Tesla (1Q25 Minutes): Model 2.5 production remains on schedule, Robotaxi and Optimus progress smoothly

Below is the$Tesla(TSLA.US) Minutes of the Q1 FY25 earnings call. For earnings analysis, please refer to《Tesla: Dragged into the Gutter by Musk? Another Test of Faith!》

I. Key Earnings Highlights

Dolphin Research's takeaways from the earnings call:

① Musk stated that starting May, he will finally shift focus from DOGE to Tesla, which is positive for Tesla.

Musk believes Tesla is not in a near-death situation as before but at a major inflection point. Tesla's future is built on large-scale autonomous vehicles and mass production of humanoid robots, with staggering potential value. With strong execution, Tesla could become the most valuable company.

② Another positive: The affordable Model 2.5 remains on schedule for production (starting June), contrary to rumors of cancellation. This is key for Tesla's 2025 sales.

However, Model 2.5 production ramp may be slower than expected, but it will proceed as planned using existing production lines.

Progress on Musk's all-in bets—autonomous driving and robots:

① Autonomous driving progress:

a. Robotaxi: On track, still focused on launching Robotaxi services in Austin in June or July, with expansion to multiple U.S. cities by year-end (generalized end-to-end algorithm supports rapid scaling). Significant financial impact expected by H2 next year.

The Robotaxi service in Austin will use current Model Y production vehicles without modifications. Initial fleet size undetermined, likely 10-20 vehicles.

In the U.S., Musk believes no competitor can challenge Tesla, likely capturing over 90% market share unless regulatory hurdles arise.

b. Cybercab: Production line construction begins late Q2. Large-scale equipment installation at Texas Gigafactory follows, with production still planned for next year.

c. Unsupervised FSD expected by year-end, rolling out to many U.S. cities. Personal Tesla vehicles will gain unsupervised FSD capability, marking major progress in 2025.

② Optimus progress:

Optimus is progressing well, with thousands of robots expected in Tesla factories by year-end. Musk is confident in reaching 1M annual production in 4-5 years (2029-2030).

Optimus remains largely in R&D, not yet a mass-market product. Most components are custom (motors, gearboxes, electronics, actuators), with no existing supply chain. Bulk production will occur late this year.

On tariff impacts:

① Minimal auto business impact: Tesla's vertical integration ensures >85% local parts for high-volume North American models and >95% for Shanghai-made vehicles. Berlin matches North American localization. However, "Section 232" tariffs (effective May) on Canada/Mexico will slightly hurt profitability.

② Significant energy storage impact: LFP battery cells sourced from China face heavy tariffs. U.S. LFP production equipment is being debugged but covers only a fraction of needs. Non-Chinese supply chains are being developed but take time. China-based production (operational since Q1) meets non-U.S. demand.

③ Higher Capex: Tariffs raise costs for importing equipment (due to insufficient U.S. capacity). 2025 Capex will exceed $10B, with further measures under evaluation.

II. Detailed Earnings Call Content

2.1 Executive Highlights

Musk:

1. Starting May, I’ll drastically reduce time spent on DOGE and focus more on Tesla.

2. Tesla has faced many near-death moments, but this isn’t one. We’re at a pivotal point—our future hinges on autonomous cars and humanoid robots. Execution is key to becoming the world’s most valuable company.

3. Business updates:

1) FSD:

a. Robotaxi service launches in Austin in June, with financial impact by H2 2025.

b. Unsupervised FSD will debut on Model Y. Most Teslas can become Robotaxis via software updates.

2) Supply chain: Localization minimizes tariff impacts.

3) Robots: Thousands of Optimus units in factories by year-end; 1M annual production target by 2029-2030.

4) Energy: Megapack boosts grid capacity; Powerwall 3 demand outstrips supply.

5) Production: Global Model Y refresh completed in Q1; annual production now 1M units.

CFO:

1. Financials:

① Auto: Lower deliveries (factory retooling, sabotage) and margins (fixed-cost absorption, fewer regulatory credits) offset by slight price hikes.

② Energy: Record storage profits despite lower deployments; Powerwall 3 supply-constrained.

③ Services: Margin dip from used cars/insurance; efficiency improvements underway.

④ Opex: Higher R&D (AI, Cybercab, affordable car) offset by lower SG&A.

⑤ Other income: Down due to Bitcoin markdowns and forex; volatility expected.

2. Tariffs:

① Auto: 85% USMCA compliance mitigates tariffs, but Section 232 (May) will hurt.

② Energy: Heavy LFP cell tariffs; U.S. production ramping slowly.

③ Capex: Tariffs raise equipment import costs; 2025 Capex >$10B.

3. Outlook:

① Affordable car production starts June.

② FSD and Robotaxi pilots to drive demand.

2.2 Q&A

Q: Biggest risks for Robotaxi scale-up?

A: Distinguish Cybercab (2025 production) from Robotaxi (Model Y-based, launching June). Growth will follow an S-curve; millions of unsupervised Teslas expected by H2 2025. Localized parameters (e.g., for snow) won’t compromise the generalized solution.

Q: Where will Cybercab be produced?

A: Within Austin Gigafactory (3x Fremont’s size), alongside Model Y/Cybertruck.

Q: Timeline for unsupervised FSD in personal cars?

A: Year-end in select U.S. cities. Safety is paramount—FSD must exceed human performance.

Q: Affordable car details?

A: On schedule for June, using existing lines. Affordability (monthly payments) is key.

Q: Robotaxi competition vs. Waymo?

A: Waymo’s sensor-heavy approach is 5x costlier. Tesla’s AI + camera strategy and manufacturing edge ensure dominance (90%+ share).

Q: Unboxed production method?

A: Cybercab’s revolutionary 5-second/unit production begins late Q2.

Q: Geopolitical risks?

A: Regional supply chains (85-95% local parts) and dual sourcing mitigate tariffs/politics.

Q: Battery progress?

A: 4680 and LFP production scaling; cathode/lithium self-sufficiency achieved.

Q: Optimus production?

A: Thousands by year-end; custom parts (e.g., rare-earth magnets) pose challenges.

Q: Why do some still buy BMW/Mercedes over Model Y?

A: Non-autonomous cars will soon seem as archaic as flip phones.

Q: FSD interventions pre-June launch?

A: Targeting 10,000 miles/intervention. Audio detection and remote ops being tested.

Q: Robotaxi launch scale?

A: 10-20 vehicles initially in Austin (June/July), then rapid expansion.

Q: FSD pricing tiers?

A: $99/month is undervalued—true worth unlocks when users can sleep en route.

Q: India plans?

A: 100% import tariffs are prohibitive; exploring solutions.

Q: Camera issues (sun glare/fog)?

A: Photon-counting tech handles extreme conditions.

Q: Affordable car design?

A: Leverages existing lines without compromising quality.

Q: Tariff collapse risks?

A: Advocates predictable tariffs but respects policy decisions.

Q: U.S. vs. China AI?

A: U.S. must revive manufacturing to avoid drone/AI dependence. Tesla leads in humanoid robots.

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Disclosures:Dolphin Research Disclaimer