Good afternoon, everyone, and welcome to Tesla's Third Quarter 2023 Q&A webcast. My name is Martin Viecha, VP of Investor Relations, and I'm joined today by Elon Musk, Vaibhav Taneja, and a number of other executives. Our Q3 results were announced at about 3 P.M. Central Time in the update that we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please use the raise hand button to join the question queue. Before we jump into the Q&A, Elon has some opening remarks. Elon? Thank you, Martin. So just a Q3 recap. Our last quarter was impacted by downtime for global factory upgrades that will help us reduce cost per vehicle, as well as increase production. We remain focused on three main objectives, which is the cost reduction of our products, investments in artificial intelligence and other growth projects, like Optimus, and continued free cash flow generation. Regarding vehicle cost, our team was able to reduce the cost per vehicle further in Q3, despite headwinds from factory idle cost and ramp-up of new factories, and we believe there's still meaningful room for improvement there. Regarding Autopilot and AI, our vehicle's now driven over 500 million miles with FSD Beta, Full Self-Driving Beta, and that number is growing rapidly. We recently completed a 10,000 GPU cluster of H100s. We think probably bring it into operation faster than anyone's ever brought that much compute per unit time into production, since training is the fundamental limiting factor on progress with Full Self-Driving and vehicle autonomy. We're also seeing significant promise with FSD version 12. This is the end-to-end AI, where it's photon count in, controls out. Or really, you can think of it as there's just a large bit stream coming in and a tiny bit stream going out, compressing reality into a very small set of outputs, which is actually kind of how humans work. The vast majority of human data input is optics from our eyes. So we are like the car, photons in, controls out, with neural nets, just neural nets in the middle. It's very interesting to think about that. We will continue to invest significantly in AI development, as this is really the massive game changer. And I mean, success in this regard, in the long term, I think, has the potential to make Tesla the most valuable company in the world by far. If you have fully autonomous cars at scale and fully autonomous humanoid robots that are truly useful, it's not clear what the limit is. Regarding energy storage, we deployed 4 GWh of energy storage products in Q3. And as this business grows, the energy division is becoming our highest margin business. Energy and service now contribute over $500 million to quarterly profit. The Cybertruck, I know a lot of people are excited about the Cybertruck. I am too. I've driven the car. It's an amazing product. I do want to emphasize that there will be enormous challenges in reaching volume production with the Cybertruck, and then in making the Cybertruck cash flow positive. This is simply normal for when you've got a product with a lot of new technology or any brand-new vehicle program, but especially one that is as different and advanced as the Cybertruck. You will have problems proportionate to how many new things you're trying to solve at scale. So I just want to emphasize that while I think this is potentially our best product ever, and I think it is our best product ever, it is gonna be require immense work to reach volume production and be cash flow positive at a price that people can afford. Often people do not understand what is truly hard. That is why I say prototypes are easy, production is hard. People think it's the idea, or you make a prototype, you design a car, and as soon as they're designing a car, just anyone can do it. It does require taste, it does require effort to design a prototype. But the difficulty of going from a prototype to volume production is like 10,000% harder to get to volume production than to make the prototype in the first place. Then it is even harder than that to reach positive cash flow. That is why there have not been new car startups that have been successful for 100 years, apart from Tesla. So, you know, I just want to temper expectations for Cybertruck. It's a great product, but financially, it will take, I don't know, a year to 18 months before it is a significant positive cash flow contributor. I wish there was some way for that to be different, but that's my best guess. You know, so it's really the demand is off the charts. We have over 1 million people who have reserved the car, so it's not, it's not a demand issue, but we have to make it, and we need to make it at a price that people can afford. Insanely difficult things. In conclusion, we continue to focus on ramping production while maintaining a positive cash flow, and we continue to target and expect to have around 1.8 million vehicle deliveries, as stated earlier this year. The Tesla AI team is, I think, one of the world's best, and I think it is actually by far the world's best when it comes to real-world AI. I'll say that again. Tesla has the best real-world AI team on Earth, period, and it's getting better. And lastly, I wanted to thank all of our employees who are making a lot of extra effort during uncertain times. Thank you very much for your hard work and the impact that you're making. Thank you very much, Elon, and our CFO, Vaibhav, had some opening remarks as well. Thanks, Martin. Our vehicle deliveries in Q3 outpaced production, and we had yet another record quarter of profitability in our energy business. Congratulations to the Tesla team for their continued focus on operational excellence as we navigate through a period of economic uncertainty, higher interest rates, and shifting consumer sentiment. As Elon mentioned, our Q3 operational and financial performance was impacted by planned downtimes for our factory upgrades. This was necessary to allow for further factory improvements and production rate increases. Despite such factory shutdowns, our cost per vehicle decreased to approximately $37,500. We saw sequential decreases in material cost and freight. Reducing the cost of our vehicles is our top priority. On the operating expenses front, R&D expenses continued to rise to Cybertruck due to Cybertruck prototype builds and pilot production testing, combined with spend on AI technologies like Full Self-Driving, Optimus, and Dojo. We have and will continue to make investments in these areas, and hence our capital expenditure and R&D will continue to grow in the near term. However, our focus is to continue making investments through positive cash flow from operations. This year itself, we have generated operating cash flows of approximately $8.9 billion and free cash flows of approximately $2.3 billion. Our other businesses are becoming more prominent on a standalone basis, with energy business leading the charge primarily from the growth in megawatt deployments. Our services and other businesses on a year-on-year basis also continue to show positive momentum as we benefit from our growing fleet. As regards our pricing strategy, in addition to what we have shared before, I want to elaborate that most car buying happens with one or other form of financing, and hence we also view pricing in terms of monthly cost for the customer. Therefore, as interest costs in the U.S. have risen substantially, it has required us to adjust the price of our vehicles to keep the monthly cost in parity. We've tried to offset such adjustments via our focus on reducing costs. However, there is an inherent lag in cost reductions, which in turn impacts margins. To that extent, we recently announced a partner vehicle leasing program in the U.S., whereby you can get a standard range Model Y for as low as $399 a month. In conclusion, as we navigate through a challenging economic environment, we're focused on reducing costs, maximizing delivery volumes, and continuing making investments in the future, in particular, AI and other next-generation platform. We believe this strategy positions us well for the long term. Once again, I would like to thank the Tesla team for their efforts in the last quarter. Thank you very much. Now let's go to investor questions. The first investor question comes from Craig: How many Cybertruck deliveries do you anticipate for 2024? It's difficult to make an accurate guess at this point. Going back to what I said earlier, that the ramp is going to be extremely difficult. And, like I said, it's. There's no way around that. If we just try to do some copycat vehicle design, of which there are literally 200 models that are slight variations on a theme in the combustion engine world, just distinctions without a difference, then, you know, it's really not that hard. But if you want to do something radical and innovative and something really special, like the Cybertruck, it is extremely difficult because there's nothing to copy. You have to invent not just the car, but the way to make the car. The more uncharted the territory, the less predictable the outcome. Now, I can say that if you say, "Where will things end up?" I think we'll end up with roughly 250,000 Cybertrucks a year. But we're not. I don't think we're gonna reach that output rate next year. I think we'll probably reach it sometime in 2025. That's my best guess. Thank you. The second question is: Can you provide a progress update on the 4680 cell, particularly progress towards performance improvements and cost savings outlined on Battery Day? Thank you. Sure thing, Martin. 4680 cell production in Texas increased 40% quarter-over-quarter. Congrats to the Texas team for producing their 20 millionth cell off of line one. Texas is now our primary 4680 facility. We're heavily focused on quality. Scrap is down 40% quarter-over-quarter. With the increased volume and yield improvements, cell costs consistently improved month-over-month within the quarter, although we have a lot more work to do to achieve our steady-state goals, and that is our priority. The Cybertruck cell, with 10% higher energy than our Model Y cell, started production on line two in Texas. This quarter, we convert to building 100% Cybertruck cells to simplify and focus the factory as we ramp all four lines in phase I over the next three quarters. Phase II of the Texas 4680 facility is currently under construction. The additional four lines incorporate further capital efficiencies over phase I, and our target is for them to start producing in late 2024. Lastly, in Kato, we're retooling to enable large-scale pallet runs of our next-generation cell designs. Kato's long-term goal is to be the launchpad for new cells, one generation ahead of our mass production facilities, enabling faster iteration and smoother ramp-ups of new designs. Thank you. The next question from institutional investor is: Could you please provide an update on capacity expansion plans for companies, factories in Berlin and Austin, and the opening schedule of Gigafactory Mexico? Berlin and Austin factory, the current priority is actually maximize the output from our existing lines by laser focusing on efficiency improvement. As always, maintaining a high quality and reducing per unit cost will be as critical as growing the production volume. For Mexico, we're working on infrastructure and factory design in parallel with the engineering development of the new production that will be manufactured there. That's all I can share for now. Yeah, in Mexico, we're laying the groundwork to begin construction, and doing all the long lead items. But I think we wanna just get a sense for what the global economy is like before we go full tilt on the Mexico factory. I'm worried about the high interest rate environment that we're in. It's. I just can't emphasize this enough, that for the vast majority of people, buying a car is about the monthly payment. And as interest rates rise, the proportion of that monthly payment that is interest increases naturally. So, that's. If interest rates remain high or if they go even higher, it's that much harder for people to buy the car. They simply cannot afford it. So, we are tracking, I believe, at this point, for Model Y to be the best-selling car on Earth, but not just in revenue, but in unit volume. If you compare that to the other vehicles that are, you know, number two or number three and whatnot, they cost much less than our car. So, you know, we're just hitting law of large numbers situations here. I know people want us to advertise, and we are advertising. I think there's something to it. There is something to be gained on the advertising front. I don't think it's nothing. But informing people of a car that is great, but they cannot afford, doesn't really help. So that, that's, that is really the thing that must be sold, is to make the car affordable or, you know, the average person cannot buy it for any amount of money. Or they simply can't afford it. They can't afford it. So this is a big deal. Okay, thank you very much. The next question is: When do you expect Model 3 Highland to be available in the U.S.? I just wanted to address that, unfortunately, we don't answer product-related questions and timings on earnings calls, so let's go to the next one. Current sell- side consensus assumes that Tesla will deliver 2.3 million vehicles in 2024, representing 28% growth versus 2023 guidance. Is this growth rate achievable without any mass market launches in 2024? And when does Tesla expect to return to its 50% long-term CAGR? Thanks for the question. When we look at 2024, there are a lot of moving pieces. Elon just talked about what is happening in the macroeconomic environment. So we're focused on growing our volumes in a very cost-efficient manner and are carefully reviewing all our options, and we'll be able to provide a much more meaningful update at our next earnings call. Yeah, I mean, the risk of stating the obvious, it is not possible to have a compound growth rate of 50% forever, or you will exceed the mass of the known universe. So but I, I think we will grow very rapidly and much faster than any other car company on earth by far. ... Thank you. Next question is, do you have an approximate timeline in mind for the Robotaxi, driven or non-driven? What excites you most about how this project is progressing? Well, the Robotaxi is, like, necessarily non-driven. I guess I'm very excited about our progress with autonomy. The end-to-end, nothing but nets self-driving software is amazing. Drives me all around Austin with no interventions. So, you know, it's clearly the right move. You know, so it's, and it's really, really pretty amazing. And obviously, that same software and approach will enable Optimus to do useful things, and enable Optimus to learn how to do things simply by looking. So, you know, extremely exciting in the long term. As I mentioned before, you know, given that economic output is number of people times productivity, if you no longer have a constraint on people, effectively, you've got a humanoid robot that can do as much as you'd like, your economy is quasi infinite or, you know, infinite for all intents and purposes. And I don't think anyone's gonna do it better than Tesla, not by a long shot. Boston Dynamics is impressive, but their robot lacks a brain. They're like the, you know, Wizard of Oz or whatever. Good memes. Yeah, lacks a brain. You also need to be able to design the humanoid robot, you know, in such a way that it can be mass-manufactured. At some point, the robots will manufacture the robots. Now, obviously, we need to make sure that, you know, there's a good place for humans in that future, and we do not create some variant of the Terminator outcome. So we're gonna put a lot of effort into localized control of the humanoid robot. So you know, basically anyone will be able to shut it off locally. You can't change that, even if you put like a software update, you can't change that. It has to be hard-coded. Thank you. The next question is, why was the price dropped on FSD if it is getting better and Robotaxi is expected so soon? Well, we just wanted to make it more affordable, ask more people to try it. Yeah, I think over time, the price of FSD will increase proportionate to its value. So I would regard the current price as a kind of a temporary low. Thank you. The next question is, again, on FSD. Mercedes is accepting legal liability for when its Level 3 autonomous driving system, Drive Pilot, is active. Is Tesla planning to accept legal liability for FSD, and if so, when? Well, there's a lot of people that assume we have legal liability, judging by the lawsuits. We're certainly not being let off the hook on that front, whether we'd like to or wouldn't like to. So- I mean, I think it's important to remember for everyone that Mercedes's system is limited to a few roads in Nevada and some certain cities in California. It doesn't work in the snow or the fog. It must have a lead car, marked lanes, only 40 mi/hr. Our system is meant to be holistic and drive in any conditions, so we obviously have a much more capable approach, but with those kind of limitations, it's really not very useful. You know, I think some people understand the profundity of the Tesla AI system, mostly very, very, very few. It's basically baby AGI. It has to understand reality in order to drive. So baby, baby AGI. Thank you. The next question on Optimus: Will Optimus be working on Gigafactory lines next year? If so, how many would you guess will be deployed? I think at this point, we are not ready to discuss details of the Optimus program, but we will provide periodic updates online. So as you can see, you know, Optimus, a year ago, could barely walk, and now it can do yoga. So a few years from now, it can probably do ballet. Sounds good. And the last question from investors is, Neural net path planning represent a significant advance in capability and safety for FSD? What steps is Tesla taking to make this technology available outside the U.S.? Yeah, our approach has been to try to get it, the more places we try to make it work, like, the harder the problem is. So the reason we don't do it in all countries simultaneously is that it would take much longer to make it work anywhere at all. So that's why it's currently just North America. And also for most parts of the world, you have to get approval before deploying things, whereas in the U.S., you can deploy things at risk or at least take liability for what you deploy. So it's whereas most countries require some sort of extensive approval program. So we only want to go through that extensive approval program when we think it's kind of ready for prime time in that country. I apologize that it's not in those countries, but we keep finding ways to make it better. And it really would—it needs to drive such that it even unsupervised significantly exceeds the probability of injury of a human. Like, significantly better, you know, a lower probability of injury than a human by far. I think we're tracking to that point very quickly. Obviously, in the past, I've been overly optimistic about this. The reason I've been overly optimistic is that the progress tends to sort of look like a log, a log curve, which is that you have kind of rapid initial improvements, and that if you were to extrapolate that sort of rapid, fairly linear rate of improvement, you get to self-driving quite quickly. But then the rate of improvement curves over logarithmically, and starts to asymptote. That's now happened several times. I would characterize our progress in real-world AI as a series of stacked log curves. I think that is also true in other parts of AI, like LLMs and whatnot. Series of stacked log curves. Yeah, each log curve gets higher than the last one, so if you keep stacking them, if you keep stacking logs, eventually you get to FSD. Thank you. Let's now go to analyst questions. The first question comes from Will Stein, from Truist. Will, please go ahead and unmute yourself. Great. Thanks so much for taking my question, and thanks for all the updates today. We learned earlier in the call. It sounds like you don't think the truck will ramp to significant volume until its third year of production. Should we have a similar anticipation for the ramp of the next-gen platform, or is there any reason that we should be maybe more optimistic or pessimistic about the ramp profile there? Thank you. Yeah, I mean, to be clear, it's not really the 3rd year of production. It's kind of like the 18th month of production is roughly my guess. So it's just that they happen to, it'll happen, is that the, it starts this year, spans next year, and gets to 2025. So technically, there are three calendar years in there, but there's actually only 18, 18 months, not three years. I would be very disappointed if it took us, and that, that would, that would be shocking if it took us three years. Mm-hmm. But 18 months from initial deliveries to have to reach volume and reach prosperity with an immense... I can't tell you how much. The blood, sweat, and tears level required to achieve that is just staggering. I've been through it many times, and then here we go again. You know, Similar path for the next-gen platform? I mean, there's, like, unique complexity to Cybertruck. Yeah. Yeah. I mean, Cybertruck is, It's beyond. Yeah. I mean, we dug our own grave with Cybertruck, you know? Nobody in general, I find, digs their own grave better than themselves. You know, it is. You know, Cybertruck is one of those special products that comes along only once in a long while. And special products that come along once in a long while are just incredibly difficult to bring to market, to reach volume, to be prosperous. It's fundamental to the nature of the newness. So now the sort of high volume, low cost smaller vehicle is actually much more conventional. It's- Yeah, in terms of, like, the technologies we're putting into it, we didn't have to invent how to bend full, hard, stainless steel or have 9,000-ton castings or the largest hot stamping in the world or new- Yeah ... high voltage, low voltage architectures. It's learning from everything we've done, so we hope it will ramp faster than the, you know, the technology. We also went through, like, a ruthless simplification exercise. Yeah, we did. There's significantly less parts, and- Yeah ... you're only as fast as the slowest part, and if you have less, less of those, that means you could probably be faster.... Yes, exactly. I mean, that said, it's, you know, it's still, still pretty revolutionary in how we're gonna build it. It is. Yes, it's a-- the manufacturing approach for the high-volume small vehicle is revolutionary. But not revolutionary quite in the same way as the Cybertruck. I think it will be quite a fast ramp. So it-- as Elon was saying, we're doing everything possible to simplify that vehicle in order to achieve a units-per-minute level that is unheard of in the auto industry. Yeah, I mean, the simplification makes it easier to automate. It also makes it lower cost. Yeah. It's intrinsically lower cost. Yeah. Let's be clear, it'll be cool, but it's utilitarian. It's not meant to be, you know, fill you with, you know, awe and magic. It can get you from A to B. But it'll be still beautiful, but it's utility. That's not 14 in of travel on its suspension. Yeah, as an example. Yeah. So, I mean, the Cybertruck has a lot of bells and whistles. All right, thank you very much. Let's go to Pierre Ferragu from New Street Research. Hey, can you hear me fine? Yes. Yes. Hey, I have, like, a follow-up question on FSD and pricing and adoption. So I agree with you that as FSD improves, we should see its value increasing. But I guess, like, the ultimate values of FSD, which is to be able to handle, like, a robotaxi, is not going to necessarily interest everybody, and you have a bit of a degraded version that would be like a chauffeur service, where the car drives by itself, but you still have to be in the car and around. And then there is, like, the hands-on, eyes-on version of the service. And I guess, you know, there should be, like, much lower cost, lower feature kind of variants of the service that could have a very large penetration on your install base, and more expensive one that would remain at a lower penetration level. So I'm just wondering if you're taking that... And last but not least, like, the simplest version of FSD are available and are going to work from a technical perspective, probably before, like, the ultimate robotaxi version can work, if ever. And so I'm wondering how you take that into account in how you're thinking, like, the financial contribution of FSD over time, and whether you could evolve your pricing along that kind of tiers to increase adoption. Yeah, I mean, a fully autonomous vehicle, I think, Pierre, you know, sort of the economics of a fully autonomous vehicle are truly astounding in a positive way. When you look at passenger vehicles today, they only get about 10 hours-12 hours of usage per week. That's, you know, if you drive an hour and a half a day on average, that's roughly 10 hours a week out of 168 hours. And then there's also, you've got to have parking and insurance. You've got to take care of the car. It's like there's a lot of overhead. So I mean, it, yeah. Yeah, it's like, the economics of the system are just insanely positive. If given that the car... Like, all of the cars we're making, and have made for a while, we believe are capable of full autonomy. So then if you, if you're able to, say, increase the utility of that car by, I don't know, a factor of 5, which slowly means that you're being used for maybe 50 hours a week, out of 168. So it's still not as you're still assuming that still assumes less than a third of the hours of the week are doing something useful. You've increased the value of that by five, but it still costs the same. Like, you have something... Then we're a hardware company with software margins. Pierre, do you have a follow-up? Yes. I have actually a follow-up on a different topic for you, Vaibhav, if that's okay. It's about, like, your gross margin in the quarter. Could you give us a sense of, like, in how the gross margin evolved sequentially? How much was the impact of idle costs? How much was, like, the sequential benefit, I imagine, of production ramping at Berlin and Austin? And then I saw, like, this massive jump in energy storage, a very strong positive surprise. So if you can give us the background on that and tell us, you know, how we should think about that gross margin going forward. Pierre, thanks for that question. So in terms of, you have a few different aspects of your question. So if I just look at from Q3 perspective, you know, obviously, factory idle time had an impact. It did impact. I mean, I won't give you the exact percentage, but it had decent impact for the quarter. And, you know, when you look at the other pieces which we are trying to do, we did see certain of our other factories ramping up pretty well, right? And they actually contributed pretty well to the margin for this quarter. In fact, one of the factories came pretty close to, in terms of per unit cost, to where we are for one of our other established factory, which is Fremont. So that, that was a positive in the quarter. When it comes to energy margins, you know, Megapack deployment was the key driver there, and that product has done well. I mean, on the Costco also, we've been able to do a lot there. But I do want to caution that, you know, Megapack deployments are a bit lumpy. So yes, we had a great quarter this period, but depending upon where we are trying to deploy that product in different markets, you would see periods wherein there would be downward pressure on deployment because of us trying to get the product to that place where- Yeah, product in, product in transit. Yeah. Yes. Yeah. Okay, thank you very much. Let's go to Rod Lache from Wolfe Research. Rod, feel free to unmute yourself. Thanks. Really nice to see the rate of vehicle cost improvement despite the downtime that you took. You've taken now about $2,000 out of the average vehicle cost over the past year. Can you give us maybe a sense of the rate of improvement that you see from the changes that you alluded to, the factory changes you alluded to? Is there a way maybe to convey the speed of improvement on your existing product from here? And then related to that, can you share the timing of your next-gen, the, the lower-priced product that you talked about earlier this year? Yeah. So just in terms of product margins, there are lots of puts and takes when you look into this. You know, there are certain things which we control, and there are certain things which we don't control. You know, we expect that we'll get some benefits from our cost reduction efforts, which are all underway. But on the other hand, we just finished our factory upgrades late in Q3. Some of these factors are still in the early ramp phase in Q4. We're still not up to where we want those factors to be, so they'll impact in the near term. Plus, like Elon mentioned, we're gonna be ramping Cybertruck, which is gonna be another headwind, which we'll be dealing with. On top of all that, you know, there's overall uncertainty in the macroeconomic environment, which even makes it harder to predict precisely as to where we'll land. But just this is something which, you know, it's, it's an evolving thing, which we're observing every day and reacting to it on a daily basis. I would just say that on the cost reduction efforts, like, we are not. We are unflagging in our pursuit of additional cost downs for 2024. We do have, like, a pipeline of them, and work on both the engineering side and the factory operations side. You know, our intention is to, like, maintain or exceed the trend that you saw. We're trying as hard as we possibly can. The timing of the next-gen product, can you share that? Not at this time. Okay. And just as a follow-up, obviously, price is also a driver of demand, but it, that's obviously not happening in a vacuum. And you mentioned that... I think you mentioned it at some point during this call, that you're also maybe hitting the law of large numbers on some of your products. Can you just share how you're thinking about price elasticity just at this point and in this macro environment, and any thoughts along those lines? I think that there's very significant price elasticity. I mean, to be totally frank, if our car costs the same as a RAV4, nobody would buy a RAV4, or at least they're very unlikely to. It's worth noting that a lot of these incentives, like the, you know, tax credits and whatnot, but they're actually very difficult for the average person to access 'cause most people do not have $10,000, you know, or even $7,500 burning a hole in their bank account. Large number of people are living paycheck to paycheck and with a lot of debt. They've got credit card debt, mortgage debt. So yeah, it's that's reality for most people. It's, it's sometimes difficult for, people who are, you know, high income earners, you know, and I'd say high, it'd be like someone who's, who's earning over $200,000 a year, to understand what life is like for someone who is earning $50,000 or $60,000 or $70,000 a year, which is most people. So, so like for, for a lot of people, like these, these tax credits, just they, they can't, they can't front $7,500 for, you know, 18 months or, or even six months to get for, for the tax credit, and they actually don't in some cases even have that $7,500 in taxes. So, you know, it's a so it's really just the vast majority of people is, how much money do they have to pay immediately, and how much per month? That's it. And you can stop right there. And a car is so much more expensive than a RAV4 when you look at it that way. Yeah, and one other thing which I'll add, you know, when you look at, you know, car buying in general, we're trying to get to the next set of EV adapters, and they use- Well, not an EV adapter, just- Next- Who wants a great car? Exactly. It's not a. You know, sometimes you get these like, you know, honestly, I'd say it's like somewhat correlates with the why doesn't everyone work from home crowd. I'm like, I mean, this is like some real Marie Antoinette vibes from people who say, "Why does everyone work from home?" Like, what about all the people that have to come to the factory and build the cars? What about all the people that have to go to the restaurant and make your food and deliver your food? It's like, what are you talking about, you—I mean, how detached from reality does a work from home crowd have to be? While they take advantage of all those who do—who cannot work from home. So, I mean, you have to say, like, "Why did I sleep in the factory so many times?" Because it mattered. So I just can't emphasize enough how, again, how important cost is. It's not an optional thing for most people. It is a necessary thing. We have to make our cars more affordable so people can buy it. And I, you know, I keep harping on this interest thing, but, I mean, it's just. It just raises the cost of the car. I mean, we're looking at an internal analysis, which I know we think is more or less on track, that when you look at the cost or the price reductions we've made in, say, the Model Y, and you compare that to how much people's monthly payment has risen due to interest rates, the price of the Model Y is almost unchanged. If you factor in the change in interest rates. Yes, right. Which is – that's what I'm trying to say: the thing that matters is the monthly pay. It's how much money do you have to put down, and do they literally have that in their bank account, or will a check bounce? Yeah. And then what is the monthly payment? And it doesn't matter how if that monthly payment is principal interest or whatever. It's just a number, and that number has to not cause their bank account to go negative. That's it. So, you know, going from near zero interest rates to the current very high interest rates, the actual monthly payment is basically the same. It's just a bunch more of it is going to interest. And there are some incremental challenges beyond that, which is the difficulty of getting credit at all has increased, and so the number of people who simply cannot get credit, period. Even if they've got a job and everything's solid, they, you know, the banks are, you know, a little gun-shy on handing out credit, given that a bunch of them kicked the bucket earlier this year. Yeah, there's also just fewer options. Even if they want to hand out credit, there's a fewer banks to go to. It's like, does your bank still exist? Yeah. Well, if your bank does not exist, you have to establish a relationship with a new bank. And, you know, so a lot of regional banks are, you know, died and, I mean, even Credit Suisse. I mean, geez, that's, that was a shocker, you know, when a, like a 160-year-old-ish Swiss institution that doesn't exist anymore. That's mind-blowing. I think there's still quite a few shoes to drop on the bad credit situation. I mean, commercial real estate obviously is in terrible shape. You know, credit card debt has been rising significantly. The credit card interest rates are usurious, right? Over 20% interest rates, meaning like, which over time is just it becomes obviously extremely punishing. 'Cause if somebody's paying 20% interest on their credit cards, it means they cannot pay them off. And if you cannot pay them off and you're still accruing interest at 20%, that's headed to a bad place. Thank you. Let's go to next question from George from Canaccord. Thank you for taking my question. Just to focus on the cost per vehicle, you know, coming down in future quarters, as you discussed in your written remarks, I'm curious as to what the levers of that could be. Is it more scale, more factory utilization? Is it material cost reductions? Are there things like Gigac asting? I mean, can you just kind of give us some data points to give us confidence that that's gonna come down over time? And if I can sneak one in, please, there are press reports, and I know how perilous it is to believe some of these, but they say that you've included radar as an option in some Model Ys in China, and I'm just here to ask if that's true, and if so, why? Thank you. We've not included radar. No. We have a Tesla-designed radar as an experiment in the Model S and Model X. That's it. We'll see whether that experiment is worth it. But there are no plans to integrate radar into 3 and Y. You know, just as humans drive well, and in fact, an excellent human driver can drive with amazing safety simply with their eyes. The car will far exceed the average human safety just with vision, far, far, far. Because, I mean, the car is looking at all directions at once, and we don't have eyes in the back of our head. So, and the computer never gets tired and never gets distracted, get drunk, hopefully. Radar is, you know, it's not what really matters is how much does it affect the probability of an accident? In order for the radar to be effective, you have to be able to do radar-only braking, or you have to do actions that are radar only. Otherwise, you get this disambiguation problem between vision and radar. That's why we actually turned off the radar in cars historically, that we had to. All Model 3 and Y used to have radar, but we turned it off 'cause the radar actually generated more noise than signal. Now, the Tesla-designed radar is a high-resolution radar that has some potential to be useful, but the jury is still very much out on whether that is in fact the case. So- On the cost saving? On the cost question, I guess from the vehicle side, like, you know, as Drew mentioned earlier, we are always trying to engineer our products to be cheaper to make and more efficient to make. That comes obviously on the engineering side as we come up with new innovations, but as well on the supply chain side with our partners. We work with them to automate some of their lines, remove their, you know, bottlenecks and their high costs as well. On the logistics side, getting parts to the factory. It's not... Go ahead. Yeah. It's not like a one thing that- Yeah You have to- Logistics efficiency. You have to attack cost everywhere. Yeah. And we do it ruthlessly at all times. Operations efficiency, all of the above. Yeah, I mean, I would say there's a whole laundry list of things which we are chasing. We internally call it the cost attack, where we're literally going line by line and saying: "How can we make it better?" It's a grind. It's a grind. It's time. A game of pennies. It's a game- Game of pennies. It's like Game of Thrones, but pennies. It's... I mean, first approximation, if you've got a $40,000 car, and roughly 10,000 items in that car, that means each thing on average costs $4. So in order to get the cost down, say, by 10%, you have to get $0.40 out of each part on average. It is a game of pennies. We play it willingly. We play it- Yeah ... religiously. We've, we've done it many, many times. And, you know, even something as simple as, like, a sticker, you know, like there's too many stickers internally in the car that nobody ever sees. There's, you know, something as simple as a QR code. You might think, well, putting a QR code on a, on part one, or just put them, put them on there. It's like, well, are we actually gonna use that QR code? Costs $0.01. Yeah, exactly. And then inevitably, sometimes the QR code doesn't go on properly, or you can't read it properly, and then it stops the line. Freaking- Costs more than a penny. Yeah, absolutely. Awesome. Um, so- Just chipping away with a... I mean, it is trying to—it is—it does feel like digging a tunnel with a spoon at times. Very much escaping prison. Yeah. You know, on top of it, like we said, you know, we did some factory upgrades, so we expect volume to go up. That would also bring some savings from higher production. But then on the flip side, we're gonna be ramping a new product, like Cybertruck, which we talked about. So yeah, so those are the real puts and takes, which we are working through. Yeah, but there, there's not, like some accidentally, you know, some gold brick of gold that we've found in the car, unfortunately. And it's... You know, we're, we're trying to be very rigorous about improving the quality and capability of the car because, you know, it, it's like any fool can reduce the cost of a car by making it worse, and just, you know, deleting functionality and capability and... But that, that's what I call this, sort of the any fool. It's like if you want to, like, lose weight, and you say, "Well, I need to lose over 15 pounds right away," well, you could chop your arm off, but then you're sitting there with one arm, you know, and you're still fat. So sort of like, yeah- You gotta work on it. Yeah. You actually have to eat less food and workout. That's the actual way, and- Doctors advice. Yeah. It's not, you know, super fun 'cause food is delicious, and I personally am not, I don't love working out. I know some people do. I wish I did, but I don't. Unless moving the mouse consists of working out, in which case, I love moving the mouse. All right. Let's go to Colin Langan from Wells Fargo. Colin? Colin, can you unmute yourself? Oh, sorry about that. You hear me now? Yes. Yeah. Oh, great. Thanks for taking my question. You said in the commentary that you're not going full tilt on the plant in Mexico until there's signs that the economy is strong. Can you continue at a 50% CAGR without that plant? And where would that come from? And any color on what you mean sort of not going full tilt, could that plant get delayed indefinitely, or what are we kind of talking about? No, we're definitely making the factory in Mexico. We feel very good about that. We put a lot of effort into looking at different locations, and we feel very good about that location. And we are gonna build a factory there, and it's gonna be great. The question is really just one of timing, and yeah, you know, I'm just gonna be a broken record on the interest front. It's just interest rates have to come down. Like, if interest rates keep rising, you just fundamentally reduce affordability. It is just the same as right, increasing the price of the car. So I just don't have visibility into—if you can tell me what the interest rates are, I can tell you when, you know, when we should build the factory. We are gonna build it and, and, I mean, I think we'll start the, you know, initial phases of construction next year. But I am still somewhat scarred by 2009 when both General Motors and Chrysler went bankrupt. So while that's now 14 years ago, it's, that is seared into my mind with a branding iron. 'Cause, you know, Tesla was just hanging on by a thread during that entire time, and with the I mean, and we closed off a financing round in 2008 at 6 P.M. on December 24, Christmas Eve, and if we had not closed that financing round, we would have bounced payroll two days after Christmas. So we actually closed that round on the last hour of the last day that it was possible. Stressful, to say the least, and then barely made it through 2009. So I'm like, I wanna just I don't wanna be going at top speed into uncertainty. A lot of wars going on in the world, obviously, as well. So, and we have room here, like in Giga Texas. You said we still have room in this building. It's not full with Cybertruck and Model Y, and, you know, there's plenty of growth opportunities still to have inside the building where our team already is. We also have 2,000 acres here. Yeah. There's also a large bunch where we're actually only occupying a tiny corner of the land that we have. So, you know, we could technically do all the scaling necessary just here. So, I mean, personnel is our biggest challenge in that the Greater Austin area only has. Generously, the Greater Austin area only has 2 million people. So people are moving here, and they're willing to move here, but there is somewhat of a housing crisis. They gotta live somewhere. So yeah, Okay. I got- I don't know. I mean, I'm just curious. Like, I'm not saying things will be bad. I'm just saying they might be, and I think, like, Tesla is an incredibly capable ship, but it is. But if, you know, we need to make sure, like, if the macroeconomic conditions are stormy, you know, you should—even if the best ship is still gonna have tough times, the weaker ships will sink. We're not gonna sink, but, you know, even a great ship in a storm has challenges. Now, that storm will apply to everyone, not just us, and not just the auto industry, but apply to everyone, I think. So, you know, apart from necessary sort of staples like food and stuff. You know, so I just... I don't know. If interest rates start coming down, we will accelerate. All right. Actually- If anybody's got any guesses on this, you know, I'd love to be less wrong. And I apologize if I'm perhaps more paranoid than I should be, 'cause I might- that might also be the case. 'Cause I have PTSD from 2009, big time. And then 2017 through 2019 were not a picnic either. That was very tough going. So, you know, the auto industry is also somewhat cyclic- Mm. Because, you know, people can hesitate to buy a new car, and if there's uncertainty in the economy. So, it's, you know, car companies do very well in good economic times, and they have but don't do as well in tough economic times. So it's just... You know, whereas if somebody's selling bread, then I think, you know, that people still need to have bread. Yeah. Okay. Yeah, you need bread. We need food all the time. But new car, you don't have to have bread smith. Especially if there are wars going on, and then that impacts your sentiment. Yeah. I mean, if people are reading about wars all over the world, if there's a... You know, buying a new car tends to not be front of mind. All right. Unfortunately, that's all the time we have today. Thank you very much for all of your good questions, and we'll see you again in three months. Thank you very much.