Key highlights

Financial Performance:

• Record Revenues: Tesla achieved record quarterly revenues in Q2 2024.
• Energy Business: Energy storage deployments hit an all-time high, driving record profits for the energy business.
• Automotive Deliveries: Automotive deliveries increased sequentially. However, revenue per unit was impacted due to financing options provided to offset high interest rates.
• Net Income: Tesla reported positive free cash flow of $1.3 billion and ended Q2 with over $30 billion in cash and investments.
• CapEx: $10 billion in CapEx expected for the year, with increased spending to bring a 50k GPU cluster online.

Product and Business Developments:

• Energy Storage: Demand remains robust, with plans to expand production in the U.S. and a new Megapack factory in China.
• Full Self-Driving (FSD): Significant progress on version 12.5, merging highway and city driving stacks.
• Robotaxi: Product unveil postponed to October 2024 for improvements. First Robotaxi ride expected possibly by the end of 2024.
• Dojo: Increased focus on Tesla's AI supercomputer due to high demand and cost of NVIDIA GPUs.
• 4680 Battery Cells: Production ramp up with a 51% increase in Q2, and first Cybertrucks built using these cells.

Future Initiatives:

• More Affordable Model: On track to launch in the first half of next year.
• Optimus Robot: Expected to enter limited production early next year, with plans to scale in 2026 and sell to external customers.
• Giga Texas: Expansion nearing completion, housing the largest training cluster.
• Giga Mexico: Project paused pending political outcomes and trade tariffs.

Quotes from management

Elon Musk (CEO):

"We saw large adoption exploration in EVs and then a bit of a hangover as others struggle to make compelling EVs."

"The big, really by far the biggest differentiator for Tesla is autonomy."

"Although the numbers sound crazy, I think Tesla producing at volume with unsupervised FSD essentially enabling the fleet to operate like a giant autonomous fleet. And it takes the valuation, I think, to some pretty crazy number."

Vaibhav Taneja (CFO):

"We are demand constrained rather than production constrained for the energy business."

"We reverted to positive free cash flow of $1.3 billion in Q2. This was despite restructuring payments being made in the quarter."

"We have stepped up our efforts to provide more trims that have an estimated range of more than 300 miles on a single charge."

Q&A session

Will Stein, Truist: There were some news stories through the quarter that indicated that you redirected some AI compute systems that were destined for Tesla instead to xAI or perhaps it was to X. How do you make allocation decisions among these various ventures and how do you make Tesla owners comfortable that you're doing it in a way that really benefits them?

Elon Musk (CEO):

"At Tesla, we had no place to try them on, so it would've been a waste of Tesla capital because we would just have to order H100 and have no place to try them on. So it was just -- there was -- this wasn't a, let's pick xAI of Tesla."

Ben Kallo, Baird: When we think about revenue contribution and with energy growing so quickly and Optimus on the come, how do we think about the overall segments longer term? And then do you think that auto revenue will fall below 50% of your overall revenue?

Elon Musk (CEO):

"The long-term value of Optimus will exceed that of everything else that Tesla combined. I think everyone on Earth is going to want one."

Alex Potter, Piper Sandler: Was just wondering if you can elaborate maybe on the mechanics of how FSD licensing works?

Elon Musk (CEO):

"The OEMs not real fast. There's not really a sensor suite, it's just cameras. But they would have to integrate our AI computer and have cameras with a 360 degree view. And at least the gateway, like the what talks to the internet, and communicates with the Tesla system, what that you need kind of a gateway computer too."

George Gianarikas, Canaccord: GM canceled their pedal less, wheel less vehicle. And Tesla's Robotaxi shown in images also lacks pedals and a wheel. Is there a different regulatory concern for Tesla?

Elon Musk (CEO):

"The real reason that they cancel it is because GM can't make it work, not because the regulators, they're blaming regulators."

Overall summary

The Q2 2024 earnings call for Tesla highlighted a strong quarterly performance with record revenues and profits, particularly in the energy business. Tesla continues to emphasize its leadership in EV autonomy, making significant advancements with its Full Self-Driving technology. The announcements on upcoming products such as the more affordable model and the Optimus humanoid robot reflect Tesla's focus on innovation and scaling its product lines. The Q&A session provided further insights into Tesla's strategic direction, particularly emphasizing the potential of autonomy and the forthcoming Robotaxis. Despite the competitive and regulatory challenges, Tesla’s growth prospects remain compelling, driven by its technological edge and robust financial health.