Tesla's Earnings Call Recap - HW3 Upgrade, Unsupervised FSD, FSD V14 and More

If you missed Tesla’s 2024 Q4 earnings call or just want to review everything that was shared, don’t worry - we’ve got you covered. Below is a list of all the key points made during the call, which includes the popular Q&A session with Elon Musk and other executives. We broke down the information into several categories for easier reading.

If you prefer, you can also listen to Tesla’s earnings call on demand.

Overall Finances

Tesla’s total revenue increased 2% year-over-year in Q4, to $25.7B.

Tesla saw growth in Energy Generation, Storage, Services, and Other product/service groups

Tesla saw growth in vehicle deliveries

Tesla had higher regulatory credit revenue (likely due to pressures from credits ending soon)

Reduced Model S, 3, X, and Y average sales price (ASP), leading to increased sales

Attractive financing options, including 0% financing, spurred additional sales

Tesla’s operating income decreased 23% YoY in Q4, down to $1.6B

That is an overall margin of 6.2%

Reduced vehicle ASP impacted margins

Increase in operating expenses driven by AI and other R&D projects

Income increased in:

Energy Generation, Storage, Services, and Other categories

Lower cost per vehicle, including lower raw material costs

Higher regulatory credit revenue

Tesla has $36.6B in free cash, cash equivalents, and investments. This is an increase of $2.9B over last year, primarily the result of $2B in positive cash flows.

Production, Revenue, COGS

Energy storage production has grown YoY since 2023

Growth came from both Megapack and Powerwall

Growth is supply-constrained - Tesla can’t produce them fast enough - both residential and commercial customers are ordering quickly

Tesla delivered over 2 million vehicles in 2024, a new record for production and deliveries (likely includes used or other types of vehicles since total new vehicle deliveries were at almost 1.8m in 2024)

The lowest amount of un-delivered vehicles this year ever, very few vehicles sitting on service center/delivery lots

The Model Y was once again the best-selling vehicle of 2024 - of any kind

Tesla’s current constraint for production is battery packs

Making progress in addressing that constraint

Progress should improve drastically next year and the years after for battery pack production

Tesla grew in volume in China greatly, even though it faces extreme competition in the country

Overall cost per car is down to below $35,000 per vehicle.

All factories will start producing the new Model Y next month

This rapid and unprecedented change could result in an impact on production

Margins will be impacted due to launch-related costs for Q1 and Q2

The referral program had an impact on cost and will continue to do so as the program continues

Tesla doesn’t expect margins for service, but service remains GAAP-positive

New Products

Several new products in 2025

1st half of 2025 - More affordable model is still coming

Per dollar basis, Tesla has the most compelling lineup

Best software in the business, capable of autonomy

Prices comparable to the mass market, products compared to premium competitors

Optimus could potentially launch for commercial use in 2026.

Looking Forward

Tariffs

Uncertainty, focusing on localizing supply chains

Tariffs are very likely, will have an impact on business and profitability

AI is the biggest driver in cost

Tesla increased CapEx by $2.4B

Focused on improving CapEx efficiency, using a targeting manner to get immediate benefits

Build out of Cortex accelerated the rollout of FSD V13

$5B in AI-related CapEx

2025 CapEx expected to be flat

Focus of critical investments will be on manufacturing, AI, and robotics.

These are expected to bear fruit in 2026, 2027, and 2028.

2025 will be a pivotal year for Tesla

Lots of investments continue to be made

Setting the pace for the next phase of growth

Tesla is focusing on maximizing volumes and doubling down (or 10x) on Autonomy and real-world AI.

Elon sees a path for Tesla to be the most valuable company in the world by far - it is a difficult but achievable path

The path means Tesla will be worth more than the next top 5 companies combined

This will be due to autonomous vehicles and autonomous robots

Tesla began laying the groundwork in 2024

Tesla will begin building the manufacturing lines in 2025

“Epic 2026 and ridiculously good 2027 and 2028” - Musk

The future will be coming very fast, the inflection point for human history (autonomy/AI)

FSD and Autonomy

Tesla has achieved exponential progress in FSD

People don’t realize how good FSD is, and many people have no experience with it

Those with previous experience need to try it again - it has improved drastically over the last year

Last year’s experience was with a toddler - this year’s experience is with a grown-up

Passenger cars have 10 hours of utility per week - out of 168 hours a week.

An autonomous car would be of utility for 55 hours a week - about 1/3rd of the week

Autonomous vehicles are useful for both cargo and people delivery

No incremental cost change, just a software update to enable 5x utility

Largest asset-value increase in human history

Bigger than anything else in its history - bigger than the first car, the roadster, the Model 3, the Model Y

Launch of Unsupervised FSD will be a turning point - true, real-world AI that actually works

No company in the world is as good as Tesla at real-world AI

FSD Going Global

FSD works very well in the US, but over time it will work just as well everywhere else

Europe is a challenge due to regulation

Netherlands presents FSD to EU in May, expected to be approved EU-wide then. Won’t happen sooner than May

Unsupervised FSD in Europe could be even further away

China is another challenge - won’t allow training videos to leave China, and US won’t let training be done in China

Tesla is using public videos of Chinese streets on the internet to train Chinese FSD

Bus lanes in China are one of the biggest challenges there due to restrictions based on time, etc - automatic tickets for being in the wrong lane in China

Q4 Safety Report

Continual year-over-year safety improvements for those using FSD

People go to manual driving to check their phone so that they don’t strike out/get beeped at - and then go back to FSD

Significantly less safe than just being on FSD

Tesla is getting to the point where FSD is an order of magnitude safer - already 8.5x safer than a human driver

FSD V14

FSD V14 will be another significant step

Cortex launched at Giga Texas, which is a significant help in training FSD, and Tesla will continue expanding it

Tesla will need 10x the current compute to make Optimus fully useable (a thousand times more complex and a thousand times more use cases than FSD)

Tesla will spend the money on training compute over time, it won’t suddenly spend $500B on compute tomorrow

The cost of training is dropping dramatically with time

FSD V14 will focus on improving neural nets, working with auto-regressive transformers

Model size and context size will continue to grow and scale up

Context size is restricted by on-board memory, and will require optimization

Audio support to be further expanded and become relevant in V14

Data from tricky edge cases gathered by the fleet will help V14 make better decisions

Unsupervised FSD

Unsupervised FSD in Austin, Texas, in June 2025, as a paid robotaxi service.

Already happening at Fremont, will be happening at Austin soon, and other factories later

Cars know what lane they need to go to for pickup/delivery

They drive from the line to their spot and do it reliably every day, thousands of times a day

Teslas will be in the wild, with no driver, as of June

Tesla’s solution is generalized - doesn’t require high-precision maps.

Tesla is starting with Austin to make sure everything is ok and to test the waters, to ensure the safety of the general public and those in the cars

More cities will come in the future

Everywhere in North America by next year

Unsupervised FSD is limited by regulatory issues, not technical capability.

Tesla’s fleet will be using Unsupervised - you won’t be able to bring your own vehicle to Austin and enable it just yet.

Robotaxi fleet will be available to be ride hailed and Tesla will charge for it.

Tesla is still working on the experience - the app, arrival, payment, billing, exiting the vehicle, etc.

In 2026, owners will be able to add their vehicles to the Unsupervised FSD fleet.

Tesla needs to be confident that the probability of injury or accident is extremely low before they allow eyes-off / Unsupervised FSD on customer vehicles

Unsupervised FSD will also happen in California this year - in fact, in many regions of the US this year.

Austin is Tesla dipping their toes into the water to confirm it works and is safe.

Tesla is aiming for a safety level significantly above the average human driver

Standard is very high, if there is even one accident, it will get worldwide headlines, even though 40,000 people die in car accidents every year

Hold-back is an excess of caution

How many times did you have to intervene for definite safety reasons?

Don’t compare to feeling like you had to intervene - Tesla is close to eliminating critical safety interventions being normal. They’re already very rare.

Hardware 3 - Replacement Confirmed

Elon confirmed HW3 will need to be replaced - it will be replaced for free for those who previously purchased FSD outright.

This will be expensive - but it won’t have a massive impact because less people purchased it outright versus subscribing

Tesla still working on HW3 in the meantime - V12.6 is a baby V13 and a significant improvement over V12.5.4.2

HW3 releases will trail AI4 releases for the foreseeable future

Licensing FSD

Tesla is in discussions with multiple major car manufacturers for licensing FSD

Tesla is advising companies to take apart their vehicles, and look at requirements

Cameras, compute, thermal limitations, capabilities and design

Tesla will only sign if the volume is very high - otherwise, it isn’t worth it for Tesla due to engineering constraints

Cybertruck’s FSD limitations are a direct result of this

Interest in licensing FSD will become even higher once Unsupervised FSD becomes proven

Optimus

It is difficult to predict when Optimus will arrive. It is not design-locked for 2025

Tesla is building the tracks, re-designing the train, and designing the station in real-time while putting it all together

Tesla used all custom parts for Optimus because they couldn’t find anything that met their requirements

Constantly improving Optimus - evolving in a good direction

The internal plan is to build 10,000 by the end of 2025 - but that’s optimistic

Tesla will build several thousand at least

They will do useful things by the end of the year - at least within Tesla’s factories.

This is “production design 1”, and use in Tesla’s factories will inform “production design 2” for next year.

Optimus will ramp faster than anything else they’ve ramped - they’ve previously done half an order of magnitude a year - they want to aim for one full order of magnitude per year

100m per year in the far future

Most sophisticated humanoid hand

Optimus will be able to play piano, thread a needle

Extreme level of precision with the hand that no other competitor has gotten close to

Other companies can’t produce thousands or millions of units - they can build one-off hand-build units or a few prototypes

Other companies have extremely limited real-world experience and data

Long term, Optimus can be $10-20B in revenue

More compute means more Optimus, more Optimus means more compute

Tesla doesn’t intend to begin Optimus sales just yet - Elon was careful not to answer questions related to sales and pricing

Tesla wants to use Optimus immediately for the boring/tedious/dangerous tasks around its own factory first

This will help training as well, close the loop for improvement

Production Version 2 - launches middle of next year

Production line to build up to 10K units a month, rather than the current limited production

This could be the version that is potentially sold to companies in the second half of next year

Likely won’t be sold directly to retail customers

The expected ramp is really fast

Demand will not be a problem, even at a high price

At 1m units of production per year, the production cost will be under $20,000 per unit

This is likely several years away

Price will be set by market demand

Semi

Semi Factory just had its roof finished last week

Mechanical equipment will be installed in the next couple of months

Late this year comes the high-volume variant of Semi

Scale production begins end-2025/early-2026

Will meaningfully contribute to Tesla’s revenue next year

There is a shortage of truck drivers in America, and people are humans - they get tired and need breaks

It is a tough job, and lots of people are leaving the profession rather than joining it.

Future logistics problem - autonomy will help to bridge the gap and meet the need for trucking

Semi will likely be a $12B/year endeavor in the future once the ramp is complete

Energy

Tesla sees this as a “down-to-Earth” topic - it's real, and it’s happening now

Storage is a big deal and will become even more important in the future

Total demand for electricity storage will grow massively over time

Enables far greater energy output to the grid than is currently possible

Vast majority of the global grid doesn’t have storage - power plants are designed for high peaks rather than steady energy

Lots of storage will help to increase the energy available - by up to 2x what is available now

Lots of demand for stationary storage, both residential and commercial

Mega Shanghai is going fast

Elon confirms a 3rd Megafactory for stationary storage, but not the location

Tesla will NOT rob from vehicle storage to feed into stationary storage, nor vice versa

Tesla still working on Solar Roof, haven’t given up

Core part of the residential product portfolio

Is a premium product - like the Model S or Model X - and priced like it

New versions of the Solar Roof are being designed and worked on still

Best time to put in a solar roof is either on a new home or a house needs a new roof - solar roof makes sense then

Combined with Powerwall, it makes owners self-sufficient, even if the grid is off for several days

Other Topics

LiDAR is still a crutch

Tesla has radars in the Model S and Model X - they ship turned off

Humans drive without shooting lasers from their eyes - they drive with eyes and a brain.

Digital equivalent is cameras and a neural net

Road system is designed for this, using LiDAR doesn’t help the generalized solution

LiDAR is good for a specific solution - which has to be trained neighborhood by neighborhood

LiDAR doesn’t work in fog, doesn’t work in inclement weather, and doesn’t make sense on roads

SpaceX uses LiDAR, but it's the wrong solution for cars on roads that were made for people

Real-world AI and the US, next 4 years

Talented Americans need to look at making manufacturing cool again in America

Move from law, finance, etc, to manufacturing. Too much talent focused on there

Tesla’s mission of electrifying the world through sustainable transport and energy

It’s inevitable that all transport will eventually be autonomous and electric, including aircraft

Loss of rebates or changes in policy won’t change that

Can’t be stopped, it will eventually happen, just like the internal combustion engine taking over

That’s the complete step-by-step replay of the entire earnings call. It’s a lengthy one, but there was a lot of information shared across all of Tesla’s pillars. There’s a lot to be excited about, from FSD to the next-gen vehicle, Optimus, the Robotaxi network, and more. These next few years will be huge for Tesla and we hope you’ll join us for the ride.

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