Ladies and gentlemen, thank you for standing by, and welcome to Tesla's Q4 2020 financial results and Q&A webcast. At this time all participants are in a 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 your speaker, Mr. Martin Viecha, Senior Director of Investor Relations. Please go ahead, sir. Thank you, Sherry. Good afternoon, everyone. Welcome to Tesla's Q4 2020 Q&A webcast. I'm joined today by Elon Musk, Zachary Kirkhorn, and a number of other executives. Our Q4 results were announced at about 1:00 P.M. Pacific Time in the update deck 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. Before we jump into Q&A, Elon has some opening remarks. Elon? Thank you. Just to recap the year, 2020 was a defining year for us on many levels. Despite a challenging environment, we reached an important milestone of producing and delivering half a million cars. I'd just like to, once again, thank the people at Tesla for an incredible effort. We delivered almost as many cars last year as we've produced in our entire history. Really, an incredible growth rate, and despite a very challenging 2020. My hat is off. It's such an honor to work with such great people at Tesla. For the year, we achieved free cash flow of nearly $2.8 billion after spending more than $3 billion on building new factories and other expenditures. We reached industry-leading GAAP operating margins in addition to positive net income and record cash flow. Regarding to capacity expansion, while we focused on execution, we continued to build a lot of new capacity. We started producing the Model Y out of Fremont and have almost reached full production speed. We ramped the Model 3 in Shanghai to more than 5,000 cars a week sustainably, and Shanghai continues to grow rapidly. We introduced the heat pump to all of our vehicles. We started and we're able to ramp to volume production at the single-piece castings for Model Y. This is where, for the first time in history, the entire rear third skeleton of a car is being cast as a single piece in the largest and most advanced casting machine ever made. We built the Model Y factory in China from start to finish in one year. We're also building Giga Berlin and Giga Texas, which we expect to start production later this year. Lastly, we built a battery cell factory in the Bay Area. Even though it is a pilot plant, its capacity is large enough that it would be in probably the top 10 battery cell factories on Earth, despite being a pilot plant. Regarding the new Model X, S and X, we're super excited to announce the new Model S and Model X Plaid are in production now and will be delivered in February. We've been able to bring forward the Plaid Model S and X. Model S will be delivered in February and Model X a little later. The Model S Plaid, we're actually in production now and we'll be delivering next month. This is a tri-motor Model S with a completely new interior. There are actually a lot of great things about this. I'll do another call about the Model S later. It's really a tremendous improvement over the prior version. The Model S Plaid will be the first production car ever that is able to go 0- 60 miles an hour in under two seconds. No production car ever has been able to get below two seconds 0 - 60. This is a luxury sedan that is able to go 0 - 60 in less than two seconds and will have the ability to seat up to seven people with the third-row seats. This is pretty nuts. This is faster, to be clear, than any car. It's not like it was a different type of car, like a two-door sports car, that was able to do that faster than this. This This is the fastest accelerating car ever made that is allowed to go on roads in history. Like I said, we'll start delivering it in a matter of weeks. Like I said, obviously, we'll get into details for the Model S changes maybe later this week or next. It's really better in many ways. We will be actually raising the price of Model S for this new model. If you bought the old model, just know the new model will be $10,000 more. Hopefully people aren't too upset if they bought the old model last month that this one's $10,000 more. Yeah, we think it's probably the best car of any kind at any price available in the world today. With regard to Full Self-Driving, we've made massive progress on Full Self-Driving. I recommend watching the videos of our public beta. We've got, I think, almost 1,000 people in the beta at this point, and with each successful release of the beta FSD software, it's really improving rapidly. I drive ladies' wheels. It's very common for me to have no interventions on drives that I do, including drives to places I've never been to. These are not pre-planned routes. The car's never been there before. It's more common than not for the car to have no interventions, even on a complex drive. Basically, I'm highly confident the car will be able to drive itself with a reliability in excess of humans this year. This is a very big deal. Thinking about how one justifies the value of the company being where it is. I think there is a way, just with back of the envelope math, to potentially justify it, where if Tesla ships, let's say, hypothetically, $50 billion or $60 billion worth of vehicles, and those vehicles become Full Self-Driving and can be used as robo- taxis, their utility increases from an average of 12 hours a week to potentially an average of 60 hours a week, if they're capable of serving as robo- taxis. That's roughly a 5x increase in utility. Even if you say, okay, let's just assume that the car becomes twice as useful, not five times useful, but merely twice as useful. That would be a doubling again of the revenue of the company, which is almost entirely gross margin. It would be like if you made $50 billion worth of cars, it'd be like having $50 billion of incremental profit, basically, from that, because it's just software. If that were the case, you have to do 20 PE on that, it's like $1 trillion, and the company's still high growth mode. I think there is a way to justify the valuation of the company where it is using just the cars and nothing else, cars with FSD. I suspect at least some number of investors are taking that approach. In conclusion, while 2020 was a turning point for Tesla in terms of profitability, we believe this is just the beginning. We think 2021 is going to be even more exciting and, you know, you don't know what to expect in a given year, obviously. Last year, there were many things we did not expect. Assuming that 2021 is a relatively normal year from an external standpoint, I think it's going to be a great year for Tesla. We've got many great new products coming out. We've got factories that are announced factories that are starting up production. It'll also make it easier having a factory in Berlin, one in Texas, that can, just from a logistics standpoint, Texas can help supply the eastern half of the U.S., and Berlin can help supply Europe. There are just fewer cars on boats, much less capital tied up with the cars that are on boats or being transported to customers. I think the fundamental efficiency of the company will be much better with at least having factories on each continent and having two factories in the U.S. I'm super excited about the future. Yeah, we look forward to making it happen. Thank you. Thank you very much. I think our CFO, Zach Kirkhorn, has some opening remarks as well. Yeah. Thanks, Martin. As Elon mentioned, 2020 has been an extremely successful year while managing through many unforeseen and unexpected challenges. On cash, we continue to generate strong free cash flows, reaching a record $1.9 billion in Q4, alongside growth and investment for future programs. Additionally, we've been able to reduce our use of debt and various working capital lines, including settling $2 billion of convertible debt in Q4, which will continue into Q1. For net income, we achieved our first calendar year and six sequential quarters of profitability. In addition, auto gross margin, excluding credits, improved from 2019 - 2020, despite reductions in ASP and inefficiencies from new product launches and transitions. On Q4 specifically, this was a noisy quarter. Let's unpack a few things. Stock-based comp increased, part of which is driven by the rise of the stock price over the course of our 2020 employee performance grant process, and a portion of which is unique to Q4 only. The impact of SBC increases is seen across both COGS as well as operating expenses. Automotive gross margin in Q4 was primarily impacted by two things. First, we invested in improving our products built in Fremont, including converting over to the new Model S and Model X, launching the single-piece castings on Model Y, and introducing heat pump on Model 3. Second, logistics and labor costs were impacted due to supply chain instability and pandemic inefficiencies. Adjusting for items such as these, as we do in our internal management views, we saw an improvement in auto gross margin. Our services and other P&L were impacted by many of the same factors just mentioned, including onboarding costs associated with new service capacity. What's most important here is that we've accelerated the growth in service capacity and will continue to drive capacity expansion as fast as possible. On energy gross margin, we saw an impact from Solar Roof related ramp costs and typical seasonality in the leased PPA business. OpEx as a percentage of revenue continues to reduce despite impacts from items mentioned, as well as increased investment in development of future products. The early settlement of our convertible notes resulted in an additional $100 million of interest expense for the quarter. All that being said, nothing has changed about our view that operating margin will continue to grow and remain industry leading. As we look forward, 2021 may be our most meaningful step forward yet as we see the benefits of longstanding investments in capacity and technology. The range of possible outcomes this year is wide, given the magnitude of launches. Thus, a few things we should keep in mind. We continue to expect a long-term volume CAGR of 50%, of which we may materially exceed this in 2021. As we increase production rates, volumes will skew towards the H2 of the year, and ramp inefficiencies will be a part of this year's story and are necessary to achieve our long-term goals. Specifically, for Q1, our volumes will have the benefit of early Model Y ramp in Shanghai. However, S and X production will be low due to the transition to the newly rearchitected products. Additionally, we're working extremely hard to manage through the global semiconductor shortage as well as port capacity, which may have a temporary impact. We will continue to invest heavily in Supercharging and service capacity while driving reductions on costs, including OpEx as a percentage of revenue. Global demand continues to outpace production and we're moving as quickly as we can with a focus on the long term. I look forward to providing updates on progress throughout the year. Thank you very much. Now we can jump straight into questions from Say Technologies. The first question from institutional investors is, what is currently holding Tesla back from being the market share leader in solar? Yeah, we're actually seeing tremendous growth in solar quarter-over-quarter last year. We had our best quarter since, I think, 2018 in Q4. We do actually expect to become the market share leader in solar and then go far beyond that. Unfortunately, there were a few years there where we had to devote the whole company to Model 3 production. We had to basically take the whole company, including a bunch of people that worked around solar, and have them work on cars. Now we've got available bandwidth. We're putting a lot of attention on solar, and it is growing rapidly. I think it will not be long before Tesla is by far the market leader in solar. Another really important part of the solar strategy is achieving an industry-leading cost structure, which then allows us to have industry-leading pricing. That's something that we've accomplished over the last year in terms of getting the cost structure in the place that it needs to be. As Elon mentioned, this is a really important part with industry-leading pricing to become the leader in the space. Yeah. Actually, an important part is achieving better integration between the Tesla Powerwall and the Tesla retrofit solar and Tesla roof. We're confident we'll have excellent integration with the Powerwall and Tesla solar, whether it's retrofit or the Tesla Solar Roof before the end of the year. I think we've got a good strategy. As Zach mentioned, we're focused on reducing the amount of time and complexity of the install, and we're making great progress in that regard. I think we'll have something that's really dialed in this year. Thank you. The second question is, could current owners get ability to transfer their FSD to their next vehicle? This would be a huge for loyalty and overall increased sales for vehicles that are offering more FSD sales on used vehicles. Unfortunately, we're not considering that at this time. We do actually offer a higher pricing for a car with FSD than one without FSD. I do think that the market currently undervalues the consumer market and arguably the stock market does probably undervalue just how good FSD is going to be. We're not currently planning on allowing it to get transferred. Thank you. We will be offering subscription pretty soon in the next month or two. That should address a lot of people's concerns for being able to get it. Thank you very much. The third question is, can you give us progress update on dry coating of the battery electrodes? At the Battery Day, Elon said, "I would not say this is completely in the bag as yet as the yields were low. Zachary? Yeah. Sure. It is true. The in-house cell manufacturing system we revealed at Battery Day contains new processes and equipment. We did expect some unknown unknowns and technical challenges to arise through the production ramp. The Kato team, however, has been able to solve each manufacturing problem presented to date and continues to improve yield and rate week-over-week and month-over-month as we move up the production S-curve. At the same time, the cell engineering team's refined designs, deepened understanding has reinforced our confidence in the dry process and 4680 design, meeting our performance and cost targets. From a capacity perspective, we have 10 GWh worth of equipment landed at Kato. The production staff is nearly all hired. Our material supply chain is established; the team is on track for full production ramp this year. Meanwhile, we've developed enough engineering confidence with our 4680 design and the production process and equipment to kick off manufacturing equipment and facility construction to support our 100 GWh 2022 goal. Okay. Thank you very much. The next question is, why are you confident Tesla will achieve Level 5 autonomy in 2021, and why is Dojo not necessary to get there? I guess I'm confident based on my understanding of the tech roadmap, and the progress that we're making between each beta iteration. Yeah. As I was saying, it's now not remarkable at all for the car to completely drive you from one location to another through a series of complex intersections. It's now about just improving the corner case reliability, and getting it to 99.9999% reliable with respect to an accident. We need to get it to better than human by a factor of at least 100% or 200%. This is happening rapidly because we've got so much training data with the robot cars in the field. The software is improving dramatically. We also write the software of course for labeling. Honestly, it is quite challenging. We're moving everything towards video labeling. It's all video labeling, all video inference. There's still a few of the neural nets that need to be upgraded to full video training and video inference. Really, as we've transitioned each net to video, the performance has become exceptional. This is a hard thing with the video, the labeling software that we wrote for video labeling, making that better has a huge effect on the efficiency of labeling. Of course, the holy grail is auto labeling. We're putting a lot of work into having the labeling tool be more efficient when used by a person, as well as enabling auto labeling where we can. The Dojo is our sort of training supercomputer. We think it may be the best neural net training computer in the world by possibly an order of magnitude. It is a whole thing in and of itself. This is something we could offer potentially as a service. If others need neural net training, we're not trying to keep it to ourselves. I think Dojo could be a whole line of business in and of itself. Then of course, for training vast amounts of video data, and getting the reliability from, say, 100% - 200% better than an average human to 2,000% better than an average human. It will be very helpful in that regard. Thank you. The next question is, what is Tesla's current gigawatt hour run rate of the 4680 cell production? How do you see this run rate evolving by mid-2021 or end of 2021? I think we kind of talked about that through. What we're saying is that the number to think about for this one is we've got 100 GWh total Tesla cells produced in 2022. It's not that important to look at the run-up to that because these things tend to improve exponentially. We are installing capacity in 2022 for 200 GWh a year, and we think probably we should be able to achieve 30% of our targeted design capacity in 2022. Yeah. Agreed, Elon, as you've said before, with the S-curve of production, you can be off a little bit on the initial part of the S-curve, and that makes a difference in absolute capacity by quite a bit one month to the next. Yeah. We are progressing up that S-curve as fast as we possibly can. Yeah, we don't see any showstopper. Thank you very much. One more question from retail investors. What is Tesla doing to improve service experience? Tesla had a reputation for outstanding customer service. Now it's impossible to even call a service center, and appointments are scheduled weeks out. Jerome? Yes. For us, best service, no service. We spend a lot of efforts trying to improve the quality and the reliability of our cars. In the last two years, the frequency of service visits are reduced by one-third. Customers have to come less frequently in service, which is really the goal, no service. If service has to take place, we're trying to make it as painless as possible. One big effort there is to increase mobile service, which is now more than 40% of all visits in North America. We're trying to push that to 50% this year. 50% of service visits last less than two hours. We're trying to service the cars very quickly so people can get their vehicles back on the road. In terms of service appointment, it continues to improve. We have actually 140 service centers right now in North America. For 100 out of those 140, you can get appointments in less than 10 days. We're going to make sure it's all service centers have a short wait time. We're accelerating, as Zach mentioned earlier, the pace of opening. In North America, we opened 11 centers in December, and we have plans to open 46 in the H1 of this year. That's what we're doing to improve service. In terms of phones, our emphasis is on the app. Really, we want all communications to go through the app, the Tesla app, and we're trying to move away from the phone. The app is much better than the phone. It can spark alerts directly from the car and schedule a service appointment. There is a written record of all communication between the customer and the service team. You can have pictures in there. You can take care of your payment without entering the credit card and doing all that stuff. You get updates on the service. There's even more features that are going to come in the coming months on the app. I think everybody will be happy, including the ability to spot where your service technician is and how far it is to coming from your car and what's going on there. We are investing everything on the app, I think just like most other companies as well. That's the way of the future. Thank you very much. Let's go to institutional investor questions. Question number one, what are the key milestones we need to achieve in order to evolve current FSD to a commercial Level 4 or Level 5 ride-sharing solution? Yeah. It really goes back to what I was saying a moment ago, which is we need to transition all of the neural nets in the car to video. In order to do that, the whole stack has to be changed to video. That means gathering video clips. This is actually surround video. You've got eight cameras operating simultaneously with synchronized frame rates. You've got basically eight-camera surround video. Then you've got to label basically everything in that video snippet, and then train against that, and then have those neural nets operate the car. This is coming from the past where we would label the neural nets would be a single camera, a single frame. No video and not combining the cameras. We went from single frame, one frame at a time, one camera at a time, neural nets to surround camera neural nets, where it would look at all eight cameras, but only one frame at a time, and now to where we include the time dimension, and that's video. I really just see this as a question of getting work done. We're getting it done, and you can see the results in the rapidly improving FSD betas that are released. We're also going to be expanding the FSD beta itself to include more and more people. From my standpoint, it looks like a very clear and obvious path towards a vehicle that will drive 100% safer than a person. Yeah, I really don't see any obstacles here. Yeah. Thank you. Thank you. The second question from institutionals is, "Does Tesla plan or expect to license any of its software applications, FSD and Autobidder in particular, to third-party OEMs? I think we're very open to licensing our software to third parties. We've had some preliminary discussions about licensing Autopilot to other OEMs. This is something we're more than happy to do. I think also, we need to probably do a little bit more work to prove that Tesla Autopilot is capable of full self-driving, which I think will become obvious later this year. We're more than happy to license that to other car companies. We're definitely not trying to keep it to be a Tesla-exclusive situation. I think probably the same goes for Autobidder. We haven't spoke as much about Autobidder, but the Tesla philosophy is definitely not to create walled gardens. We're going to allow other companies to use our Supercharger networks. Yeah, using our autonomy software and Autobidder and perhaps other things will be fine, too. Thank you. The next question is, key differences in product customer preferences, FSD strategy between China and the rest of the world. Do we need to do things differently to win the Chinese EV market? Well, we are currently the leader in the Chinese EV market. I think we must be doing something right if we're the best-selling electric car in China. That said, very few of our customers in China, I think maybe as low as 1% or 2%, actually have selected the FSD option. This is much lower than the rest of the world. We definitely need to make it work well in China. I think as soon as it works well in China, then we will have a great take rate for FSD. I find the customers in China, Tesla owners in China, are among the most discerning in the world. Their attention to detail is incredible. I'm confident that they will buy FSD as soon as it is working well in China. Hopefully that is later this year. Thank you. The next question is: Is it fair to argue that the best way to think about company's long-term earnings power is tied to profit per unit of battery capacity? Three terawatt hours target from Battery Day implies half of long-term battery capacity goes to storage, depending on what you assume for pack size on Elon's 20 million vehicle unit goal. Yeah, it is. The fundamental limit on electric vehicles right now in general is availability of cells. What's the output of battery cells in gigawatt hours, and you can't grow faster than that. Now, at Tesla, we've improved the efficiency of our cars dramatically such that you can actually get pretty good range even with the standard range battery pack. The Model 3 is pushing the high 200s, and with some subsequent continued improvements, we'll start to get to 300-mile range even with a standard pack and on the order of 500 kilometers. There's efficiency improvements in the car, but fundamentally, their growth is dependent on cell production. There's also a lot of other companies that have a need for cells. The reason Tesla is doing its own cell production is in order to accelerate the growth. It is not to make less use of our cell suppliers. I want to be really clear, Tesla wants to increase purchases from cell suppliers. We've been very clear with our cell suppliers, whether it be CATL or Panasonic or LG, that we will take as many batteries as they can produce. We urge them to increase their production, and we will buy as much as they can send to us. Obviously, there's some price limits on that because the car still needs to be affordable. I just try to be as clear as possible that our goal with making our own cells is not to disintermediate our suppliers. It is to supplement our suppliers. We want our suppliers of cells to increase their production in addition have our production that is simply taking up the amount beyond which they are either unable or unwilling to increase their production. It's an acceleration open about what the most that our suppliers say they can produce for us. Since the cell output drives vehicle output, and then probably the broad-brush stroke value of Tesla is just what's the cell output that drives vehicle output, and then at least double that for Autonomy revenue run-rate level. That's how you figure out the value of the company, I think, long term. Thank you very much. The next question is about 4680 cells, which we already covered in the retail section of this call. Let's go straight to the last question from institutional investors, which is, where are you in Cybertruck development? What are your expectations for Cybertruck deliveries in 2021? We finished all of the Cybertruck engineering. We're no longer iterating at the design center level or design level. We've got the designs fixed. We're getting to an order of the equipment necessary to make the Cybertruck work. We're actually going to be using even bigger casting machines for the rear body of Cybertruck because obviously it's a bigger vehicle and we've got a long truck bed that's going to support a lot of load. We'll be using an 8,000-ton casting press for the rear body casting, of course, the 6,000 ton for Model Y. 6,000 ton was the biggest casting press in the world, 8,000 ton will be quite a bit bigger than that. I think it's going to be an incredible vehicle. If we get lucky, we'll be able to do a few deliveries towards the end of this year. I expect volume production to be in 2022. Thank you very much. Now we can start with questions in the queue. Thank you. Our first question will come from Colin Rusch with Oppenheimer. Please go ahead. Thanks so much, guys. Can you talk a little bit about the regulatory environment for FSD and how you're seeing that play out? It's a bit of a moving target right now and you guys are leading the way here, but we'd love to understand how those conversations are going and how you see that impacting the rollout of FSD throughout the balance of this year and into next year. Okay. Zach, do you want to start that or Jerome? What we're seeing right now in the U.S., for example, is a pretty dynamic space, it's overall not particularly limiting on a rule basis. What we're going to expect is to have to work with regulators to demonstrate really, really high reliability, as Elon said before. The rest of the world's fairly dynamic. In Europe, we see a general slowdown, generally not reaching past Level 3 right now, with some impetus to start working on new working groups to reach past that. China's showed an interest in working on Level 4 or even Level 5 later this year. We expect a pretty dynamic 2021 in the regulatory space. We have leadership in the U.S. looking for manufacturers to demonstrate really good launches and really high reliability before releasing to wider and wider groups. Thanks, guys. Just a quick follow-up around inflation on some of the materials markets. Obviously, there's a lot going on as low interest rates flow through the basic materials space. Can you talk a little bit about the supply chain and how you're mitigating some of your exposure around some of your raw material costs? This is Jerome. Yeah. For supply chain, the first priority now is to deal with the disruptions from COVID and the shipping, in particular, boats between Asia and North America. We're also looking forward to pricing, and we're watching this very closely for all the components. We are entering a series of long-term agreements with preferred suppliers to ensure that not only we're going to have enough quantity to support the growth, 50% CAGR, as Zach mentioned earlier, but also good pricing with appropriate sharing of the risks. Thank you. Our next question will come from Dan Levy with Credit Suisse. Please go ahead. Hi. Good evening. Thank you. Two questions, one on 2021 and just one on capital. First on 2021, any expectations for what we should see on regulatory credit sales? The second question is on capital. Obviously, you've raised a lot of capital in 2020. What should we think about the use of those funds beyond just covering some of the maturities? Can you just give us a sense of what the elevated liquidity does and doesn't buy? Meaning, to what extent does elevated capital enable you to accelerate plans on building capacity or expanding vertical integration, accelerating timing on Full Self-Driving features? Those are the questions. Thank you. Sure. On the regulatory credit sales side, this is always an area that's extremely difficult for us to forecast. 2020 regulatory credit sales ended up being higher than our expectations. It's difficult to give guidance on that. What I've said before is that in the long term, regulatory credit sales will not be a material part of the business. We don't plan the business around that. It's possible that for a handful of additional quarters, it remains strong. It's also possible that it's not. Most of our regulatory credit revenue from Q4 was not lined up prior to the beginning of the quarter. These were discrete deals that were struck over the course of the quarter. I wish I could give you more on this, Dan. It's a space that's extraordinarily difficult for us to forecast. On the second side, with respect to capital, a couple of things that we're thinking through there. As I mentioned in my opening remarks, debt reduction is an important thing that we're focused on now. Early conversions, these are things we don't have a choice on. We did around $2 billion of that in Q4. We currently have $1.4 billion that we expect to go out in Q1 as a result of early conversions or conversions on convertible debt. That number may increase, and so debt reduction is important. That's helpful on interest expense as well. We are also using the money with respect to our investments in future capacity. What we're able to do now that we haven't had the opportunity to do in the past is as we're building capacity, particularly in Austin and Berlin, we can build that capacity with the expectation of what the end state of capacity will be, pulling forward some of those investments rather than incrementally adding capacity as we go along. This is an important part in terms of capital efficiency that we haven't had the luxury to do in the past, and it's great to be able to have the liquidity to focus on that. More broadly, as Jerome was touching on, service expansion is really important to the future strategy of the company. As you saw in our Q4 numbers, the expansion of service centers and mobile service from Q3 - Q4 increased quite a bit and was also quite a bit higher than the first part of the year. We're able now to make investments there and also in the Supercharging network to get ahead of future demand, which will cost us more in the near term, but is what the right long-term thing is for our customers and the company. Thank you. Our next question will come from Alex Potter with Piper Sandler. Please go ahead. Great, thanks. Was wondering, you mentioned how you'd like to increase your purchases and sales from suppliers. Does this require them to also have the capability to build structural 4680 cells of the sort that you're putting in these newer iterations of vehicles? No, it does not. Although we are talking with them about making the 4680 form factor, but it is not required. For example, the new S currently uses the 18650 form factor, so they just inward that cell. I think we'll continue to use that form factor for at least a few years. We will, over time, be retiring the form factors and trying to move to a consistent form factor. It is not a requirement that we place upon our suppliers because it would just result in fewer cells. It's better for us to deal with the complexity of different cell form factors than insist on a single form factor for our suppliers today. Like I said, over time, it will make sense to have a consistent form factor. Okay, makes sense. One additional, maybe qualitative question on capacity expansion. You've mentioned in the past, access to dollars is one thing, access to human beings that are sufficiently qualified is another. Have you run up against any issues on that front that would potentially limit your growth in any way? Thanks. That is one of the things that limits growth is, or limits the growth rate. This doesn't limit the ultimate size, it limits the growth rate, which is what the rate at which we can onboard great people and get them trained in the right areas. You certainly can't instantaneously, if you've got a factory that has 20,000 employees, you can't just hire 20,000 people instantly. They're usually doing something else. They've got to transition from whatever they were doing or move from some other part of the country. There's a certain amount of time required for that. That said, we do think that we can maintain a growth rate in excess of 50% per year for many years to come. At least for 50% per year for many years to come. I think this year we may track to a fair bit above 50%, but we don't want to commit to that, but at least that's what we're at there. The same again next year, it appears to be meaningfully above 50%. Thank you. Our next question will come from Joseph Spak with RBC Capital Markets. Please go ahead. Thanks. Elon, back in 2018, you tweeted about electric vans and how it could be interesting to work with Daimler and Sprinter. We haven't really heard of anything since, but in the meantime, we've seen a lot of activity in that electric van and last mile space from a number of established players and startups. I know you said that you have a lot of projects on the table, but can you provide us an update of your thoughts on this market, and is it something you're interested in? I think Tesla is definitely going to make an electric van at some point. The thing to bear in mind is that there is fundamentally a constraint on battery cell output. If one is not involved in manufacturing, it's really hard to appreciate just how hard it is to scale production. It's the hardest thing in the world. Prototypes are easy. Scaling production is very hard. A big part of the reason, the main reason we have not accelerated new products is, for example, the Tesla Semi, is that we simply don't have enough cells for it. If we were to make the Semi right now, we could easily go into production with the Semi, but we would not have enough cells for it right now. We will have cells for it, enough cells for Semi when we are producing the Tesla 4680 in volume. For example, Semi would use typically five times the number of cells that a car would use. It would not sell for five times what a car would sell for. It would not make sense for us to do the Semi right now, but it will absolutely make sense for us to do it as soon as we can address the cell production constraints. The same would go for a van. Okay, thank you. Maybe if I could dig into your past on one more item. About two years ago at the Autonomy Day, you stated that you're working on the next gen Tesla chip, which was about two years away. Is there any update on that front? Yeah, to be clear, the software still does not fully use the capabilities of the FSD Version 1 Computer. It is really just an incredibly powerful computer, and I'm personally certain that you can achieve Full Self-Driving with safe Level 5 success with just using the Full Self-Driving Version 1 Computer. The Version 2 is roughly about three times as powerful, and this would need to be paired with higher resolution cameras. It requires a bunch of things to change simultaneously. We have not been rushing the Version 2 for the chip. It's coming along well, and it's in good shape, since we can achieve FSD Full Self-Driving with the current system, it would actually be a distraction right now if we were to introduce the Full Self-Driving Tesla FSD chip 2 because it would set us back quite a bit on software. Software is the critical path to full self-driving. I wouldn't worry too much about that. That's an improvement, but not a game changer to FSD 2. Getting the software to work and getting all the neural nets to the video, that's the game changer. Thank you. Our next question will come from Emmanuel Rosner with Deutsche Bank. Please go ahead. Thank you very much. My first question is about your in-house cell manufacturing efforts. In addition to building up capacity, some of the goals you highlighted was to cut the pricing or the cost by about 50%, boost the range by about 50% over a number of years. Wanted to know if your initial efforts are trending in that direction. What is sort of like the timeline to achieve these goals? Maybe related to this, how are you thinking about the timeline for the cheaper Tesla, the entry model, eventually? I think we feel very confident about achieving those targets, let's say, over a three-year timeframe. Our group, it's not like year one. Three, maybe four years, give ourselves a little room, but for three or four years, I'd say. Yeah. We put together the trajectory in the Battery Day, and we're on that trajectory still. I think that's probably the best reference for the cost trajectory that we. Yeah. We're aspiring to do better than what was presented at Battery Day, but we're confident of at least doing what we presented at Battery Day. Thank you. Our next question will come from Ben Kallo with Baird. Please go ahead. Hey, guys. Thank you, Elon. Congrats to the whole team. We're trying to put together all the breadcrumbs. If I remember correctly, going back, you know, 10 years, you talked about when you had a mass market car on the road that you would step down as CEO, and be a chief architect. Then, we have you going to Hawaii to see Larry, and the X.com, and I'm trying to put it all together. There's a lot of questions there. Thank you. Sure. Well, I expect to be CEO of Tesla for several years. I think there's still a lot that I'm super excited about doing, and I think it would be hard to leave a lot of these great projects halfway or probably partway done. Yeah, I do expect to be running the company for several years into the future. Now, obviously, nobody is or should be CEO forever. The sheer amount of work required to be CEO of Tesla is insane. I think I do probably more, well, I definitely do more technical work than is typical for a CEO. It would be nice to have a bit more free time on my hands, as opposed to just working day and night from when I wake up to go, when I go to sleep, seven days a week. It's pretty intense. I think the mission isn't over yet, and we've still got a long way to go before we can really make a dent in the world on accelerating the advent of sustainable energy. I mean, the goal of Tesla from the beginning has been to accelerate sustainable energy. If you say, like what percentage of cars on the road are electric today, it's still very tiny, like on the order of 1%, or I think less than 1% of the total fleet worldwide. That's still have a long way to go for current order of 1% of the fleet is electric. There's also a tremendous way to go on solar power, although it's exciting to see the advent of very cost competitive wind and solar and geothermal. And of course, we need a large volume of stationary battery packs. Basically, the three legs of a sustainable energy future are sustainable energy generation via solar, wind, geothermal, and hydro, and a few others. I'm actually not against nuclear fission. Actually, I think nuclear fission, with a well-designed reactor in a situation that is not subject to bad weather or seriously bad weather, it is a good thing to do. The second thing you need is you need stationary storage, you need batteries, because most renewable energy is intermittent. The wind doesn't blow all the time, the sun doesn't shine all the time. You need a lot of batteries. They need to be very long-lasting and high cycle life. You need electric transport. If you have those three things, we've got a very bright future with respect to energy and the environment. A long way to go on that and still very much right up to your comment. Fantastic. Let's take the last question, please. Thank you. Our last question will come from Gene Munster with Loup Ventures. Please go ahead. I was happy to see the update on the timing of the Semi and I had a couple of related questions. First, since semi trucks typically travel predictable highway miles, will Tesla Semi be the first to achieve full autonomy? I think that's quite likely, yes. Same track? Yes, I can't imagine. I'm not sure who would be number two, but yeah. Highly likely, yeah. Okay. It's the exact same part numbers on the Semi than it is on the Tesla car. There's no difference. Yeah. It's true. Yeah. As it is, we need to modify the software parameters change for Autopilot or for self-driving, because it needs to know if it's in a Model 3, Model Y, Model X, or Model S. We just inform the vehicle or inform the full self-driving brain that it is now in a semi-truck. Would it need to be retrained then as part of that? No. I think you'll have different control functions because there are turns that you could do in a regular car that you cannot do in a Semi. You don't want to try to parallel park this thing on the street in the city. It needs to know its limitations being a giant truck. Makes sense. My follow-up question was related to if you could just help explain why battery electric will win versus hydrogen cell fuel tech? Yeah. Honestly, I've had this question one million times just for regular vehicles, even back in the early Roadster days, even before we had the Roadster out. People were saying that somehow hydrogen is going to be a better means of energy storage in a car than batteries. It's like, this is just really not the case. Hydrogen, it's number one on the periodic table. It's got very low density. It's got lower density as a liquid. It's like Styrofoam level density as a liquid. Then it's only a liquid very close to absolute zero, so it's really not realistic to keep it as a liquid. You want to have it as a high-pressure gas. That has even lower density. You need a gigantic fuel tank volumetrically, and it's got to be very high pressure. It's a big pain in the ass, basically. If somebody was going to use an alternate chemical energy storage mechanism to hydrogen, I'd say they should use propane or something like that, or methane. Those would be way better than hydrogen. Having it be a fuel cell just adds even further complications to the situation. It's just crazy, basically. We're extremely confident that we could do long-range trucking with batteries. The math works out. You just take, say, watt hours per kilogram of currently available cells and say, "Okay, what weight would you need to go, let's say, 500 miles? To what degree does that affect your payload?" It's like, okay, if you do it right, you basically have no effect on your payload, or almost nothing, and you can have a long-range truck. Jerome, do you want to add to that? No, I agree with everything. We see also an increase on the regionalization of trucks. I think it will be perfect. The Tesla Semi will be perfect for it, yeah. Yeah, I'm looking forward to having some additional ones on the road very soon. Basically, we do not see any issues with creating a compelling long-range truck with batteries. Apart from cell supply. Cell supply is the only thing. Cell supply is it. It's going to be awesome. Yeah. All right. Thank you very much. Unfortunately, that's all the time we have today. Thanks for all of your great questions, and we will speak to you again in about three months. Thanks again. All right. Thanks All right. Thanks a lot. Bye. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.