初級: TOEIC 250-545
中級: TOEIC 550-780
上級: TOEIC 785-990
- We like to too.
Okay, welcome guys.
Hello, everyone, thank you for joining me here today.
I'll be your kind of post moderator, Ben Sullins.
I have a show called Teslanomics,
if you guys are new here and unfamiliar.
For everyone else that does know, that is in Crowdcast.
Make sure to go ask your questions,
up vote questions, and all that.
I do have, we will be restreaming the broadcast,
once it begins, which is set for 2:00, 12:00,
I have it in the back of my ear,
so I'm waiting for them to come on.
So, when that happens you know that's where,
that's what we'll jump over to,
and I'll kind of be quiet during the duration of that,
but Tesla just did release the new update letter.
And so, I just wanted to go
through some of those talking points with you real quick.
First and foremost let me just take a look and see,
what it has, too, too, too, too.
I had it in the other screen.
There it is, okay, Tesla second quarter update 2018,
Q2 automotive gross margin increased to 20 percent
20.6 percent GAAP and 21 percent non GAAP.
I think that's pretty amazing.
Those were some of the things that we
really needed to be looking for
was an increase in the margin,
because that is where, how they're gonna actually end up
being profitable down the road.
Next, you have the Model 3 gross margin,
turned to slightly positive in Q2,
expecting roughly 15 percent in Q3,
so that's good, that's the direction that we want
the margin and everything to be headed,
because that will lead to profitability.
Then you have the next bullet
here on the update letter
expecting to produce 50 to 55,000 Model 3s in Q3.
Delivery should exceed that.
So, if you just go back a year ago,
and see what they were doing,
it's pretty, it's pretty wild,
to see kind of how far they've came,
how far they've come on this.
So, that's just an astounding number
if you've been with Tesla for a while,
and you know kind of
what they're normally producing.
So, there you go.
They did a major cost restructuring in Q2,
and they have $2.2 billion of cash
and cash equivalents at the end of Q2,
and they're expecting to grow in Q3 and Q4.
So, remember that's the big equation right?
If you run out of cash that's where things will go bad.
So you can, you know you can be taking on date.
You can be spending and expanding your business,
and doing all these things
as long as you still have cash in the bank,
which you're getting from either financing operations,
or you know divesting some of your assets,
which doesn't typically happen.
So, the last bullet on the update was a CAPEX projection
in 2018 adjusted to less than $2.5 billion,
meaning that they're gonna be spending less money
on new things that they need to do
to kind of scale this and grow.
So, some other notes that I thought were interesting.
The Model 3 according to their letter here
in July of 2018 the Model 3 not only had
the number one market share position
in its segment in the US,
it outsold all other mid-size premium sedans combined,
accounting for 52 percent of the segment overall.
The popularity of the Model 3
is a true testament to the product.
Based on trade ins they've received so far,
they can see that the total addressable market
for the Model 3 is much larger
than mid-sized premium sedans.
We are drawing customers from many other segments
including non premium sedans and hatchbacks.
So, the reason I bring that up,
because I think that is extremely interesting,
because what I think, what you're gonna see,
is you're gonna see a lot of people that weren't BMW
or premium car owners already coming into this space,
and you know this would be the most expensive one
that they'll ever purchase.
So, that's what they mean
by expanding the market segment,
and I think that's tremendous.
They went on to talk about how some of the things,
these things are produced,
and one of the things that they're talking about here
are that they're now producing,
or they have multiple times in July
achieved 5,000 per week milestone.
We will now continue to increase that further
with our aim being to produce 6,000 Model 3 vehicles
per week by late August.
We then expect to increase production
over the next few quarters beyond 6,000 per week
while keeping additional CAPEX limited.
So, that's the thing, right?
If you just wanted a big number
of how many can you actually,
how many cars can you actually produce?
Then yeah you could just kind of
just keep having that number go up and up and up and up
by spending more.
So, what they're saying is that they're gonna try to do it
in a capital efficient way,
meaning not spending much more money,
but still increasing production,
so that way they'll you know
be a kind of a bigger margin on those dollars coming in.
Now they also state that they aim to increase production
to 10,000 Model 3s per week as fast as we can.
Notice they took off the date
of when that might be possible.
I and many others still believe that this will be something
that we'll see in 2019 maybe,
but not something that you're gonna see
very, very kind of soon.
Best guess, 2019.
Could be even even kind of beyond that.
So, they also said that they are trying to get GA3,
which is the main general assembly line in Fremont
to produce 5,000 Model 3s per week,
and then GA4 the one out in the tent,
would be in addition to that.
So, that means that there are
some changes that they need to do.
And so, I'll just bring that up here it says,
to address the short-term issues with GA3, we built GA4
to help us reach our 5,000 units per week target earlier,
and ultimately to push us past that point.
We were able to build the GA4 quickly,
due to the design simplicity of the Model 3 architecture,
and because it's a tent.
Okay, the layout and processes of GA4
are similar to those of the Model S and X assembly line,
while the quality and cost of production are roughly equal
to those of GA3.
General assembly excluding the cost of components
accounts for approximately three percent of Model 3 cost.
The rest of our manufacturing processes
remain highly automated,
including stamping, body, welding, paint shop,
powertrain assembly, and battery pack assembly.
I thought that was pretty crazy to see that it,
that it's only three percent of the overall cost.
To me, I just, it seems like the assembly of it
is such a huge part of the process.
Yeah, it's wild to that that only accounts
for that small percentage there.
So, they also stated in this that
they're now selling the performance Model 3,
which you've seen a lot of,
you've heard a lot of, and that the,
at the end of July, Gigafactory 1 battery production
reached an annualized run rate
of roughly 20 gigawatt hours,
making it the highest volume battery plant in the world
by a significant margin.
Consequently, Tesla currently produces more batteries
in terms of kilowatt hours
than any other car makers combined.
I don't know if that's a big achievement.
Not many other car makers are purely electric
and selling at this high volume.
It just doesn't, it's just not happening.
so you know, that, I don't know.
Yeah, you're the best of you know,
the only one in the industry.
So in Q2, they said that we've produced a 53,339 vehicles
and delivered 22,319 Model S and X vehicles,
and 18,449 Model 3 vehicles,
totaling 40,768 deliveries.
Now remember, they were able to push out
the 200,000th car being delivered to Q3,
so that was a big milestone,
because now that means the tax credit at least in the US
is gonna be extended.
So, that's a big news,
and I think we're gonna see even bigger stuff
happening in Q3,
because a lot of people kind of be you know,
basically saying that they're sandbagging
on their deliveries in order to maximize that,
which makes makes a whole lot of sense.
Now, there's some comments here about the energy side.
They said while we are largely focused
on the Model 3 ramp in Q2,
our energy business grew as well.
Demand for our energy storage products
remain significantly above our production rate,
even as we gradually add capacity.
Overall, we expect our energy business revenue
to improve in the second half of this year.
And I bring that up, because I know a lot of people
are waiting on the energy products.
So, it's good news that that stuff is happening,
and that the people I've spoken to a Tesla about this
all agree that it's, you know,
it's important for them and it's going up,
and they're working on it.
So, if you have a power wall,
you're waiting on a power wall, something like that,
I think you know hopefully
we'll start to see some deliveries
and some changes to that down,
down in the future here.
Okay, so that kind of ends the update letter there.
There's a lot more tidbits in there,
but well of course we're gonna,
we're gonna get into the call here.
And so, let me switch over and just make sure.
I'll take some questions now from Crowdcast
while we're waiting.
And guys, give me a thumbs up if the audio and video,
and everything looks good.
I am on a new set up here with crazy high performance,
so it should be should be pretty solid.
And then of course like I said,
I have the actual webcast in my ear,
so as soon as that starts,
or you know even a couple minutes before,
I'll switch over and then I'll shut up,
so he doesn't have to listen to me yammer.
Okay, let's see.
Going to the questions on Crowdcast.
Liz asked, have you heard when the autopilot self-driving
beyond level two is planned?
I don't think that you're gonna see that anytime soon.
I think that honestly autopilot
or self-driving beyond level two
is something maybe five years from now
will actually be a reality.
There may be little nuances and additional features,
but I think you'll still see a hands on system
that requires the driver to pay attention
and isn't truly beyond level two.
Level three I think is actually kind of a scary one,
so I'm a little mixed on that.
I think what we ought to do
is to jump to level four, level five.
So, yeah that's kind of my thoughts on that.
Thanks, thanks for the question, Liz.
Phil asks, hello Ben, as it has been reported
that Panasonic are ramping up battery production
so as not to cause any bottlenecks for Model 3.
Do you think the new objective of 10,000 a week
will be announced today by Elon?
Well, Phil, as I just mentioned in the update letter, it,
they state sort of what their goal is with the 10,000.
They didn't really put a specific date on it,
and I and many others do believe that they will need
an additional factory to do this.
I don't think they can just keep, you know,
maybe if REI has a sale
they can just build some more tents or something.
Kidding, but yeah I think it'll be a while.
I don't think you'll see 10,000 any time very soon,
but maybe in a couple years, and that probably aligns,
because you're gonna need
a place to build the semi.
You're gonna need to have a place to build the roadster,
very important, as well as the Model Y,
and the pickup truck, so that's all coming.
I think that's when we really get more serious
about 10,000 a week per Model 3.
and you know that calls, but could just be 10,000 overall,
which means a lot of them could be done
in the new Gigafactory in Shanghai,
which I think they said will be up in a couple years.
So, there you go.
That's my thoughts on that Phil.
Thank you for the question.
Crafty Geek asks, if you've got to be on the call
what would your question to Elon, JB, who else be?
Do you know if HyperChange will be on again?
So, I know Gali at HyperChange is trying to get on.
I don't know if he is or not,
certainly last time was a kind of a watershed moment
for a lot of us in this new media space
as you might call it.
I was, I and a lot of people were very excited,
and very happy about that.
So, I don't think it's gonna happen again,
because of the consequences of last time.
So, that's my guess.
If I had a question for Elon and JB in this?
I don't really know if I have one in this context.
I actually don't think I'd be a great person
to be on the call, just because I'm not.
Yeah I would rather talk to them about other things
that I think are far more interesting.
So, thank you.
Thank you for the question.
Kay X42, wonder if there's any analysts
are going to ask any boneheaded questions
that are already answered in letter this time?
Ignore if already discussed.
I don't think they're gonna play that game.
I don't think it's gonna happen, but you know we'll see.
That's kind of why these things are fun to do.
We've got a couple more minutes here.
Then I'm gonna cut out.
I'm gonna stop talking at five minutes prior
just 'cause you don't know exactly
when they're gonna go live, so there you have it.
Tony asks, Ben it's pretty cool that Tesla is now offering
unlimited free supercharging
for Performance Model 3 buyers.
Not sure if that's enough to sway your decision
to purchase one though.
You know I think what it comes down to for me
and why I'm not buying a Performance Model 3 is that
for my family that vehicle just doesn't work perfectly.
I think a better option for us would be to get a Model X,
because it was just more storage and things like that.
So, I just don't see us keeping a Model 3 forever.
I do love my car now and it's fantastic,
and I love taking it around and showing people,
making videos with it but yeah.
I think that that's one of the things that it's not,
it's just not the right car for me and my family.
So, there you have it.
And so, yeah that's kind of my answer in that.
So, if you guys aren't familiar
with what Tony's talking about here,
the referral program was extended to September 16th.
This is officially when the end
of the unlimited free supercharging will happen.
Now in addition to that, Model 3 Performance Edition
does qualify so if you haven't ordered your Model 3 yet,
you can go get one of those.
You can use a code like mine or anyone else's,
and you can then actually get free supercharging
as long as you keep that vehicle,
if, one on a Model 3, which is great.
So, if you're doing a lot of road trips
and long trips and stuff,
I think that that's probably a good buy.
If you're interested in my code,
if you guys haven't heard me say it a thousand times,
You have to fill out a form,
but become my friend and I'll email it to you.
And then you know, you ask me any questions,
'cause that's honestly where,
that's, people ask me how I got so many referrals.
That's why, it's because you get on,
you get on the email list and I send you a note
with the code and then I respond a week later
saying hey how was it,
and then a lot of people respond to that,
and that's when I come in personally
and answer questions and go back and forth.
So, if you guys are doing that,
if you're interested whatever, go ahead.
There's literally zero additional benefit to me,
so if you have someone else's referral code,
please go ahead and use theirs,
but you can get mine at teslanomics.co/td.
So, you have it.
Thanks for the question, Tony.
Russ asks, how will Tesla and Panasonic overcome
raw material shortages or pipeline snags?
I think I had heard before
that they were buying mines and so forth.
Can Panasonic buy mines, and it routes ...
Okay, so just a couple bits about this.
So, the main components,
there's a lot of different materials
that go into these batteries as far as I know.
There's lithium, obviously,
and then cobalt is another big one
that is difficult to source.
So lithium, I don't think there's a ...
There, I did a video on this.
There's an enormous supply out there,
and with you know, literally everything you use
that is rechargeable, essentially using that material,
this, there you know, tons of industries
that are really pushing hard to expand
mining or in many cases dehydrating that resource.
You get it from the salt brines, in Chile, and anyways,
so lithium shouldn't be a problem.
Cobalt is a problem, but JB had recently said,
that they think they're gonna be able to get
the cobalt in their batteries down to almost nothing.
And so hopefully you know
with the advancements in battery technology,
these things won't actually be, won't be an issue.
So you have it, there's my thoughts on that, Russ.
Alright, last question,
then we're gonna be cut over to the stream
and just wait for it to start.
Flying Panda asks, hi there I understand that there's
a multi coat option that cost $1500
more than the original black
and $500 more than the other paint colors.
Do you know how much of a difference it is
to have a multi coat from Tesla.
Okay, so quick answer, the black is not the multi coat one.
That's an obsidian black, which is $1,000 more.
The white and the red are multi coat.
Those are the $1,500 more, so there's a difference.
There's a solid black.
Then there's all the other colors
with the exception of white and red,
and those are the $1,500 ones.
I think it would make a difference
I think would probably look
a lot better than the solid black.
I had to spend about $1000 on paint correction
just from my Model 3, just to make it look decent
before we did ceramic coating.
So yeah, the paint, the solid black paint,
definitely soft definitely prone to nicks and scratches.
So yeah, and it sucks that it's black,
because like of all the colors
that you wanna have the weakest paint on,
black is not the one, heh heh.
Anyways, thanks for the questions guys.
I'll come back after it's all over and we'll do it there,
but let me switch over to the broadcast near now
as they should be getting started here any second.
(upbeat classical music) This is their waiting music.
- [Cherie] Good day ladies and gentlemen
and welcome to the Tesla Q2 2018
Financial Results and Q and A webcast call.
At this time, all participants are in a listen-only mode.
Later, we will conduct a question and answer session,
and introductions will follow at that time.
If anyone should require assistance during the conference,
please press star then zero on your touch-tone telephone.
As a reminder, this conference may be recorded.
I would now like to introduce your host
for today's conference, Mr. Martin Viecha,
Senior Director of Investor Relations.
Mr. Vieira, you may begin.
- [Martin] Thank you very much Cherie,
and good afternoon everyone.
Welcome to Tesla's second quarter 2018 Q and A webcast.
I'm joined today by Elon Musk, JB Straubel, Deepak Ahuja,
Robin Ren, our Head of Sales,
Jerome Guillen, our VP of Trucks,
and we also, they're our autopilot team with us here,
Andrej Karpathy, Director of AI,
Stuart Bowers, our VP of Engineering,
and Pete Bannon, our Director of Silicon Engineering.
Our Q2 results were announced
at about 1:00 p.m. Pacific Time,
in the update letter we 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 press star 1 now
if you would like to join the question queue.
Before we jump into Q and A,
Elon has some opening remarks.
- [Elon] Hi, thank you for joining.
First of all, I'd like to say we're incredibly proud
of the Tesla team for producing 7,000
Model 3, Model S, and Model X vehicles
in the last week of June.
It was amazing efforts.
It's an honor to work with such a great team
to produce that incredible result.
It's like mind-blowing.
We continued to achieve 5,000 Model 3s per week,
7,000 combined S, X, and 3,
multiple weeks in July,
showing that they were able
to do this on a sustained basis,
and we expect to,
in the absence of a force majeure
or some very very unexpected event,
be able to achieve an average
of 5,000 Model 3s or above for Q3,
and 2,000 Model S, X's or above
for week four for Q3 as well.
So essentially 7,000 cars a week plus,
for an average above for Q3.
That's an amazing jump from only a year ago
when we were producing 2,000 vehicles a week.
It's really kind of a mind-blowing leap forward
for a manufacturing company.
So yeah, it's incredible work by the team to do that.
Many, many late nights, weekends,
extreme amounts of effort,
and lots of smart ideas.
One of the results you're seeing
is that the Model 3 market share
has surpassed all competitor premium
mid-size sedans in line.
So Model 3 market share is now a majority,
or in July, it was a majority of all premium sedans.
That trend is we think likely to continue,
so it's not, we do not think it will stop there.
I have Robin Ren here who's our Head of Sales
to talk about some the interesting elements
that we're seeing in terms of cars
that people are trading in,
the sales and demand trends.
It's looking really,
We're also getting great feedback
on the Model 3 from our customers,
and we're now delivering
the Performance dual motor and all-wheel drive versions.
And the Model 3 reviews are outstanding.
We really couldn't ask for better reviews
from some of the toughest critics in the world.
And it's yeah, and it's just ...
the thing that we're really finding is that
the more Model 3s we deliver to the field,
it's actually causing viral growth of our sales.
So we deliver a Model 3 to somebody, they love it,
they tell all their friends.
They're actually really,
our customers are our primary sales force.
They love their car and take their friends for a drive,
and that's the thing that fundamentally drives our sales.
But not everyone has a friend
who has a Model 3, obviously,
so we need to get the cars out there for test drives.
As it is right now, not even all stores in North America
have Model 3 for test drives.
We're supposed to be prioritizing
getting cars to customers,
but we're soon gonna have
Model 3s available for test drives in all stores,
and both the Performance version
and the rear-wheel drive version.
So, 'cause you know, a lot of people,
they will not buy a car until they test drive it,
which is not unreasonable.
Although on Sunday, when I delivered it,
we're testing out like direct delivery,
which I think is definitely the future,
direct delivery from factory to customer's home or work,
wherever they are.
But the guy who bought it
had never actually even sat in a Model 3.
Like, wow okay.
I said, well how do you feel about the car
now that you have it and you've driven it?
He's like, I love it, it's amazing.
Yeah, it just seems to be really (mumbles).
Yeah so, at approximately 7,000 cars a week
we believe we can be sustainably profitable from Q through,
We're gonna try to raise that rate of Model 3 productions
steadily in the coming quarters
and try to get to the 10,000 cars a week number
as soon as we can.
We found as we spent
a lot of time debugging
a wide range manufacturing issues
that the potential for our existing lines
to be able to produce far more cars
is much greater than expected.
That by simplifying production lines,
by speeding them up,
by in some cases have things being done manual
instead of with automatic
and in other cases having it be done
automatic instead of manual,
we've been able to achieve dramatic improvements
to the output of existing lines,
which means that our CapEx
going from 5,000 cars a week
to 10,000 cars a week is a tiny fraction.
CapEx five to 10 is a tiny fraction
of the CapEx needed to go from zero to 5,000 Model 3s.
This is I think very good news
for capital efficiency of a company.
And with Web's transmount,
that's gonna bring future mass market
to the vehicles that we produce.
So the, and from an operating plant standpoint,
from Q3 onwards, I really wanna emphasize,
our goal is to
and cashflow positive for every quarter going forward.
Now obviously, if there's a big recession
or there's a severe force majeure event
that interests the supply chain,
that's not always possible,
but and we're confident that
and provided the economy is roughly where it is today
or reasonably good
and there's not a big force majeure event that we,
I feel comfortable achieving a gap incompositive
and cash flow positive quarter
every quarter from here on out.
As you said, there may be occasional quarters
we'll pay back a big loan or something,
where there may be,
you know, just because we paid back a big loan,
absent that, it would be cash flow positive.
So okay, I thank
the Tesla team for their incredible work
and our customers for their support.
Without the great crew we have at Tesla
and the customers who put their faith in us
by buying our product,
we would not be here today.
And yeah, I've really never been more excited
about the future of Tesla.
We have a super exciting
set of products to bring out in the future
It's like yeah.
Hey, I'm sorry if I sound a little tired.
I've been working
like crazy in the body shop lately.
But uh it's really
going great, I'm super excited.
Damn good, some good people.
And a good,
a number of the executive team here,
in particular asked the three key leaders of Tesla
Autopilot team to be here,
so they're gonna pick up from here to
see if the Autopilot leaders of Tesla
could introduce themselves
and say a bit about what you're working on,
what you're excited about in the future.
Sorry to put you guys on the spot.
But we're making pretty radical advances
in the core software technology
and the vision and all that,
and then very importantly,
self-driving chip technology that
we've been working on for three years
is finally coming to fruition.
Pete Bannon is gonna talk a lot about that,
it's a plug-in replacement for the existing computer
and it enables an order of magnitude improvements in,
in operations per second
or frames per second is the way to think about it,
and we can go say it
the really key to Tesla full vehicle autonomy.
And like I said, designed to be really easy to replace.
I'll let Pete talk about that.
So we're gonna start with like,
maybe Stuart, Andrej Karpathy.
- [Stuart] Okay, hi, I'm Stuart.
- [Elon] You have to talk loud, by the way.
- [Stuart] Oh yeah, I'll talk extra loud.
So I'm Stuart.
Yeah, joined the team relatively recently,
see the foundation the team has built up until this point.
I'm gonna be building on top of that right now.
So right now a lot of the focus is on Autopilot V9.0,
which is our on ramp to off-ramp solution
that's going to automatically attempt to change lanes,
understand what lane the car is in,
understand the route the user wants to travel,
and take that route for the user
and ultimately hand back control to that user,
kind of safety control. - Integrate navigation?
So you like, to get to one place.
You said I go out just, by the way, a little,
a little tip for, if you're driving
Model S or X or 3 is if you just tap in that, hold,
tap the navigate button and just drag down,
it will automatically navigate you to home or work
depending upon where you are.
That's pretty cool feature.
- [Stuart] So you have this model focus right now.
We're also kind of digging out some new safety features.
I think probably the thing is most exciting
for me coming to the team is just seeing
the foundation's that's been built out over last two years.
I think Andrej will talk a lot about
some of the perception vision work we've done there,
including data engine.
But it's sort of a lot of to build on top of that
very very quickly.
I think we're all starting to see
a new set of safety features that really only makes sense
in this world we have such an extremely high understanding
what's happening around the vehicle,
so I think, when I sort think what will get me excited,
I come into work it's like one
starting to introduce real aspects with kind of not
just making the commute kind of reducing the drudgery,
or kind of the risk of commuting,
but also really make the element fun.
And the second is like
dramatically improving safety
in a way you really can only do
once you have this very nuanced understanding
of the world around you, the perception.
- [Andrej] Yeah.
Hello everyone, my name is Andrej Karpathy.
I'm Director of AI here at Tesla.
In particular, I lead the Vision team
which is responsible for turning the video stream
that we receive from all the cameras in a vehicle
into an understanding of what is around us
and around the vehicle.
I worked with Neural Networks for about 10 years
mostly as a PhD student of Stanford
and as a Research Scientist at OpenAI.
And what I'm really excited about is
really building out this infrastructure for computer vision
that underlies all the neural network training,
trying to get those networks to work extremely well,
and make that a really good foundation on top of which
we build out all the features of the Autopilot
like the features associated with the v9 release
that's going to come up and that Stuart has mentioned.
- [Peter] Hi, this is Pete Bannon.
- [Elon] He's gonna talk to (mumbles).
- [Peter] My team is leading currently
the Hardware 3 development.
The chips are up and working,
and we have drop-in replacements for S, X, and 3,
all have been driven in the field.
They support the current networks
running today in the car at full frame rates
with a lot of idle cycles to spare.
So, I think we're all really excited about what
Andrej and his team will be able to do
with this hardware in the future.
I think like one little anecdotal story was,
I gave a talk to ...
- Hey guys, looks like the call just dropped
on Tesla's end.
So I'm gonna to try to get that back up real quick.
I'm not sure what happened to it.
Give me one second here.
- [Peter] Development, the chips are up and working,
and we have drop-in replacements for S, X and 3,
all have been driven in the field.
They support the current networks
are running today in the car at full frame rates
with a lot of idle cycles to spare.
So, I think we're all really excited about what
Andrej and his team will be able to do
with this hardware in the future.
I think like one little anecdotal story was,
I gave a talk to his team on Hardware 3 last month
explaining how it worked and what it was capable of,
and then afterwards, one of the researchers came up to me.
He was really excited, and he said, this is so ...
- Hey guys, yeah sorry about that.
It looks like something is going on
with the Tesla website here,
so give me one second to spin that back up,
and I will get the call going yet again.
Be right back.
- [Peter] Adding something to accelerate
neural networks, but nobody was doing
a bottoms-up design from scratch,
which is what we elected to do.
We had the benefit of having the insight into
seeing what Tesla's neural networks looked like
back then and having projections of what
they would look like into the future,
and we were able to leverage all of that knowledge
and our willingness to totally commit
to that style of computing
to produce a design that's dramatically more efficient
and has dramatically more performance
than what you can buy today.
- [Elon] Cool, thanks.
Yeah, I mean, essentially the key is
to be able to run the neural net
at a fundamental, at a bare metal level
so that it's you actually, in the circuits
and especially during the calculations,
in the circuit itself and not
in some sort of emulation mode,
which is how a GPU or a CPU would operate.
So, you want to do basically a massive amount
of localized matrix multiplication
with the memory right there.
So, it's a huge number of very simple complications
with the memory needed to
store the results of those complications
right next to the circuits
that are doing the matrix calculations.
And the net effect is an order of magnitude improvement
in the frames per second.
Our current hardware, which,
I'm a big fan of NVIDIA, they do great stuff.
But using a GPU, fundamentally it's an emulation mode,
and then you also get choked on the bus.
So, the transfer between the GPU and the CPU
ends up being one of the constraints of the system.
So, the net effect is we're able to,
with the Tesla computer,
and we've been like in semi-stealth mode basically
for the last two to three years on this,
but I think it's probably time to let the cat out of the bag
because that cat's gonna come out of the bag anyway.
But it's an incredible job
by Pete and his team to create this,
the world's most advanced computer
designed specifically for autonomous operation.
And as a rough sort of rough figure of merit,
whereas the current NVIDIA's hardware can do
200 frames a second,
this is able to do over 2,000 frames a second
and with full redundancy and fail-over.
It's an amazing design and we're gonna be looking to
increase the size of our chip team
and our investment in that as,
as quickly as possible.
I think we have some of the best aces in the world,
but I think we want to build on that even more.
And it costs the same as our current hardware
and we anticipate that this would have to be replaced,
this replacement, which is why we made it easy to
switch out the computer,
and that's all that needs to be done.
If we take out one computer and plug in the next.
That's it, all the connectors are compatible
and you get an order of magnitude, more processing
and you can run all the cameras at
primary full resolution with the complex neural net.
So it's super kick-ass, thank you for doing that.
- [Peter] You're welcome.
- [Elon] Thanks for making nets
and thanks for making the software.
Anyway, basically I wanted to introduce
three of the key people at Tesla that are doing this.
I have huge respect and admiration for you guys and,
and it's because of what you and your team's doing
that Tesla will be successful in this arena, thank you.
- [Martin] Thank you, Elon.
Shiree, let's go to the first question.
- [Shiree] Thank you, our first question comes
from Tony Sacconaghi with Bernstein.
- [Tony] Yes, thank you.
I have one question and one follow-up, please.
First, just on gross margins,
it looks like S & X gross margins were up
maybe 500 basis points sequentially and I'm wondering
maybe you can articulate what drove that.
And then, more importantly,
it looks like you're calling for Model 3 gross margins
to go from about maybe 3% this quarter
to 15% next quarter.
That's about a $6,000
cost out per car
and I'm wondering if you can maybe
help us understand what sort of the forces
that drive that kind of improvement
in a relatively short timeframe.
- [Elon] Yeah, absolutely.
First of all, I'd like to apologize for
being impolite on the prior call.
Honestly, I think there's really
no excuse for bad manners
and I was violating my own rule in that regard.
Certainly, I have some excuse.
There are reasons for it in that I'd gotten no sleep and
been working sort of
110-hour, 120-hour weeks.
But, nonetheless, there's still no excuse.
My apologies for not being polite on the prior call.
- [Antonio] I appreciate that, thank you.
- [Elon] And let's see, with respect to gross margin,
I'll touch on that and then hand the rest to Deepak,
but certainly, when it's filling up the production line,
there are a tremendous amount of inefficiencies.
There's a lot of
hurry up and wait, where
some parts of the production line move well.
Then, one part doesn't
and you have associates waiting around
with nothing to do.
There are parts that we thought were right
but then it turns out
that they weren't right because
we got to send them back to the supplier.
It's just like a whole sort of giant machine.
It just needs to kind of lurch into