Elon Musk: We do expect production to start, I don’t know, maybe sometime this summer. But, I always like credit downplay at the start of production, because the start of production is always very slow. It increases exponentially, but it’s always very slow at first. So I wouldn’t put too much stock in start of production. It’s kind of when does volume production actually happen, and that’s next year.
Andrew Baglino: Thank you. That’s great Elon. Like just to emphasize on that, we’ve started installation of production equipment here in Giga Texas, castings, GA, general assembly, body shops. We built all our beta vehicles, some more coming still in the next month, but as you said the ramp will really come 2024.
Elon Musk: Yes, exactly.
Martin Viecha: Thank you. And the last investor question is, with near-infinite global demand for energy storage.
Elon Musk: Yes.
Martin Viecha: Where will Tesla build the next Megapack factories? How many are needed on each continent?
Elon Musk: It’s a good question. It’s not something we — I think we’ll provide an update about that in the future, but it is something we’re thinking about very carefully. I really kind of like what is the fastest path to 1,000-gigawatt-hours a year of production. And you’ll see announcements come out later this year and next, that answer that question.
Martin Viecha: Thank you. Okay. And now let’s go to analyst questions. The first analyst question comes from Rod Lache from Wolfe Research. And Rod, feel free to unmute your mic.
Rod Lache: I think I’m unmuted. Can you hear me?
Martin Viecha: Yes. We can.
Rod Lache: Okay. Thank you. Just firstly, it sounds like your 1.8 million unit volume indication for this year is somewhat more supply constrained than demand constrained. Then I have a follow-up on cost. Is that an accurate statement?
Elon Musk: Well, okay. I mean, our internal production potential is actually closer to two million vehicles, but we were saying 1.8 million, because — I don’t know, it just always seems to be some force majeure thing that happened somewhere on earth. And we don’t control if there’s like earthquakes, tsunamis, wars, pandemics, et cetera. So, if it’s a smooth year, actually, without some big supply chain interruption or massive problem, we actually have the potential to do 2 million cars this year. We’re not committing to that, but I’m just saying that’s the potential. So €“ and I think there would be demand for that, too.
Rod Lache: Yeah. Thanks for clarifying that. And on the cost side, the numbers that we just saw from you, as you pointed out, were weighed down by the 4680 ramp, the Berlin, Austin, Giga castings, processes, not at rate. Can you give us a bit of an indication of the headwind that you’re absorbing from those things like you did last quarter? And then lastly, on cost, do you think that we can tease out an interesting data point from on where battery costs are headed from this announcement that you just made last night? If I’m correct, it looks like the investment cost per kilowatt-hour is less than half of what I’ve seen anywhere else, maybe $30 a kilowatt-hour for that capacity?
Elon Musk: I don’t think we want to say the specific number, but it’s interesting, if you look at the size of the €“ of Giga Nevada that is allocated to make 100 gigawatt-hours, is a small fraction of the size that currently makes about 35.
Andrew Baglino: Yes. I mean, the goals we’ve outlaid at Battery Day on using the investment required to deploy cell manufacturing, I mean, that’s been a key focus of ours and the team is doing a good job hitting the marks on that focus.
Elon Musk: Yeah. And it goes back to the point, I was making. I said, it several years ago, I think Tesla’s really the competitive strength that will be, by far, the hardest for other companies to replicate is Tesla being just damn good at manufacturing and having the most advanced manufacturing technology in the world. And if you’ve got that sort of advanced manufacturing toolbox, you can apply it to many things and we’re applying it now to battery cells. I should also say that, there €“ we have other products in development. We’re not going to announce them obviously, but they’re very exciting. And I think we’ll work for those clients when they €“ when we reveal them. Tesla has the most exciting product of any company on Earth by a long shot.
And we’ll continue to, I think, be in that position. We’ve got more great ideas. I mean, we know what to do with. So the future is very exciting. As I said in the last call, there’s going to be bumps along the way and we’ll probably have a pretty difficult recession this year, probably. I hope not, but probably. And so, one can’t predict the short-term sort of stock value, because when there’s a recession and people panic and the stock market then prices of stocks, worth value of stocks can drop sometimes to surprisingly low levels. But long term, I’m convinced that, Tesla will be the most valuable company on Earth.
Martin Viecha: Thank you. And I think, Zach, there was a question on cost headwind in Q4.
Zachary Kirkhorn: Yeah. I mean, our weighted average COGS for the company, if you were to assume Austin and Berlin were at the cost structure of our other factories, it was on the order of 2,000 to 2,500 of headwinds. So I think from there, you can back into margin impact of those factories as of end of Q4.
Martin Viecha: Thank you very much. And let’s go to the next question from Pierre Ferragu from New Street Research.
Pierre Ferragu: Thanks, Martin. Can you hear me well?
Martin Viecha: Yes.
Pierre Ferragu: Excellent. Zach, actually, I’d like to follow up on the data point you just gave on cost. If I look back at the COGS per car, you guys bottom close to $36,000 in the middle of 2021. And then the number went up as you had to face with inflation in input costs and the ramp of Berlin and Texas. And this quarter, I think we are close to $40,000 and we peaked maybe close to $42,000 at some point last year. And so my question from here is, how much time do you think it takes you to get back to this kind of $36,000, which would mean Berlin and Texas and input costs all that stuff is normalizing, is that like — and that would be like a kind of like a 10% decline in the COGS per car? Is that something we can hope to see this year or is that too optimistic?
