AGI, they want to be a startup.
There was such a multiple-choice question at the time, either they were involved in a startup that I was involved in, or they were involved in a startup that I was not involved in, and they would not come to Tesla under any circumstances.
Q12: Regarding the new cars planned to be launched in 2025, I heard that the focus is on reducing costs; On the other hand, you also say that Roadster will be launched. Should we expect other, potentially more limited model variants? Should we expect this to be an important part of the strategy for the next 1~2 years?
Elon Musk: I don't want to go into detail about product announcements, but we have to be careful about the Osborne effect here, which means that if a company discloses the performance of a new product in advance, it will make consumers have higher expectations for the new product and reduce the desire to buy past and existing products.
If we announce something great, it could affect near-term sales. We will continue to make great products, just as we have done in the past.
Q13: With the rapid growth of the energy business and the launch of Optimus, how should we see the long-term development of each business segment? Do you think the revenue of the automotive business will fall below 50% of the total revenue? My follow-up question is, can you update us on the progress of distributed computing that you mentioned on the last call, talk about the timeline, and how you're going to reward customers for having their car computing power used?
Elon Musk: I think Optimus will be worth more in the long term than everything else at Tesla combined. Just consider the practicality of a general-purpose humanoid robot that can do almost anything you ask for.
I think everybody would want one, there are 8 billion people on the planet, and all the other industrial uses, and that's probably at least as much as mentioned above, and I feel like there's a long-term demand for more than 20 billion general-purpose humanoid robots.
Tesla has the world's most advanced humanoid robots, very good at manufacturing, which other companies are not good at, and we also have world-leading AI experience. For large-scale, efficient, general-purpose humanoid robots, we are uniquely equipped with all the necessary ingredients.
That's why, I roughly estimate that in the long run, Ark invest's analysis of market capital, the market value of autonomous transportation is about $5 trillion, and the number of general-purpose humanoid robots will be several times that.
At that point, I'm not sure what money even means, and in a benign AI scenario, we're heading for an era of abundance and abundance, with no shortage of goods and services. Anyone can have almost anything you want, and we're heading into a pretty crazy future.
Distributed computing, which seems like a fairly obvious next step. I think what is interesting about distributed computing is that it is related to the next generation of Tesla AI chips, which is the HW5, which we call AI5, which is comparable to the B200 in terms of inference power. Our goal is to start production in 2025 and achieve large-scale production in 2026.
If you have a self-driving vehicle, you can run 50 or 60 hours a week, 168 hours a week, and more than 100 hours for neural network computing.
More than 100 hours of AI inference computation per week, from vehicles in the fleet and some from humanoid robots, it makes sense to conduct distributed inference. If at some point, there are 100 million vehicles equipped with AI5, and higher AI6 or 7 or something like that, plus billions of humanoid robots, that would be a staggering amount of inference computation that could be used for general-purpose computing, not just for humanoid robots or the cars themselves.
I think it's a fairly obvious thing, and it's more useful to take advantage of these computing resources than to do nothing.
Q14: Regarding the mechanism of FSD licensing, I guess this is not a simple plug-and-play solution, and it will take several years for an OEM to develop an FSD-based vehicle platform with Tesla's electrical architecture, computing and sensor stack, etc. If Tesla reaches a partnership with an OEM, how many years may it take from signing the agreement to generating licensing revenue?
Elon Musk: OEMs won't move fast.
Tesla's FSD system doesn't need any real sensor kits, they need to integrate Tesla's AI computer and install a camera with a 360-degree viewing angle.
A gateway-like computer is also needed to communicate with the Tesla system via the internet.
It actually takes a gateway computer with cellular and WiFi connectivity, a Tesla AI computer, 7 or a sufficient number of cameras to get a 360-degree view.
Given the speed of action in the automotive industry, it could take several years to see this in large-scale applications.
Q14: If you sign an FSD license agreement with another car manufacturer, do you think it will be made public when you sign the agreement, or will it be made public when the vehicle is ready to launch in a few years?
Musk: It depends on the OEM situation, and we'll be happy either way.
Vaibaf · Taneja: And what kind of agreement we reach, there are a lot of factors to consider, and we will make a decision when we get to that point.
Elon Musk: Only OEMs that are willing to adopt Tesla's technology in 1 million vehicles per year, or a similar scale, are interested in Tesla's cooperation. If the number is only 10,000 or 100,000 per year, Tesla can handle it itself and does not need to work with these OEMs.
Q15: I'd like to start with Shanghai. You use Shanghai as an export hub, which makes a lot of sense, and the cost is low. How will the strategy change in light of the tariffs imposed in Europe? And given the tariffs, how will the situation of you importing batteries from China to United States change?
Vaibav · Taneja: In terms of tariffs, the European side picked certain other Chinese OEMs in the first round to establish tariffs on cars imported from China to Europe.
We were not individually singled out for review in the first round, and they selected us in the second round. They visit our factory, we work with them to provide all the necessary information, and we are adjusting our import strategy from China to Europe.
Another thing to note is that in Q2 2024, we start production of the right-hand drive Model Y in Berlin, delivered in the United Kingdom.
Tesla is making adjustments as needed, and we are still importing Model 3s from Shanghai to Europe, still evaluating the best alternatives.
Review by the European authorities, we work well with them. We believe in being able to get a better tax rate than what they're currently imposing, it's an evolving situation and we're adjusting as quickly as we can.
Because of the tariffs, the Berlin factory's exports to China, Taiwan and the United Kingdom have increased, and the changes are continuing, and we will continue to adapt.
Q16: I'd like to ask about Robotaxi strategy. In particular, it was noted in the shareholder filing that one of the limiting factors to the issuance was regulatory approval. What are the specific regulations that we should pay attention to? Is the Federal Motor Vehicle Safety Standard FMVSS standard? To what extent will the strategy change? Are you taking a more national, boundary-free approach to FSD, is Robotaxi's approach more geofencing? What is it driven by an interstate approach?
Elon Musk: Our solution is a one-size-fits-all solution, unlike everyone else. If you look at Waymo, they have a very localized solution that requires HD maps, which is quite vulnerable, and I think they have limited scalability.
Our solution is a universal one: it can work anywhere, it can even work on different planets.
In our experience, once something is proven to be safe enough, or significantly safer than humans, we find that regulators support the deployment of such things.
If you have billions of miles of data that show a future where unsupervised FSD is safer than humans, what regulator can really stop it? They are morally obligated to approve. I don't think regulatory approval is going to be a limiting factor.
I would also say that outside of North America, autonomous driving capabilities lag far behind North America.
Shortly after the release of version 12.5, and possibly version 12.6, we will apply to Europe, China, and other countries for regulatory approval for Tesla-supervised FSD for Full Self-Driving.
Approval is likely to be obtained by the end of 2024, which will be a favorable demand driver in these regions.
Russ · Moravi: In terms of regulatory approval, vehicles are subject to FMVSS in the United States, which is the same in all 50 states, and the rules are the same in all 50 states.
Create a common solution that gives us the best chance of rapid deployment in all 50 states.
There are also regulations at the state and even local municipal level that may apply as a transport company that affect taxis. As far as getting vehicles on the road is concerned, it's all federal, which is very much in line with the data and the vehicles themselves that Musk is proposing.
Ashok · Eluswamy: End-to-end network, basically without making any assumptions about location. By adding data from different countries, it can perform equally well in those places. At present, FSD, there are almost no United States specific codes, and all codes are based on data from the United States.
Rass · Moravi: From this perspective, we can go and drive in other countries and drive in those countries in some way that makes sense, and that's how we designed the FSD software.
Q17: Regulatory issues, GM canceled their pedalless, wheelless vehicles, and according to the company this morning, their decision was driven by uncertainty about the regulatory environment. As far as I know, at least in the pictures seen by the public, the Tesla Robotaxi is also pedalless and steering wheelless. Are there different regulatory concerns for deploying these vehicles that may differ from traditional Tesla FSD vehicles?
Elon Musk: The failure of General Motors is that their technology is not up to standard, not the regulators.
They blame regulators for being misleading in doing so, and Waymo works well in these markets.
It's just that their technology is not good enough.
Q18: You mentioned that the FSD payment rate has increased significantly after the price reduction, can you quantify what this means?
Vaibaf · Taneja: We shared the significant growth that we have seen, and I don't want to be specific, we started from a low base and we saw encouraging results.
The point is that we need to experience it, and words can't describe it until we actually use it. That's why we try to make sure that every time a car is delivered, people are made sure to understand how FSD works, and when you see it work, you realize how great it is.
I can give you an example, I have to commute more than 20 miles to the factory almost every day. In the latest FSD I had 0 interventions and the vehicle drove like this. Especially in the latest version, we can also track your eye movements, and as long as you're not wearing sunglasses, the steering wheel reminder is almost non-existent.
Elon Musk: We're working on the issue of sunglasses, and there will be soon.
There have been many times when I've talked to some smart people who live in downtown New York or Boston, who don't drive themselves, and then asked me questions about fully autonomous FSD.
I said, you can buy your own car and try it. If you don't experience it yourself, you simply don't know what it's actually like.
Q19: What about Robotaxi deployment? Once you have a car that you can drive anywhere, you need a certain scale. This means that a lot of cars are on the road and an infrastructure is needed to maintain the vehicles, take care of them, etc. My question is, are you already doing something about it? Do you already have an idea for a deployment plan? Is this a Tesla-only plan? Or are you looking for local partners, global partners to do this?
Elon Musk: It's going to be just the Tesla network. All you have to do is open the Tesla app, summon a car, and we'll send a car to take you somewhere quickly, and we'll soon have a fleet of about 7 million capable of self-driving.
In the United States, there will be more than 10 million, then more than 20 million, which is a huge size, and the vehicles will be able to run 24/7, unlike human drivers.
It's basically through software updates, which are instantaneous at scale. Now, this fleet is owned by the customer.
Think of the Tesla fleet as an Airbnb on wheels with every car, and you can choose to allow your car to be used by the fleet, or remove this option and take the car back. The car can be used by the fleet full-time or part-time, and Tesla will share the revenue with customers.
We're also going to make some vehicles that are owned by Tesla itself and added to the fleet, like Uber, which will be a Tesla network. We add an important clause to each purchase that Tesla vehicles can only be used in Tesla fleets and cannot be used by third-party autonomous driving.
Q20: Will this gradually expand to start with just a few vehicles in a city and increase the number of vehicles over time? Or do you think you need to reach a certain critical mass in order to provide quality that is competitive with a service like Uber?
Elon Musk: I may not have made it clear, the entire Tesla fleet will be involved. There may be some people who don't want their cars to be used to earn income, and I think most people will, which will allow for instant scaling.
Q21: I have two questions about energy storage.
Considering the tight supply of fixed storage, can you talk about the pricing strategy? What do you think about saturation in a particular geographic location, considering that some of the larger systems have had a considerable impact on the wholesale electricity market in a fairly short period of time?
Vaibaf · Taneja: We're working with a large number of players on the market, and the passage is quite long. There's also a long tail between when you sign the contract and when delivery begins.
So far, we've had good pricing power, and I'll let Mike have a say in that as well.
Mike: Just like in vehicles, there is a lot of competition from Chinese OEMs.
We work closely with our customers to ensure that we remain competitive where they sell electricity and energy in the market. We signed a large number of contracts during the quarter and continue to accumulate orders for 2025 and 2026.
We are quite pleased with our position in the market, we are aware that the competition is fierce and we have a very strong value proposition to offer a fully integrated product that includes our own power electronics with field-level control systems.
Vaibav · Taneja: Another thing that you may not fully understand is that Megapack is not only hardware, but also a complete software system. This system is exclusive to us, no one else can use it, we also use it for other products, which gives us a big advantage over our competitors.
Elon Musk: We've found that clients can put together a hodgepodge of solutions on their own, and sometimes they choose them. But when those solutions don't work, they come back to us.
Tesla executive: We're not really seeing saturation globally, maybe some saturation in some local markets, we're seeing more of new markets opening up.
This is because grid demand continues to grow beyond all expectations, and this situation is actually opening up new market opportunities in different regions around the world.
Vaibaf · Taneja: Take AI computing, these GPUs that we rent are really powerful. We're getting a lot of new business opportunities, like providing services like data center backup to our customers, which are growing massively.
Q22: In the 4680 process technology, there is some news about your equipment suppliers, can you talk about the progress of the qualification of potential incremental suppliers in the 4680 process technology steps?
Rass · Moravi: You're probably referring to our lawsuit with one of the vendors, and I don't think that will affect our ability to launch the 4680.
We have a very strong intellectual property position in this technology. Most of the equipment we use is designed in-house, and some are even manufactured in-house. It's not a concern at the moment that we can hand off our IP stack to someone else to make it if we need to.
Musk: I don't think people understand how big the demand for energy storage is going to be, and they really underestimate that need, probably by orders of magnitude.
For the United States power grid, if the power plant can operate stably, the actual total energy output is at least 2~3 times the current energy generated. This is because there is a huge difference between peak and trough periods when it comes to electricity consumption or power generation.
To avoid blackouts, the grid must be able to support the worst 1 minute load on the worst day of the year, such as the coldest or hottest day. This means that for the rest of the year, the grid has a lot of excess capacity, but there is no way to store this excess energy.
Once a battery energy storage system is added, the power plant can operate stably. Stable operation means that the grid anywhere in the world can cumulatively produce at least twice as much energy in a year as it does today, and in some cases it may produce three times as much.
This is a very far-reaching impact.
Q23: If Trump wins, it is more likely that the subsidies brought by the IRA will be cut, and Musk has commented online that Tesla does not rely on EV subsidies. If the IRA disappears, will Tesla lose a lot of support? If the IRA disappears, will this have a negative impact on Tesla's short-term profitability? Why might it not be a negative effect?
Elon Musk: I guess it's going to have some impact, and it's going to be even more devastating for our competitors, and it's only a slight impact for Tesla.
In the long run, it may actually help Tesla, but that's my guess, Tesla's value is mainly in autonomous driving, and everything else is just noise relative to autonomous driving.
I would advise anyone who doesn't believe Tesla will solve self-driving, don't hold Tesla stock, they should sell Tesla stock.
If you believe that Tesla will solve the problem of self-driving, you should buy Tesla stock, all other problems are noise.
Vaibaf · Taneja: At the end of the day, when we look at the business, we are always thinking about whether there is an IRA or not, and we want the business to grow healthily without any subsidies.
That's been the way we've modeled, even when considering the cost of batteries internally, and it does get some manufacturing subsidies.
We are always forced to think about ourselves: How would we operate in that environment without the benefits of an IRA?
We have a big advantage over our competitors in this regard. Tesla has done just that, and as you can see from the data over the years, you can't ignore the fundamentals of the business.
Once you build on that and add autonomous driving technology, short-term considerations become less important.
Tesla Energy Storage: The price fell by 60% year-on-year, the revenue doubled, and the revenue accounted for more than 10%
When: July 24, 2024
Source: Polaris Energy Storage Network
Word Count: 1,165 (with cuts)
The energy storage business has become the main business from the edge, and the third chapter of Musk's imagination is slowly opening.
Looking back on Tesla's growth process, energy storage, which has been tepid, has now ushered in a highlight moment, with the installed capacity in Q2 doubling compared with the previous quarter.
On March 1, 2023, Tesla officially launched the "Secret Grand Plan Chapter 3" to officially announce its energy business development plan. Tesla believes that 240TWh of energy storage will be needed to completely replace fossil fuels with renewable energy in the future. In this process, Tesla plans to provide feasible solutions for the realization of a global sustainable energy economy through terminal electrification, sustainable power generation and energy storage.
In just one year, Tesla's energy storage business has surpassed the electric vehicle business and become the brightest part. The new installed capacity in a single quarter was 9.4GWh, an increase of 157.3% year-on-year and about 132% quarter-on-quarter, setting a record for Tesla's new installed capacity of energy storage, bringing huge revenue and gross profit to Tesla.
Tesla's power generation and energy storage business, Q2 2024 revenue will be 3.014 billion US dollars, and energy storage revenue will account for 11.8%, a record high; Compared with US$1.509 billion in the same period in 2023, a year-on-year increase of 99.7%; Compared with Q1 2024 of $1.635 billion, it is an increase of 84.3% month-on-month.
The energy storage business of Tesla's power generation and energy storage business will cost about 2.274 billion US dollars in Q2 2024, and Tesla's energy storage gross profit margin will be about 24.55%, much higher than the company's overall 17.95%.
Similar to China's energy storage market, the cost of Tesla's large-scale energy storage system Megapack is declining rapidly, even faster than the cost of energy storage in the Chinese market.
In June 2023, the EPC bid price of China's 2h 100-megawatt energy storage power station was about 1.5 yuan/Wh, and the recent domestic energy storage EPC quotation was about 1.2 yuan/Wh, a decrease of about 20% compared with 2023.
Tesla's current price of more than 100 sets of 2h energy storage system Megapack is about RMB 1.80/Wh, a year-on-year decrease of 51.4% compared with 3.71 yuan/Wh in the same period in 2023; At present, the price of each 4h version of the energy storage system Megapack is about RMB 1.81/Wh, a decrease of more than 60% compared with the same period in 2023.
Despite the sharp reduction in prices, Tesla still relied on its historic large-scale energy storage installation to achieve a significant increase in revenue and profits, not only outpacing the growth rate of the electric vehicle business, but even making up for the decline in electric vehicle profits.
According to Tesla, the Megapack energy storage system can not only support low-cost, high-density utility and commercial projects up to gigawatt hours, but also meet the global trend of strong AI development and subsequent surge in demand for stable power supply.
In remote areas, Tesla's energy storage products can provide stable power supply and improve living conditions for local residents. In developed countries, these products are widely used in industry and commerce, for electricity bill management, etc.
On July 18, 2024, Tesla announced that it had won the largest order in history, and by 2030, it will provide a 15.3GWh Megapack battery energy storage system for United States Intersect Power's solar + energy storage project.
With the rapid decline in costs and skyrocketing orders, the delivery time limit of Tesla's energy storage products will attract much attention. Tesla has invested in the construction of its first overseas super energy storage factory in Shanghai, China, which will officially start construction in May 2024 and is expected to be put into operation in Q1 2025, after which it will have an annual production capacity of 10,000 units of energy storage system Megapack and an energy storage scale of nearly 40GWh.
Not only large storage, but also Tesla's household energy storage products are constantly ushering in new breakthroughs. Tesla said that after the launch of Powerwall 3, it has been widely recognized by the market and has been sold to the United States, Canada, United Kingdom, Germany and other countries.
In addition to energy storage systems, Tesla is also seeking to promote battery cost reduction and develop and manufacture 4680 large cylindrical batteries. In 2024Q2, Tesla's 4680 battery production increased by more than 50% month-on-month, and the cost continued to improve.
In July 2024, Tesla began vehicle verification testing of the first Cybertruck prototype using an internal dry cathode 4680 battery, which is also seen as a milestone in Tesla's drive for cost reduction. Reducing costs across the entire product line remains a top priority.
In Tesla's view, as long as there are oil-burning vehicles running in this world, Tesla's important task of accelerating the world's transition to sustainable energy has not been completed.
Related Research Reports:
【Intelligent Era】Autonomous Driving: The moment of the iPhone car, the evolution of China's three major schools is taking shape
Battle of the Gods: United States tech giants, from the Spring and Autumn Five Hegemons to the Warring States Seven Heroes|GBAT 2023 Greater Bay Area Intelligent Era Industry Summit
The second part of the trilogy of human future civilization: the special pre-sale of the intelligent era is open, the singularity is approaching, and the future has come
Zhao Yujie of Jiuyu Capital: Thinking in the era of intelligence, cognitive thinking, there are three waves of cognitive dividends of native, dimensionality reduction, and dimensionality upgrading
Zhao Yujie of Jiuyu Capital: Thinking in the era of intelligence, taking history as a mirror, the wave of science and technology, from the Internet to AI
Zhao Yujie of Jiuyu Capital: Thinking in the era of intelligence, cosmic perspective, from carbon-based organisms to silicon-based agents
One of the trilogy of human future civilization: the pre-sale of the metaverse topic is open, with 59 issues and 450,000 words
Zhao Yujie of Jiuyu Capital: 15,000 words of annual thinking collection of number one players, scientific and technological innovation, endless frontier
Zhao Yujie of Jiuyu Capital: 15,000 words of annual thinking set of smart electric vehicles, software definition, reshaping everything
Frontier Weekly: Embrace technology, insight into the future, 70 issues of the collection are packaged and delivered
The members of the Liuhe annual report were officially launched, and the research results of more than 5 years were systematically delivered
【Smart Electric Vehicle Special Pre-sale】The century-old automobile industry has accelerated its transformation, and the era of intelligent electric vehicles has opened
[Ready Player One Season 1 Pre-Sale]: Tech giants explore the future, and the number one player echelon rises
[Ready Player One Season 2 Pre-sale]: Technological innovation brings a paradigm shift and expands endless new frontiers
[First paid report + annual membership] 140,000-word in-depth report on live broadcast e-commerce: under the trillion-level GMV tuyere, giants are fighting and merging
The collection of science and technology sports reports was launched, and the deep integration of "technology + sports" has transformed sports in an all-round way
【Blockbuster】365 star companies, nearly 600 reports, and a panoramic presentation of Liuhejun's research results for more than 4 years
Zhao Yujie of Jiuyu Capital: CES Experience, open your brain, super technology giants will take over everything
Zhao Yujie of Jiuyu Capital: 5G opens a new cycle and enters the era of exploration in the online world|GBAT 2019 Greater Bay Area 5G Summit
Zhao Yujie of Jiuyu Capital: Seize the huge trend dividend of e-cigarettes, and seize the changes and changes in industrial transformation
[IPO Observation] Quarter 1: A collection of 11 in-depth research reports from SMIC, Cambrian, SMOORE, Pop Mart, Anker Innovations, etc
[IPO Observation] Season 2: A collection of in-depth research reports from 12 companies, including Ideal, Xpeng, Shell, Ant, Snowflake, and Palantir
[IPO Observation] Season 3: A collection of in-depth research reports from 12 companies including Coinbase, Roblox, Kuaishou, and Wuxin Technology
Annual Observation 2019 Series Collection: It lasted more than 3 months, with more than 200,000 words and nearly 500 pages, reviewing the past, looking forward to the future, and gaining insight into change and change
【Collector's Edition】Liuhe Treasure Book: A panoramic scan of 300 star companies, which lasted 3 years, 2.1 million words and more than 5,000 pages, is highly recommended
Zhao Yujie of Jiuyu Capital: Fragmented thinking on the smart electric vehicle industry
Zhao Yujie of Jiuyu Capital: Jiugong Grid Analysis Method, Tao and Art in the Field of Language and Mathematics Education and Training
[2023 Returning to the Hometown] The post-90s and post-00s friends have a 10,000-word record, life is back on track, and the Spring Festival is stronger
[2022 Hometown Experience] 20 post-90s and post-00s with 20,000 words, 4 countries and 13 places, comprehensively showing the differences in epidemic prevention at home and abroad, Spring Festival atmosphere, and development status
[2021 Homecoming Experience] 22 post-90s 20,000 words, the collision of the Chinese New Year on the spot and the return to their hometowns for the New Year, showing a real, three-dimensional and transformative China
[2020 Homecoming Experience] 20 post-90s 20,000 words, special Spring Festival, the collective memory of the times
【Blockbuster】22 "post-90s" 20,000 words of experience and experience of returning to their hometowns, telling about their eyes in China's counties, towns, and rural areas
Liuhejun's 3rd birthday, TOP 60 classic research reports are recommended
Afternoon tea, the Three Kingdoms Killing in the Internet world
5G boosts AR to open a new industrial cycle, and AR glasses open the era of dedicated AR terminals
The new business infrastructure continues to be enriched and improved, enabling the rise of new brands, new models and new products, and creating a new and diversified lifestyle
【Blockbuster】China's new economy leader, a compilation of 20 reports on listing in Hong Kong and the United States
Knowledge service + payment + audio, opening up new industry-level opportunities for content production, the knowledge economy can be expected to be 100 billion yuan in 10 years
From the 4-year replacement of the best-selling list of the App Store, watch the rise of content payment
Thinking about the new third board breaking 10,000 yuan: the daily trading volume of the new third board is 100 times in 10 years?
Zhao Yujie of Jiuyu Capital: Technology Changes Consumption and Makes Life Better|2017 GNEC New Economy and New Consumption Summit
Zhao Yujie of Jiuyu Capital: The Law of Time in the Entrepreneurial Era, Parallel Time for Developing Users|2016 GNEC New Economy and New Intelligence Summit
Zhao Yujie of Jiuyu Capital: The Internet Leads the New Economy, Content Entrepreneurship Connects the New Ecology|2016 GNEC New Economy and New Marketing Summit
Be sure to read the disclaimer and risk warning