Martin Viecha: show Tesla brand favorability declining in 2022 and division among partisan lines. Such brand damage can impact demand. Does Tesla track favorability? And how will any brand image be mitigated?
Elon Musk: Well, let me check my Twitter account. Okay, so I’ve got 127 million followers. It continues to grow very rapidly. That suggests that I’m reasonably popular. It might not be popular the way with some people, but for the vast majority of people, my follow count speaks for itself. I’m the most interactive account, social media account, I think, maybe in the world, certainly on Twitter, and that’s actually predated the Twitter acquisition. So I think Twitter is actually an incredibly powerful tool for driving demand for Tesla. And I would really encourage companies out there of all kinds, automotive or otherwise, to make more use of Twitter and to use their Twitter accounts in ways that are interesting and informative, entertaining, and it will help them drive sales just as it has with Tesla. So the net value of Twitter, apart from a few people are complaining, is gigantic, obviously.
Martin Viecha: Thank you. Let’s go to the next question. Please provide a detailed explanation of where you are on the 4680 ramp. What are the current roadblocks? And when do you expect to scale to 10,000 vehicles a year — a week?
Andrew Baglino: Yeah. Thanks, Martin. First, I just want to say congrats and thanks to the Tesla 4680 team for achieving 1,000 a week in Q4. It was no small feat. Definitely a result of more than a couple of years of hard work. As far as where we stand in Texas, one of four lines are in production, with the remaining three in stages of commissioning and install. Really, our 2023 goal as a 4680 team is to deliver a cost-effective ramp of 4680s well ahead of Cybertruck. Focus areas are dialing in and improving the quality of the high-volume supply mechanical parts and driving factory process yields up as much as possible. Between two of those things, if we had achieved those key goals, we’ll be well set up to — for a major 4680 year in 2024.
Martin Viecha: Thank you. Next investor question is Elon said previously that FSD Hardware 4 will most likely come first in Cybertruck. Is that still the current plan? Do you expect there to be an upgrade path for Hardware 3 cars to Hardware 4?
Elon Musk: Yes, Cybertruck will have Hardware 4. And to be clear, for 2023, Cybertruck will not be a significant contributor to the bottom line but it will be into next year. So it’s an incredible product. I can’t wait to drive it personally. It will be the car that I drive every day. I actually just I’m wearing the T-shirt with this matched glass. And it’s just one of those products that only comes along once in a while, and it’s really special. So yeah, so with respect to upgrading cars on Hardware 3, I don’t think that will be needed. Hardware 3 will not be as good as Hardware 4, but I’m confident that Hardware 3 will so far exceed the average — the safety of the average human. So what we’re aiming for is like how do we get ultimately to, let’s say, for argument’s sake if Hardware 3 can be, say, 200% or 300% safer than human, Hardware 4 might be 500% or 600%.
It will be Hardware 5 beyond that. But what really matters is are we improving the average safety on the road. But it is the cost and difficulty of retrofitting Hardware 3 with Hardware 4 is quite significant. So it would not be, I think, economically feasible to do so.
Martin Viecha: Thank you. The next question is for Zach. Zach, when do you think Tesla Insurance will become big enough revenue source to warrant providing more details in the financials of the business so investors can compare it to other insurance companies?
Zachary Kirkhorn: Yes. I think it’s probably going to take some time before this business is large enough for specific financial disclosures. But I’m happy to provide an update on where we stand in the business. So, we’re currently at a $300 million annual premium run rate as of the end of last year. We’re growing 20% a quarter, so it’s growing faster than the growth in our vehicle business. And in the states in which we’re operating, on average, 17% of the customers in the states are using a Tesla Insurance product. And that number continues to tick up as we spend more time in markets. And we see most of the adoption occurring when folks take delivery of a new car, as they’re setting up insurance for the first time as opposed to going back and switching when they already have insurance set up. So there’s an inherent stickiness in the Insurance business.
Elon Musk: No, go ahead.
Zachary Kirkhorn: No, I was just going to say, just as a broader reminder on kind of the motivation for starting this business, it was to improve and still is to improve the total cost of ownership of our cars, given that we’re seeing high premiums of insurance from third-party companies. And that remains our priority here. We’ll obviously run this as a healthy business, but we want to make sure we keep our costs low and insurance stays affordable to our customers.
Elon Musk: Yes. And so there are two really important side benefit to our Tesla Insurance that are worth mentioning, one of which Zach alluded to, which is that, just by Tesla operating insurance for our cars at a competitive rate, that makes the other car insurance companies offer better rates for Teslas. So it has a bigger effect than you think because it improves total cost of insurance costs even when they don’t use Tesla Insurance, because now the guy goes up to the world have to compete with Tesla and cannot charge outrageous insurance for Teslas. So it’s great. So it has an amplified effect, very important. Then, it is also giving us a good feedback loop into minimizing the cost of repair of Teslas, for all Teslas worldwide, because we obviously want to minimize the cost of repairing at Tesla if it’s in a collision and for Tesla Insurance.
And previously, we didn’t actually have good insight into that, because the other insurance companies would cover the cost. And actually, the cost in some cases, were unreasonably high. So we’ve actually adjusted the design of the car and made changes in the software of the car to minimize the cost of repair, obviously minimize — first, the best repair is no repair, avoid the accident entirely, which since every Tesla comes with the most advanced active safety in the world, whether or not you buy full self-driving, you still get the intelligence of full self-driving or active safety, active collision prevention. So it’s giving us this really good feedback before, again, reducing cost — total cost of ownership and also just figuring out how to get — if somebody’s cars in an accident, most accidents are actually small.
They’re like a broken fender or scratched side of the car or something like, the vast majority of accidents. But we’re actually solving how to get somebody’s car repaired very quickly and efficiently and back in their hands. And like I said, those improvements actually apply then to old cars. And we’re making just to emphasize another key point, because some of these points might be like, so I apologize for being repetitive. But it’s remarkable how small changes in design of the bumper and improving — obviously improving the logistics of spare part or providing spare parts needed for collision repair, have an enormous effect on the repair cost. So, if you’re waiting for a part to get repaired and that part takes a month, now you’ve got a month of having to rent another car.
It’s extremely expensive. And of course, you’re missing the car that you love and the one you actually want to drive. So, this has actually a very significant effect on total cost of ownership and customer happiness.
Martin Viecha: Thank you. The next question from investors is, is Cybertruck production still on track for mid-year?
