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Speaker 1: (00:00)
Thank you for standing by. Welcome to the Tesla, Second Quarter, 2021, Financial Results and Q&A Webcast. At this time, all participants are in listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today’s conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to our speaker today, Martin Viecha, Senior Director of Investor Relations. Please go ahead.
Martin Viecha: (00:34)
Thank you and good afternoon, everyone. And welcome to Tesla, Second Quarter, 2021 Q&A Webcast. I’m joined today by Elon Musk, Zachary Kirkhorn, and a number of other executives. Our Q2 results were announced at about 1:00 PM Pacific time in the update deck we published at the same link as these webcasts. 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 and results could differ materially and 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 one now if you would like to join the question queue, but before we jump into Q&A, Elon has some opening remarks. Elon.
Elon Musk: (01:27)
Sure. So to recap, Q2, 2021 was the record quarter on many levels. We achieved record production [inaudible 00:01:35] , and surpassed over a billion dollars and gap income for the first time in Tesla history. I’d really like to congratulate everyone at Tesla for an amazing job. This is really an incredible milestone. It also seems that public sentiment towards Ev’s is at an inflection point. And this point, I think almost everyone agrees that electric vehicles are the only way forward. Regarding supply chain, while we’re making cars at full speed, the global chip shortage situation remains quite serious. For the rest of this year, our growth rates will be determined by the slowest parts in our supply chain, which is there’s a wide range of chips that are at various times the slowest parts of the supply chain. I mean, it’s worth noting that if we had everything else, if we had vast numbers of vehicles in sales, we were not able to make them, if everything except the chips, we would be able to make them. The chips supply is fundamentally the governing factor on our output. It’s difficult for us to say how long this will last because we don’t have, this is because out of our control, essentially. It does seem like it’s getting better, but it’s hard to predict. So in fact, even achieving the output that we did achieve was only due to an immense effort from people within Tesla. We were able to substitute alternative chips and then write the firmware in a matter of weeks. It’s not just a matter of swapping out a chip. You also have to rewrite the software. So it was an incredibly intense effort of finding new chips, writing new firmware, integrating with the vehicle and testing in order to maintain production. And I also like to thank our suppliers who worked with us and there’ve been many calls, midnight, 1:00 AM just with suppliers, in resolving a lot of the shortages. So thanks very much to our suppliers.
Elon Musk: (03:56)
Let’s see in terms of epic FST subscription, we were able to launch a full self driving subscription last month and we expect it to build slowly and then, but then gather a lot of [inaudible 00:04:09] over time. Obviously we need to have the full self-driving [inaudible 00:04:14] widely available for it really to take off at a high rate. And we’re making a lot of progress there. So yeah, I think FSC subscription will be a significant factor probably next year.
Elon Musk: (04:33)
We’ve got two Giga, Texas, and Giga, Berlin, we’re actually doing this earnings call from Giga, Texas. So we’re in the factory right now doing this earnings call. And the team has made incredible progress here. You can see the pictures online and see that there’s basically nothing a year ago and this mostly complete large factory a year later. So really, really great work by the Giga, Texas team. And then also great work in Berlin- Brandenburg with the team there. So we expect to be producing the sort of new design of the Model Y in both factories in limited production later this year. It’s always like, it’s hard to sort of explain to people who have not been through the agony of a manufacturing ramp. Like, why can’t you just turn it on and make 5,000 a week. This is, it is so hard to do manufacturing. It is so hard to do production. First approximation, there are thousand unique parts and processes that have to work. And the greater growth of production goes as fast as the least lucky and dumbest of those 10,000 things.
Elon Musk: (06:10)
And a bunch of them are not even in our control. So it’s insanely difficult. I’m fond of saying that prototypes are easy and production is hard. And I do believe that the really remarkable thing that Tesla’s done, it’s not to make an electric car or to be a car startup because there’ve been hundreds of car startups in the United States and outside United States. So the thing that’s remarkable is that Tesla didn’t go bankrupt in reaching volume production. That’s the amazing part because everyone else did because they all thought the prototype or the idea was the hard part, and it is not. It is trivial by comparison with actual production. So it’s always worth noting that of all the American car companies, there are only two that have not gone bankrupt, and that is Ford and Tesla. So, the seeds of defeat are sown on the day of victory. And we must be careful that we cannot do that. They often, if you look at the look at history, so often at the Caesar’s feet are set on the day of victory. We will endeavor not to make that the case at Tesla.
Elon Musk: (07:38)
So let’s see. The Model Y is in Texas and made Texas, and Berlin will look very much like the Model Y’s we currently make, but that there are substantial improvements in the difficulty of manufacturing. So for example, the Model Y made here and in Berlin will have a cast front body and a cast rear body. Whereas the one in California has cast rear body, but not a cast front body. We’re also aiming to do a structural pack with 4680 cells, which is a mass reduction and a cost reduction. But we’re not counting on that as the only way to make things work. We have some backup plans with a non-structural pack and 2170, essentially. So, but at scale production, we obviously want to be using 4680’s and structural pack. From a physics standpoint, this is the best architecture. And from an economic standpoint, it is the lowest cost way to go. So the lightest, lowest cost, but there’s a lot of new technology there. So it’s difficult predict with precision. When does it work and when do you reach the scale production. Andrew’s going to talk a bit more about the 4680 productions.
Elon Musk: (09:08)
Yeah. So we are making great progress in 4680 cells, but there is a tremendous amount of innovation that we’re packing into that 4680 cell. And so it’s not simply a sort of minor improvements on state of the art. There are… And we went through this on the factory sell date, really dozens of, half a dozen major improvements and dozens of small improvements. So I think it will be great, but it’s [inaudible 00:09:43] to say when the last of the technical challenges will be solved.
Elon Musk: (09:50)
So in conclusion, our team continues to make huge efforts to make our factories run at full speed, which is very difficult. We have had some factory shutdowns due to a power shortages, and we hope those will be relieved in the coming weeks and months. And we’re making great progress on self driving. So far this is not easy to see because of, at the foundational software level. And so it ends up being sort of a two steps forward, one step back situation, and, but over time, if you do two steps forward, one step back and keep going, you do move forward. So I’m highly confident that the cars will be capable of full self-driving if they full self-driving computer and the cameras, I’m confident that they will be able to drive themselves with the safety levels substantially greater than that of the average post. But again, thanks to all of our employees who are making this a breakthrough year for Tesla and an incredible quarter. Thanks, guys.
Martin Viecha: (11:02)
Thank you very much. And we have some follow-up remarks from Zachary Kirkhorn.
Zachary Kirkhorn: (11:07)
Yeah. Thanks Martin. And thanks, Elon. Just to reiterate, Q2 was a great quarter for the Tesla team with strong improvements across the business. In particular, auto gross profit and margin, excluding credits increased substantially. This was primarily driven by better cost optimization across our factories, good execution against our cost reduction plans, as well as increases in production and delivery volumes. There was some benefit from pricing action, mostly in North America. However, it was small in the context of the other contributors. Note that the Model S and X program, was at a slight loss for the quarter due to the relatively low volume. In supply chain challenges, including expedites continued to provide costs headwinds. Additionally, it’s encouraging to see the progress made on profitability within our energy and services and other businesses. While there’s some benefit to looking at our progress quarter over quarter, I find it more helpful to look at progress over a slightly long-term horizon.
Zachary Kirkhorn: (12:09)
Over the last two years, our vehicle delivery volumes have more than doubled. This volume increase was made possible by a steady decrease in ASP’s of more than 10%, driven by a roadmap to increase affordability and shifting mix towards our more affordable vehicles. Yet over that same period of time, our auto gross margin excluding credit has increased nearly 25 percentage points to our highest yet since the introduction of Model 3. This is only possible because our average cost per vehicle has reduced by more than the reduction in average price. This is a remarkable achievement in the context of the volume growth and ASP reduction as mentioned, and a testament to the hard work by the Tesla team.
Zachary Kirkhorn: (12:51)
Additionally, OPEX as a percentage of revenue has declined. And in particular SGNA representing the work we’ve done to become more efficient as we scale the company while still making the required R&D investments to support our future. As a result, our gap operating margins have risen from negative to double digit in line with what we have guided. By managing our overhead costs and driving higher volumes, our P&L is benefiting from the marginal profitability of each incremental unit. Or said differently, we are recognizing the benefits of scale and improved fixed costs absorption. With strong operating cash flows and cash balance, we were putting that cash to use. CapEx continues to tick up primarily driven by capacity investments in Austin, Berlin, and Shanghai. Additionally, each quarter we are using our cash to retire legacy debt, which was taken on at a time when interest rates and company risk were much higher than in today’s environment. As I’ve mentioned before, our 2021 volumes will skew towards the second half of the year, as we push for continued sequential increases in volume. Despite the great work so far, managing the instability of the supply chain, these challenges remain and are unfortunately increasing in pain with a higher volume.
Zachary Kirkhorn: (14:05)
As we work through the uncertainty, we want to ensure we do our best to manage customer wait times as well as the impact these interruptions have on our employees and costs. And as Elon mentioned, volume growth will be determined by part availability as we have the factory capacity ready and are in a strong demand position. I’m excited to see the progress made by the Tesla team as we continue building the business and strengthening our financials. Thank you very much.
Martin Viecha: (14:32)
Great. Thank you very much, Zach. And now let’s go through the retail investor questions on say.com. The first question from Robert M. is, Tesla’s website still says cyber truck production is expected to begin in late 2021. Can Tesla share more details on the current status of the cyber truck and confirm if production is still-
Zachary Kirkhorn: (14:54)
Okay. Martin, do you want to-
Martin Viecha: (15:02)
Sorry. We cut out there for a second.
Drew: (15:02)
Sorry, we cut out there for a second. Yeah. The Cybertruck is currently in its alpha stages. We finished basic engineering architecture of the vehicle. With the Cybertruck we’re redefining how the vehicle is being made. As Elon said, it carries much of the structural pack and large casting designs of the model Y being built in Berlin and Austin. Obviously those take priority over the Cybertruck, but we are moving into the beta phases of Cybertruck later this year. And we’ll be looking to ramp that in production in [inaudible 00:15:34] Texas after model Y is up and going.
Elon Musk: (15:38)
Yeah. I just want to reemphasize the extraordinary difficulty of ramping production of large manufactured items. At risk of being repetitive, it’s actually easy to make prototypes or sort of handle small volume production, but anything produced at high volume, which is really what’s relevant here, it’s going to move as fast as the slowest of the, say rough order of magnitude, 10,000 unique parts and processes. And so you can have 9,999, where just one is missing. We were missing, for example, a big struggle this quarter was the module that controls the airbags and the seatbelts. And obviously you cannot strip a car without those. And that limited our production severely worldwide, in Shanghai and in Fremont. So it wouldn’t have mattered if we had 17 different car models, because they all need the airbag module. It’s just irrelevant.
Elon Musk: (16:49)
So in order for Cybertruck and Semi to scale to volume that’s meaningful for customer deliveries, we’ve got to solve the chip shortage, or working with our suppliers. People sometimes say, why don’t you just build a chip vat? Okay. Well, okay. That would take us, even moving like lightening, 12 to 18 months. So it’s not like you can just whip up a chip vat. It’s just like, yeah, just make a quick chip vat.
Elon Musk: (17:25)
So some of these things are … yeah. Anyway, it is quite a trial dealing with all of the constraints of scaling a large manufactured object. I think it may be the case that Tesla is scaling. I think we might be the fastest in history ever for scaling a large manufactured object. Maybe the Model T would have been comparable back in the day of the Ford Model T. Probably internet knows the answer, but I think we may be scaling large manufactured objects at the fastest rate in history, or I’d like to know who did it faster so we can learn from them.
Elon Musk: (18:11)
So it’s worth just noting that, in the grand scheme of things, it’s not bad. So, yeah. So the Cybertruck and Semi actually both are heavy users of sub capacity, so we’ve got to make sure we have the sub capacity for those two vehicles or it’s kind of pointless. We can make a small number of vehicles, but the effective cost, if you make a small number of vehicles, is insane. They would literally cost a million dollars piece or more. There’s a reason why you do things at volume production, which is to get the economies of scale that get the cost down.
Elon Musk: (18:57)
So we are looking at a pretty massive increase in cell availability next year, but it’s not like in January one, it comes through … it ramps up through the course of next year. But even without Tesla … (silence).
Elon Musk: (19:20)
Hello? Even without Tesla’s cell production, our suppliers will be able to deliver about twice as much cell output in next year as this year. [inaudible 00:19:51], do you want to talk more about that?
Drew: (19:52)
Yeah. Given concerns over cell’s bottlenecking growth, our target is to grow cell supply ahead of the 50% year on year growth targets of the vehicle business and also enable increased energy storage deployments. So yeah, our cells suppliers are tracking to double their production in 2022.
Speaker 1: (00:00)
Thank you for standing by. Welcome to the Tesla, Second Quarter, 2021, Financial Results and Q&A Webcast. At this time, all participants are in listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today’s conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to our speaker today, Martin Viecha, Senior Director of Investor Relations. Please go ahead.
Martin Viecha: (00:34)
Thank you and good afternoon, everyone. And welcome to Tesla, Second Quarter, 2021 Q&A Webcast. I’m joined today by Elon Musk, Zachary Kirkhorn, and a number of other executives. Our Q2 results were announced at about 1:00 PM Pacific time in the update deck we published at the same link as these webcasts. 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 and results could differ materially and 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 one now if you would like to join the question queue, but before we jump into Q&A, Elon has some opening remarks. Elon.
Elon Musk: (01:27)
Sure. So to recap, Q2, 2021 was the record quarter on many levels. We achieved record production [inaudible 00:01:35] , and surpassed over a billion dollars and gap income for the first time in Tesla history. I’d really like to congratulate everyone at Tesla for an amazing job. This is really an incredible milestone. It also seems that public sentiment towards Ev’s is at an inflection point. And this point, I think almost everyone agrees that electric vehicles are the only way forward. Regarding supply chain, while we’re making cars at full speed, the global chip shortage situation remains quite serious. For the rest of this year, our growth rates will be determined by the slowest parts in our supply chain, which is there’s a wide range of chips that are at various times the slowest parts of the supply chain. I mean, it’s worth noting that if we had everything else, if we had vast numbers of vehicles in sales, we were not able to make them, if everything except the chips, we would be able to make them. The chips supply is fundamentally the governing factor on our output. It’s difficult for us to say how long this will last because we don’t have, this is because out of our control, essentially. It does seem like it’s getting better, but it’s hard to predict. So in fact, even achieving the output that we did achieve was only due to an immense effort from people within Tesla. We were able to substitute alternative chips and then write the firmware in a matter of weeks. It’s not just a matter of swapping out a chip. You also have to rewrite the software. So it was an incredibly intense effort of finding new chips, writing new firmware, integrating with the vehicle and testing in order to maintain production. And I also like to thank our suppliers who worked with us and there’ve been many calls, midnight, 1:00 AM just with suppliers, in resolving a lot of the shortages. So thanks very much to our suppliers.
Elon Musk: (03:56)
Let’s see in terms of epic FST subscription, we were able to launch a full self driving subscription last month and we expect it to build slowly and then, but then gather a lot of [inaudible 00:04:09] over time. Obviously we need to have the full self-driving [inaudible 00:04:14] widely available for it really to take off at a high rate. And we’re making a lot of progress there. So yeah, I think FSC subscription will be a significant factor probably next year.
Elon Musk: (04:33)
We’ve got two Giga, Texas, and Giga, Berlin, we’re actually doing this earnings call from Giga, Texas. So we’re in the factory right now doing this earnings call. And the team has made incredible progress here. You can see the pictures online and see that there’s basically nothing a year ago and this mostly complete large factory a year later. So really, really great work by the Giga, Texas team. And then also great work in Berlin- Brandenburg with the team there. So we expect to be producing the sort of new design of the Model Y in both factories in limited production later this year. It’s always like, it’s hard to sort of explain to people who have not been through the agony of a manufacturing ramp. Like, why can’t you just turn it on and make 5,000 a week. This is, it is so hard to do manufacturing. It is so hard to do production. First approximation, there are thousand unique parts and processes that have to work. And the greater growth of production goes as fast as the least lucky and dumbest of those 10,000 things.
Elon Musk: (06:10)
And a bunch of them are not even in our control. So it’s insanely difficult. I’m fond of saying that prototypes are easy and production is hard. And I do believe that the really remarkable thing that Tesla’s done, it’s not to make an electric car or to be a car startup because there’ve been hundreds of car startups in the United States and outside United States. So the thing that’s remarkable is that Tesla didn’t go bankrupt in reaching volume production. That’s the amazing part because everyone else did because they all thought the prototype or the idea was the hard part, and it is not. It is trivial by comparison with actual production. So it’s always worth noting that of all the American car companies, there are only two that have not gone bankrupt, and that is Ford and Tesla. So, the seeds of defeat are sown on the day of victory. And we must be careful that we cannot do that. They often, if you look at the look at history, so often at the Caesar’s feet are set on the day of victory. We will endeavor not to make that the case at Tesla.
Elon Musk: (07:38)
So let’s see. The Model Y is in Texas and made Texas, and Berlin will look very much like the Model Y’s we currently make, but that there are substantial improvements in the difficulty of manufacturing. So for example, the Model Y made here and in Berlin will have a cast front body and a cast rear body. Whereas the one in California has cast rear body, but not a cast front body. We’re also aiming to do a structural pack with 4680 cells, which is a mass reduction and a cost reduction. But we’re not counting on that as the only way to make things work. We have some backup plans with a non-structural pack and 2170, essentially. So, but at scale production, we obviously want to be using 4680’s and structural pack. From a physics standpoint, this is the best architecture. And from an economic standpoint, it is the lowest cost way to go. So the lightest, lowest cost, but there’s a lot of new technology there. So it’s difficult predict with precision. When does it work and when do you reach the scale production. Andrew’s going to talk a bit more about the 4680 productions.
Elon Musk: (09:08)
Yeah. So we are making great progress in 4680 cells, but there is a tremendous amount of innovation that we’re packing into that 4680 cell. And so it’s not simply a sort of minor improvements on state of the art. There are… And we went through this on the factory sell date, really dozens of, half a dozen major improvements and dozens of small improvements. So I think it will be great, but it’s [inaudible 00:09:43] to say when the last of the technical challenges will be solved.
Elon Musk: (09:50)
So in conclusion, our team continues to make huge efforts to make our factories run at full speed, which is very difficult. We have had some factory shutdowns due to a power shortages, and we hope those will be relieved in the coming weeks and months. And we’re making great progress on self driving. So far this is not easy to see because of, at the foundational software level. And so it ends up being sort of a two steps forward, one step back situation, and, but over time, if you do two steps forward, one step back and keep going, you do move forward. So I’m highly confident that the cars will be capable of full self-driving if they full self-driving computer and the cameras, I’m confident that they will be able to drive themselves with the safety levels substantially greater than that of the average post. But again, thanks to all of our employees who are making this a breakthrough year for Tesla and an incredible quarter. Thanks, guys.
Martin Viecha: (11:02)
Thank you very much. And we have some follow-up remarks from Zachary Kirkhorn.
Zachary Kirkhorn: (11:07)
Yeah. Thanks Martin. And thanks, Elon. Just to reiterate, Q2 was a great quarter for the Tesla team with strong improvements across the business. In particular, auto gross profit and margin, excluding credits increased substantially. This was primarily driven by better cost optimization across our factories, good execution against our cost reduction plans, as well as increases in production and delivery volumes. There was some benefit from pricing action, mostly in North America. However, it was small in the context of the other contributors. Note that the Model S and X program, was at a slight loss for the quarter due to the relatively low volume. In supply chain challenges, including expedites continued to provide costs headwinds. Additionally, it’s encouraging to see the progress made on profitability within our energy and services and other businesses. While there’s some benefit to looking at our progress quarter over quarter, I find it more helpful to look at progress over a slightly long-term horizon.
Zachary Kirkhorn: (12:09)
Over the last two years, our vehicle delivery volumes have more than doubled. This volume increase was made possible by a steady decrease in ASP’s of more than 10%, driven by a roadmap to increase affordability and shifting mix towards our more affordable vehicles. Yet over that same period of time, our auto gross margin excluding credit has increased nearly 25 percentage points to our highest yet since the introduction of Model 3. This is only possible because our average cost per vehicle has reduced by more than the reduction in average price. This is a remarkable achievement in the context of the volume growth and ASP reduction as mentioned, and a testament to the hard work by the Tesla team.
Zachary Kirkhorn: (12:51)
Additionally, OPEX as a percentage of revenue has declined. And in particular SGNA representing the work we’ve done to become more efficient as we scale the company while still making the required R&D investments to support our future. As a result, our gap operating margins have risen from negative to double digit in line with what we have guided. By managing our overhead costs and driving higher volumes, our P&L is benefiting from the marginal profitability of each incremental unit. Or said differently, we are recognizing the benefits of scale and improved fixed costs absorption. With strong operating cash flows and cash balance, we were putting that cash to use. CapEx continues to tick up primarily driven by capacity investments in Austin, Berlin, and Shanghai. Additionally, each quarter we are using our cash to retire legacy debt, which was taken on at a time when interest rates and company risk were much higher than in today’s environment. As I’ve mentioned before, our 2021 volumes will skew towards the second half of the year, as we push for continued sequential increases in volume. Despite the great work so far, managing the instability of the supply chain, these challenges remain and are unfortunately increasing in pain with a higher volume.
Zachary Kirkhorn: (14:05)
As we work through the uncertainty, we want to ensure we do our best to manage customer wait times as well as the impact these interruptions have on our employees and costs. And as Elon mentioned, volume growth will be determined by part availability as we have the factory capacity ready and are in a strong demand position. I’m excited to see the progress made by the Tesla team as we continue building the business and strengthening our financials. Thank you very much.
Martin Viecha: (14:32)
Great. Thank you very much, Zach. And now let’s go through the retail investor questions on say.com. The first question from Robert M. is, Tesla’s website still says cyber truck production is expected to begin in late 2021. Can Tesla share more details on the current status of the cyber truck and confirm if production is still-
Zachary Kirkhorn: (14:54)
Okay. Martin, do you want to-
Martin Viecha: (15:02)
Sorry. We cut out there for a second.
Drew: (15:02)
Sorry, we cut out there for a second. Yeah. The Cybertruck is currently in its alpha stages. We finished basic engineering architecture of the vehicle. With the Cybertruck we’re redefining how the vehicle is being made. As Elon said, it carries much of the structural pack and large casting designs of the model Y being built in Berlin and Austin. Obviously those take priority over the Cybertruck, but we are moving into the beta phases of Cybertruck later this year. And we’ll be looking to ramp that in production in [inaudible 00:15:34] Texas after model Y is up and going.
Elon Musk: (15:38)
Yeah. I just want to reemphasize the extraordinary difficulty of ramping production of large manufactured items. At risk of being repetitive, it’s actually easy to make prototypes or sort of handle small volume production, but anything produced at high volume, which is really what’s relevant here, it’s going to move as fast as the slowest of the, say rough order of magnitude, 10,000 unique parts and processes. And so you can have 9,999, where just one is missing. We were missing, for example, a big struggle this quarter was the module that controls the airbags and the seatbelts. And obviously you cannot strip a car without those. And that limited our production severely worldwide, in Shanghai and in Fremont. So it wouldn’t have mattered if we had 17 different car models, because they all need the airbag module. It’s just irrelevant.
Elon Musk: (16:49)
So in order for Cybertruck and Semi to scale to volume that’s meaningful for customer deliveries, we’ve got to solve the chip shortage, or working with our suppliers. People sometimes say, why don’t you just build a chip vat? Okay. Well, okay. That would take us, even moving like lightening, 12 to 18 months. So it’s not like you can just whip up a chip vat. It’s just like, yeah, just make a quick chip vat.
Elon Musk: (17:25)
So some of these things are … yeah. Anyway, it is quite a trial dealing with all of the constraints of scaling a large manufactured object. I think it may be the case that Tesla is scaling. I think we might be the fastest in history ever for scaling a large manufactured object. Maybe the Model T would have been comparable back in the day of the Ford Model T. Probably internet knows the answer, but I think we may be scaling large manufactured objects at the fastest rate in history, or I’d like to know who did it faster so we can learn from them.
Elon Musk: (18:11)
So it’s worth just noting that, in the grand scheme of things, it’s not bad. So, yeah. So the Cybertruck and Semi actually both are heavy users of sub capacity, so we’ve got to make sure we have the sub capacity for those two vehicles or it’s kind of pointless. We can make a small number of vehicles, but the effective cost, if you make a small number of vehicles, is insane. They would literally cost a million dollars piece or more. There’s a reason why you do things at volume production, which is to get the economies of scale that get the cost down.
Elon Musk: (18:57)
So we are looking at a pretty massive increase in cell availability next year, but it’s not like in January one, it comes through … it ramps up through the course of next year. But even without Tesla … (silence).
Elon Musk: (19:20)
Hello? Even without Tesla’s cell production, our suppliers will be able to deliver about twice as much cell output in next year as this year. [inaudible 00:19:51], do you want to talk more about that?
Drew: (19:52)
Yeah. Given concerns over cell’s bottlenecking growth, our target is to grow cell supply ahead of the 50% year on year growth targets of the vehicle business and also enable increased energy storage deployments. So yeah, our cells suppliers are tracking to double their production in 2022.
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