Tesla Inc (TSLA) — Q1 2026 Earnings Call Transcript

Good afternoon, everyone, and welcome to Tesla's First Quarter 2026 Q&A Webcast. My name is Travis Axelrod, Head of Investor Relations, and I'm joined today by Elon Musk, Vaibhav Taneja and a number of other executives. Our Q1 results were announced at about 3:00 p.m. Central 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 1 question and 1 follow-up. Operator provided instructions. Before we jump into Q&A, Elon has some opening remarks. Elon?

Thank you. So I think we've got a very exciting year ahead of us with 2026. We're going to be substantially increasing our investments in the future so we should expect to see a very significant increase in capital expenditures, but I think well justified for a substantially increased future revenue stream. And obviously, Tesla is not alone in this. I think you've seen most, if not all, certainly the major technology companies substantially increasing their capital investments. And we're going to be doing the same. I think it's going to pay off in a very big way. So we're investing in and improving our core technologies: battery, powertrain, AI software, AI training, chip design, manufacturing, laying the groundwork for significantly increased manufacturing production. We are also strengthening our supply chain across the board: batteries, energy, AI, silicon, everything, and laying the groundwork, like I said, for what we expect to be a significant increase in vehicle production in the future and, of course, a very significant increase, well, actually releasing Optimus. But increasing our internal production for testing and then probably being able to have Optimus be useful outside of Tesla sometime next year. As you've heard me say a few times, I think Optimus will be our biggest product, not just Tesla's biggest product ever, but probably the biggest product ever. And I remain convinced of that conclusion. So on our vehicle side, it's always, I think, worth noting that a Tesla car is incredible value for money, and they're all autonomy-ready depending on what part of the world you're in. The supervised full self-driving is getting extremely good. We have just started production of Cybercab, and we'll begin production of SemiTruck soon. And I should say, whenever you have a new product with a completely new supply chain, new everything, it's always a stretched out S-curve. So you should expect that initial production of Cybercab and Semi will be very slow, but then ramping up and going kind of exponential towards the end of the year and certainly next year. And in fact, we'll be ramping up production of all vehicles and all factories to the best of our ability through the balance of this year. On the energy front, the United States and the whole world will need a lot of energy storage to meet growing electricity demand. Demand for our Megapack is very strong, and we're excited to begin production of Megapack 3 later this year in our new world-class factory outside Houston. For full self-driving and Robotaxi, version 14.3 was a major architectural update. And we have a whole pipeline of major improvements to full self-driving that, we believe, will lead to unsupervised full self-driving being available anywhere in the world that it is legal to do so. And then there's a version 15, hopefully later this, hopefully by the end of this year, but certainly by early next year. And that will be a complete overhaul of the software architecture, and will run on AI4. At that point, we're really just increasing the safety level of FSD above human safety level, even more. Meaning I think even within version 14, we're significantly safer than human, but v15 will take that to another level. We've expanded Robotaxi to Dallas and Houston using the same software source in the Bay Area. And the limiting factor for expansion is really rigorous validation, making sure things are completely safe. We don't want to have a single accidental injury with the expansion of Robotaxi. And we have, to the credit of the team, not had a single one to date. And Optimus, we're preparing Fremont for starter production later this year with Optimus. Again, totally new supply chain, totally new technology. So therefore, the production S-curve is always very slow in the beginning, but we'll ramp up to significant numbers next year. And we're constructing a second Optimus factory at our Giga Texas location. And that will probably start production around summer next year. The V3 Optimus design is almost ready to demonstrate. I think we want to just make sure it's polished. It works functionally, but there are some aesthetic elements that need to be finalized. And I think probably middle of this year, we should be able to show it off. We're also a little hesitant to show V3 off because we find our competitors do a frame-by-frame analysis whenever we release something and copy everything they possibly can. So I think there's some value to not showing new technology until it's close to production. Congratulations again to the Tesla AI chip team for taping out AI5. That's going to be a great chip. I think probably the best AI inference chip for edge compute that exists. And certainly, I think the best value for money. The team did a great job. And we already have a lot of momentum for designing AI6, and we've begun to discuss ideas for Dojo 3. So this is all very exciting. We've also finalized plans for the chip fab, the research chip fab on the Giga Texas campus, and we'll start construction of that this year. In conclusion, Tesla is working on a lot of large, ambitious projects. They're all very challenging, but I think they're going to be revolutionary. And that's what the team does best: solve the hardest problems and build amazing products. And I'd like to thank the Tesla team for all the hard work and thank you to all of our supporters.

Great. Thank you very much, Elon. And Vaibhav also has some opening remarks.

Thanks, Travis. So 2026 has had an interesting start not just for us, but I think the world in general. On the autos business, we have seen a resurgence in demand in EMEA, in certain countries like France and Germany showing over 150% quarter-over-quarter growth in deliveries. In APAC, we witnessed growth in South Korea and Japan, again, in terms of deliveries. Even out here in the U.S., we have seen slight growth in terms of quarter-over-quarter deliveries. On the order backlog front, we ended the quarter with the highest Q1 order backlog in over 2 years. While the recent increase in gas prices has had a positive impact on the order rate, this improvement started before the uptrend in gas prices. This is due to the work done by the Tesla team in bringing more compelling and affordable vehicles to market. Ten years back, when we launched Model 3 in the U.S. with a promise of $35,000 starting price, which if you adjust today for inflation translates to about $48,000 in today's dollar terms, the starting price of Model 3 today is way less than that while the product is way more compelling from where it started. Given this setup, we're focused on increasing our overall production volume, something that we already started in Q1. This volume increase is evidenced by the Giga Berlin reaching a record output of over 61,000 units in Q1. We plan to keep growing volumes further, not just in Berlin, but across all our factories. Our biggest limiter continues to be our battery pack capacity, and we are actively working on resolving that. Auto margins, excluding credits, improved sequentially from 17.9% to 19.2%. Note that we have had certain one-time benefits from warranty true-downs around $230 million and some relief on tariffs. We have not realized any benefit from the recent Supreme Court ruling on IEEPA tariffs as there is still a lot of uncertainty around the final outcome. Both tariffs and sustained high interest rates continue to add to our automotive cost. Interest rate subvention costs are recognized upfront. If interest rates continue to rise, our cost of subvention will continue to impact auto margins. On the FSD adoption front, we continue to see improvement, reaching nearly 1.3 million paid customers globally. The bulk of the growth came from subscriptions, while upfront purchases only increased 7% as we removed the purchase option in some markets in Q1. We recently received approvals for our FSD in Netherlands. This sets us up well for an EU-wide approval later in Q2, and we're just gated by how the regulators go about it. Additionally, we've also received approvals in China. The broader approval is still not there, but we're working with the regulators in the country, and we're hoping that we can get approval by Q3. With these approvals coming through, we expect broader adoption of the software in the existing fleet and incremental demand for our vehicles. With all this in mind, we have evolved our vehicle sales strategy, where we now emphasize FSD as a product and vehicle as only the delivery mechanism. As we have noted previously, the energy storage business is inherently lumpy tied to customer deployment timelines. In Q1, we deployed 6 to 8.8 gigawatt-hours of energy storage, a 38% sequential decline. However, we still expect 2026 deployments to be higher than 2025. We set yet another record with gross margins in this business over 39.5% due to some one-time benefits from certain tariff recognitions of more than $250 million which we had paid in prior quarters. On a normalized basis, we continue to expect margin compression from here with increasing competition and tariff impacts. As previously discussed, tariffs in this business can have outsized impacts as most of the battery cells are procured from China. Our order backlog for this business is robust, and we're doing our best to build not just based on existing demand but also unexpected demand. Services and Others improved sequentially from 8.8% to 9.2%. This includes a collection of efforts meant to support our customers like service centers, used cars, spare supercharging, parts sales, insurance and even our Robotaxi business. We're making deliberate investments in the infrastructure to help the Robotaxi in the future. We grew the Robotaxi fleet quarter-over-quarter, and we expect to keep ramping the fleet as we accelerate and get into other geographies. On operating expenses side, we did increase sequentially from a full quarter stock-based compensation expense for the 2025 CEO compensation plan for which one milestone is still deemed probable. Additionally, our spend on AI-related initiatives, including expense on development of our own AI5 chip and new products like Cybercab, Semi, Optimus and Megablock, etc., continue to be at elevated levels, and we expect this trend to continue for the full year 2026. Net income was impacted from mark-to-market charges on our Bitcoin holdings, which depreciated 22% as compared to the last quarter and the unfavorable impact of FX, primarily from our large intercompany foreign exchange. On free cash flow, we ended the quarter with just over $1.4 billion. As Elon mentioned, we are in a very big capital investment phase, which is going to start now and will last a couple of years. So based on that, our current expectation for 2026 is over $25 billion of CapEx. And just to remind you, we are paying for six factories which we're going to bring into operation. Some have already started, some will go into operation later part of this year. We're further increasing our investment in AI-related initiatives, including the AI infrastructure to support Robotaxi and the launch of Optimus. We've already started placing orders for the research semiconductor fab in Austin and for solar manufacturing equipment. While this may seem like a lot and will have the impact of negative free cash flow for the rest of the year, we believe this is the right strategy to position the company for the next era. We'll make such investments in a very capital-efficient manner. We are actively working on our mission of building a future of amazing abundance. However, that requires not just a lot of investment, but an immense amount of execution. The future is going to be great, and the whole Tesla team is rising to the occasion to make this a reality. I would like to end by thanking the Tesla team, our customers, investors and vendors for having confidence in us on this journey. Thanks.

Thank you very much, Vaibhav. Now we're going to go to investor questions, starting with questions from say.com. The first question is: when will we have the Optimus 3 reveal, which we already touched on. But the rest of the question is: when will Optimus production start since we ended the Model X and S production earlier this year? And then what's the expected Optimus production rate exiting this year? And what are the initial targeted skills?

Well, as I was saying, what we found is that when we've unveiled various Optimus versions, our competitors literally do a frame-by-frame analysis and copy everything we're doing. So I think we want to push the Optimus 3 unveil maybe closer to production. We're assuming start of production is somewhere around late July or August. And to inject some reality into these questions, since they do not fully understand what happens with the production line: the last S and X vehicles will be produced in early May. But you have to look at the entire upstream portion of the production line. You start with sales, battery packs, motor production, all the parts production. We've been dismantling the S and X production line starting with the more basic parts. As you get to larger subassemblies, you dismantle from the small parts first, not from the final assembly. So the final assembly line will be dismantled next month after the last S and X vehicle is finished. You can't dismantle some gigantic production line overnight. It takes at least a few months to do so. Then you've got to install a new production line, provide all of the wiring and communication, and test out the machines of the new production line for Optimus. That also takes several months. Frankly, if we're able to go from shutting production on one line, dismantling that entire line, reinstalling a whole new line and turning that on in a matter of four months, that is an insanely fast speed. I don't think any other company on earth has ever done that before, just to put things into perspective and inject some reality into the situation. I don't know what the production rate of Optimus will be this year. It is impossible to predict these things. When you have a brand-new product on an entirely new production line and you have 10,000 unique items, all of which have to go right into ramp production, it will move as fast as the least lucky, lowest, dumbest part in the entire 10,000. Optimus is a completely new product with a completely new production line. So it's literally impossible to predict, except that I think it will be quite slow for us as we iron out the 10,000-plus unique items that have to be solved for Optimus to reach volume production. Initial skills will be simple; we'll start with basic skills in the factory and then build up from there.

Great. Thank you, Elon. The next question is: what milestones are you targeting for unsupervised FSD and Robotaxi expansion beyond Austin this year? And how will that drive recurring revenue?

Well, we certainly hope to have unsupervised FSD or Robotaxi operating in, I don't know, a dozen states by the end of this year. Initially, we're taking a very cautious approach to the rollout here. We haven't had any injuries and certainly no fatalities to date with the unsupervised FSD and Robotaxi expansion. We want to keep it that way. I don't think unsupervised FSD or Robotaxi revenue would be super material this year, but I do think it will be material probably in a significant way next year.

Great. Thank you very much. The next question is: when do you expect FSD unsupervised to reach customer cars?

I'm just guessing here, but probably in the fourth quarter. It's difficult to release this to everyone everywhere all at once because we do want to make sure that there aren't unique situations in a city that are particularly complex intersections or unsafe intersections or bad road markings or a lot of weather challenges. So I think we would release unsupervised gradually to the customer fleet as we feel like a particular geography is confirmed to be safe.

Great. And the next question is: how will hardware 3 cars reach unsupervised FSD?

Unfortunately, hardware 3 does not have the capability to achieve unsupervised FSD, and I wish it were otherwise. We did think at one point it would, but compared with hardware 4 it has only one-eighth of the memory bandwidth. Memory bandwidth is one of the key elements needed for unsupervised FSD; it is generally a critical requirement for AI. If you are doing aggressive transformer workloads, memory bandwidth becomes the limiting factor. For customers who have bought FSD, we are offering essentially a discounted trade-in to upgrade cars to AI4 hardware. We will also offer the ability to upgrade the car by replacing the computer, and unfortunately the cameras must also be replaced to move to hardware 4. To do this efficiently, we will need to set up micro-factories or small factories in major metropolitan areas, because doing it only at service centers would be extremely slow and inefficient. We basically need many production lines to make the change. Over time, it will make sense for us to convert all hardware 3 cars to hardware 4 because that is what enables them to enter the Robotaxi fleet and have unsupervised FSD.

And for what it's worth, in the meantime, we are going to also release a V14 version for Hardware 3. This will be a distilled version of the same V14 software that we released for Hardware 4, and people should be able to start the drive from park state and basically have all the features that V14 for Hardware 4 has. That's expected to come end of June.

Great. The next question is: what enabled you to finish the AI5 tape-out early? And were there any changes to the original vision? Last week, Elon said AI5 will go into Optimus and the supercomputer, but one month ago said it would go into the Robotaxi. Has AI5 been dropped from the vehicle roadmap?

The reason AI5 tape-out finished early was because the team worked incredibly hard to make it happen. Over time, we gathered a lot of momentum. We did have to work every weekend for six months straight, including every holiday. It was a lot of sacrifice by our team, and I was there myself every weekend. Fortunately, we didn't encounter any major mistakes that required pushing out the tape-out. So the team just did a great job and worked incredibly hard. Yes, I do expect that AI5 will go into Optimus and into the data center because it's looking like we'll be able to achieve unsupervised self-driving with AI4 that is far greater than human safety levels, which means AI5 is not immediately needed in the car. At some point, I think it will make sense for us to switch to AI5 in the car, but there's not a pricing issue to do so. At some point, AI4 hardware will get old and we'll want upgrades. We are planning an AI4 upgrade to use newer generation RAM. So it will go from 16 gigabytes to, I think, 32 gigabytes per SoC — a total of 64 gigabytes — and probably a roughly 10% increase in compute and improvements in memory bandwidth. So that's AI4.1 or AI4+ which probably goes into production middle of next year. It depends on Samsung doing the modifications for us, so it depends on when they're able to finish those modifications and bring it to production.

Great. The next question is: now that FSD has been approved in the Netherlands and is expected to launch across Europe this summer, can you discuss your Robotaxi strategy for the region?

We're probably jumping the gun on Robotaxi in Europe since it took us an immense amount of time just to get supervised self-driving approved in Europe. We don't control regulators. We push as hard as we can, but it's ultimately up to the governments in Europe and the EU to decide what to do. As it is, we've only been approved in Netherlands; we expect to be approved in a lot of other countries. The supervised FSD goes to Brussels for EU review in May. Obviously, the next thing beyond that is to aim for unsupervised self-driving or Robotaxi in Europe. I actually don't know what the timeframe for that is and it will be somewhat dependent on the regulators as to when that approval would take place.

From a technology standpoint, what we deployed in Netherlands and Europe is the same exact architecture and the same training procedure and so on, except we had more Europe-specific data. I suspect that same approach will be true for unsupervised FSD as well. Whatever we use to solve it in the U.S. will work in other places and the rest of the world, too, once we add data from the local regions.

Great. The next question is: given the recent NHTSA incident filings, can you update us on the Robotaxi safety data? If safety validation remains the primary bottleneck, why not deploy thousands of vehicles to accelerate removal of the safety driver?

Ashok, do you want to take that?

Yes. We are increasing the size of our QA fleet, but we also want to use the customer fleet to give us useful metrics so that we can scale safely. As Elon mentioned, we are absolutely focused on safety. So far, we have zero incidents, and that's what the NHTSA filing also shows. In addition to safety, we are also solving some of the so-called scaling issues. For example, you do not want the Robotaxi to be stuck, blocking intersections, and you don't want it dropping people off at slightly incorrect locations and so on. We are simultaneously solving the long tail of safety by monitoring the metrics across the entire Tesla customer vehicle fleet, which is close to driving 10 billion miles on FSD in the next few weeks, and also scaling up the amount of QA fleet that we have across the entire U.S. to accelerate our safety validation while also scaling the other factors that can throttle the increase of unsupervised vehicles.

All right. The next question is: is v14.3 still the last piece of the puzzle to enable large-scale unsupervised FSD and Robotaxi? Or do we have to wait until v15?

I think 14.3 is the last piece of the puzzle for unsupervised FSD. Now the question is degrees of safety and convenience. We have a lot of known improvements — major architectural improvements — that we know would improve the probability of safety significantly. So it doesn't make sense for us to deploy unsupervised FSD Robotaxi at very large scale when we know there are software improvements in the pipeline that would improve safety. We're going to want to finish writing that software, validate it and release it before going to very large-scale unsupervised FSD. Depending on what large scale means: we are, as I mentioned earlier, doing unsupervised FSD in several cities, and we'll expand to probably a dozen states or more later this year. So it depends on your definition of large scale. But I do think it wouldn't be right for us to go to very large scale when we know v15 will provide further safety benefits.

Yes. I'd like to note that the version of Robotaxi that's running in Austin, Dallas, Houston, et cetera, are essentially 14.3 variants, and it's obviously safe — that's why we're able to launch in those cities — and we continue to expand based on the v14 base for a while until v15 lands. V15 is going to be a major upgrade.

Yes.

Great. Thank you. The next two questions we've already addressed about Robotaxi rollout and the data that we're observing. So we will end on the last question, which is: what is Tesla doing to scale the energy generation business with solar? Residential roof deployments have stalled. Will Tesla move to regional solar and battery farms, perhaps coupled to superchargers? Will we deploy solar through utilities?

Yes. The overall U.S. residential solar market is going through a bit of a correction after the loss of the homeowner tax credit last year, but we still see strong demand shaping up for the second half of the year. Tesla introduced a lease product this year that allows us to capture the tax credit ourselves and offer competitive pricing for homeowners. We have also debuted our own solar panel with superior performance in aesthetics as well as our own best-in-class mounting system that gives us a fully integrated home energy ecosystem. We strongly believe that solar and storage markets globally will continue to grow at both residential and utility scale, and we will continue to invest in that growth.

Great. Thank you, Mike. So now we're going to move on to analyst questions. The first question is going to come from Will Stein at Truist. Will, please feel free to unmute yourself when you're ready.

Can you hear me?

Yes. Yes, we can.

Considering the various parties involved in the Terafab project, I'm hoping you can provide some details for investors about which party is going to take responsibility for each aspect of that project: funding it, designing it, building it, operating it, taking production and the like. I would love to hear some more details.

Yes. So we're still working out the details of the Terafab deployment. In the near term, Tesla will be building the research fab on our Giga Texas campus. This is something we expect to be probably a $3 billion-ish initiative and capable of maybe a few thousand wafers per month, but it's really intended to try out ideas. The research fab is intended to test some ideas for improving the fundamental technology of how chips are made and some new physics we'd like to test, but we also want to test the ability to see if something is working in production. You need a few thousand wafer starts a month to make sure that a production process is sound. SpaceX is going to take care of the initial phase of the scaled-up Terafab. That's what we have figured out thus far. Any kind of intercompany thing has to be approved by both the SpaceX and Tesla Boards of Directors. It has to go through conflict resolution and it will have a lot of complexity because we've got to make sure Tesla shareholders are served and SpaceX shareholders are served and strike the right balance there. So that takes a while to work through the independent director reviews. So that's basically what we've figured out thus far: Tesla doing the research fab, SpaceX doing the initial part of the large-scale Terafab. And then we have to figure out the rest.

Yes. And what about Intel's involvement?

Yes. Intel is excited to partner with us on some of the core manufacturing technologies. We plan to use Intel's 14A process, which is state-of-the-art and not yet totally complete. By the time Terafab scales up, 14A will probably be fairly mature. 14A seems like the right move. We have a great relationship with Intel. A lot of respect for the CEO, the CTO and the new team there. So we think it will be a great partnership.

And the other thing on the research fab: we plan to do memory, logic, everything in the same place, including mask creation because we want a quick iteration loop so that we can scale the technologies we are trying to bring up.

I think this will be unique in the world, or at least I'm not aware of any place where you have lithography mask creation, logic, memory and packaging under one roof in one building. That's the fastest I could possibly imagine for the course of research and development and being able to try out some pretty radical ideas, some of which are long-shot, but if some of these long shots pan out, it would be a radical improvement in the way chips work.

Great. The next question is going to come from Pierre at New Street.

A quick one first on FSD adoption. You have 180,000 new paying users this quarter. Compared to your overall installed base, that might be 15%. But if I shrink that to the U.S. or to North America, where most of them are, it's probably more like 30% to 35%. I'm trying to compare: you probably sold about 100,000 cars in North America in the quarter, so you're winning twice as many FSD users as cars sold. And if it's mostly Hardware 4 owners who subscribe to FSD, it sounds like most drivers in North America who have Hardware 4 would already be using FSD. Is that the right way to think about it and the kind of success FSD is meeting today?

Yes. I think you're thinking about it the right way, Pierre. You can't just look at one quarter versus another in terms of churn, but we are actually seeing churn of subscribers coming down, which again reflects the product getting better. Subscriptions going up is a good metric. We're also seeing customers drive longer, which correlates to lesser churn because people are liking the product. If I use my own behavior, I literally get in the car, I press a button and it just goes. Earlier, I used to park. Now I don't even have to park. That is the experience which we want everybody to have, and that's why you're starting to see it in the numbers.

Excellent. Quick follow-up, completely different, more on Optimus architecture. You talked about the partnership with xAI and Grok, and I was wondering if you can share anything about how the system-to-intelligence is going to be implemented? Is that going to be onboard on chips inside Optimus? Or should we think that a fleet of like one million Optimus being produced a year actually driving significant inference demand in data centers as well for system thinking?

We think we can put a lot of intelligence locally in the robot, and it certainly needs enough intelligence that if a robot gets disconnected — if there's a bad cellular signal or no Wi-Fi — Optimus can't just get stuck. It needs enough local intelligence that it can still do useful things even if it loses connection, similar to how the car doesn't need cellular to drive safely. Optimus does need a manager to be told what to do broadly, otherwise it will keep doing the same thing it did before. So an orchestration AI is needed; Grok would be good for orchestration. For Optimus' voice and low-latency intelligent voice AI, Grok is very good. If you want to talk to Optimus and have a Grok-level conversation, you need to connect to a Grok-level AI. But the amount of interaction, apart from voice and asking complicated questions that need a large model, will be limited. Grok will probably have about as much interaction with Optimus as a manager would have with people on their team. Optimus could probably work for several hours without management oversight.

Great. The next question is going to come from Dan at Barclays.

Elon, your chip suppliers generally generate pretty good economics on the chip they sell. Your approach has historically been vertical integration, part of that has been to get better economics. I know the longer-term goal of Terafab is to get the supply you need, but how much of Terafab is also motivated to get better economics on your midterm chip purchases? And how long is it going to take to ramp to get to a yield that achieves that type of economic parity?

Terafab is not a mechanism to generate leverage over our chip suppliers. It's literally because we don't see a path to having enough efficient quantity of AI chips down the road. As we scale production to high levels, the rate at which the industry is growing in logic and especially memory, we anticipate hitting a wall if we don't make chips ourselves. So that's the reason for Terafab. We also have ideas for how to make radically better AI chips; these are research ideas and long shots, but if they pan out, they could be giant improvements. It's easier to pursue those if we have our own research fab and production technologies. Long term, for applications like AI satellites or very large-scale AI deployments, the existing industry likely cannot keep up with the demand without new approaches.

All right. Our next question is going to come from Mark at Goldman Sachs.

I recognize the importance of FSD and that FSD can help to drive vehicle sales and I see some of the improvements in FSD technology more recently with version 14. However, I'm hoping to understand if the company's view on new vehicle models has evolved. I ask given that you, Elon, posted on X recently that Tesla could develop a family vehicle, and there's also been past discussion about a compact vehicle.

Cybercab is compact. It's very roomy, but it's a two-person vehicle. We think most of our production long term will be Cybercab because 90% of miles driven are with one or two people. So it would mean the vast majority of production should be Cybercab. Over time, our whole lineup will be autonomous vehicles of different sizes. I discussed this at our AI event: it's going to be almost entirely autonomous. Long term, the only manually driven car will be the new Tesla Roadster. Speaking of which, we may be able to debut that in a month or so. It requires a lot of testing and validation before we can have a demo and ensure nothing goes wrong. I think it will be one of the most exciting product unveils ever. I don't think it moves the needle massively from a revenue standpoint, but it is very cool and might be one of the most spectacular demos ever.

All right. Mark, did you have a follow-up question?

Yes. My other question was on batteries. The company mentioned battery is a constraint on growth. Can you speak more to how Tesla expects to resolve this? To what extent might this come from ramping up your own LFP and 4680 battery cell manufacturing? Or is this something you expect to resolve primarily with increased sourcing from suppliers?

At the moment, the limiter is not the cells themselves; it's battery pack capacity. As I said in my opening remarks, we're actively working on resolving this. More capacity is being added as we speak, and I'll let Lars add a few more details.

Yes. As you may have seen in Berlin, we started launching Model Y battery packs with our in-house 4680 cells a few months ago, and that is ramping up nicely, adding to Berlin's output and helping with the demand surge we've seen in Europe. We're adding additional capacity in our Reno facility, retooling it as it's been building packs now for almost 10 years, and we're putting in more efficient lines to get additional output. And then we continue to have growth in China as well, ramping in-house LFP module production and battery packs associated with that. All of those things are happening now over the next months and are the plans we laid out a few months back to increase output with the growing demand.

All right. Thank you. Our next analyst is Colin from Wells Fargo.

Great. You moved the safety driver in Austin, and you're now expanding into Austin, Dallas, Houston. What are the key safety metrics that you're tracking that gives you confidence that Robotaxi is safe enough to expand? Is it miles per intervention, miles per accident, per fatality? And where do you stand on that now?

Ashok?

We track basically all the metrics you mentioned. We have a large QA fleet across the United States, and we look at any intervention that could happen and then simulate both in practice and in our simulators using neural networks to determine what would have happened. Based on all of this analysis, we then make the call to expand. So far, all of the expansions have gone according to our expectations.

A lot of what limits wider deployment of Robotaxi are actually not safety issues, but convenience issues — the car getting paranoid and getting stuck, or sometimes being scared to move. For example, it might get scared crossing railroads or get stuck at a light because of ambiguous signals. There was an amusing situation where a whole bunch of Robotaxi got stuck in Austin because a Waymo had crashed into a bus, so they could not turn left. You have a long line of Robotaxi waiting for the bus to move, but the bus wasn't going to move because of that crash. That drives people crazy if Robotaxi are blocking the road. We also have had literal infinite loops where the car tries to make a turn into a road under construction, goes around the block, tries again, and repeats. We have to stop those infinite loops. Those are, by far, the issues we have to resolve as opposed to direct safety issues.

Got it. Just last year I asked about FSD camera issues with sun glare, and you noted there was a breakthrough with direct photon counting that addressed this issue. But a month ago, NHTSA filed saying they haven't received an update on deployment. Did this require a retrofit of the camera? Is this fully deployed? I was curious since the filing mentioned it.

We did change the cameras some months ago, and those are out in newer vehicles. The NHTSA filing is referring to older vehicles. We always work directly with NHTSA on all issues they raise, and they're asking for quite a bit of information, and we're complying in as timely a manner as possible. We expect to resolve that and other investigations in short order.

We have also implemented stricter measures for camera visibility. In recent software, if the camera is not able to see things clearly because of residual buildup or similar issues, then FSD won't be available for those cars.

It just means you have to clean the inside of the windscreen.

Great. That, unfortunately, is all the time we have today. We appreciate everyone's questions, and we look forward to talking to you next quarter. Thank you very much, and goodbye.