But yes, I would — like I said, I would want to caution that do not project the previous cost reduction at the same pace completely in the future, because with our current platform, we are getting to a place wherein there are limitations.
Karn Budhiraj: Yeah. The increased scale also sort of helps us there. As we introduce new products, we have the opportunity to go renegotiate existing suppliers for better pricing. We’re looking at every penny, like Vaibhav and Elon mentioned. Just to give you an example, our inbound logistics cost has come down by 22% year-over-year. And this is because of optimization on using returnable packaging as opposed to cardboard, which is even better for the environment, optimizing trucking routes, negotiating better pricing with shipping companies, with trucking companies, going with full truckloads and just doing that, sort of. The bigger we become, the more we put thought into these things and the more efficient we become as a result of it. So those work streams are going to continue.
Unidentified Company Representative: And we are also getting into the tiers of supply chain to see if there are opportunities, getting into the tier 2, tier 3, tier 4 levels, and then negotiate those pricing as well to get more efficiency out of the system.
Karn Budhiraj: And then on the design side, we’re not static, right, like, especially in areas where the technology is still improving rapidly. Power electronics is a great example. We continue to bring improvements there that are like fundamentals, sort of driven from the device up, that result in cost reductions, generation over generation. And they don’t only go into the new vehicles, they come to the old vehicles as well. So that’s closer to what you were talking about with the microelectronic space. Some of that exists in the vehicle.
Lars Moravy: Yeah. Certainly our car is more computer than car in many ways and has a lot of new tech over the last 100 years of automotive production that everyone’s trying to scrape pennies from.
Elon Musk: We have a crazy amount of compute in our cars compared to anyone else. It’s like orders of magnitude.
Karn Budhiraj: And we get to ride that down, right?
Elon Musk: 1,000 times more. Some nutty number.
Karn Budhiraj: I mean, if I just look at the main microcontroller that makes the motor truck go, for example, when I think about what it costs when we stuck it in a roadster in 2006, it costs now. There’s no comparison. So we’ve definitely been riding that electronics cost wave.
Elon Musk: Yeah.
Lars Moravy: And then even on the like non — what you call traditional vehicle side, we do things that no other automakers do to bring cost down through breaking down the way structures are built and the way we put our cars together. And I think that mindset that we have is very much closer to the microprocessor or power electronics industry than the automotive industry.
Martin Viecha: Thank you. Pierre, do you have a follow-up?
Pierre Ferragu: Great. Yes, a quick one. You mentioned this phase in which you are between two big growth periods. I’d love to hear you about what you consider the size of your addressable market. With the portfolio you have today, like the three, the Y, the X, and the S, what’s your estimate of your addressable market? You’re shipping like, probably about like a 2 million unit run rate today and given the price points of these cars, what kind of market share of what you address with these cars do you think you’ve already achieved today?
Elon Musk: I don’t know, if anybody — I actually don’t think we have a firm idea of this. That’s hard to say exactly.
Vaibhav Taneja: Yeah. This — I won’t say there’s — I mean, one way to think about it is look at the automotive industry as well. EVs still contribute a very small market share. So, yes, our goal is to try and take as much market share out of that pie. But do I have a specific number to give you? I don’t think we can say that with certainty.
Andrew Baglino: And it’s a growing pie as well.
Vaibhav Taneja: Exactly
Andrew Baglino: It’s like its 9% today, but it could be 20% in a couple of years or in the future.
Elon Musk: Yeah.
Andrew Baglino: Certainly, like the way we’ve looked at it, and we’ve always said this, it’s not about how many EVs we sell. It’s how many great cars you can sell, how many vehicles you can sell. And that market is 100 million a year, and we’re barely 2% of that. I still think there’s 98% more to get.
Elon Musk: I mean, it’s worth noting that if you look at, say, the average selling price of the other top-selling vehicles in the world, they are much lower priced than a Model Y.
Andrew Baglino: Yeah.
Elon Musk: So like Toyota RAV4.
Andrew Baglino: Corolla.
Elon Musk: Corolla, Honda Civic, that kind of thing. They’re much lower priced than ours. So people are really stretching their wallets to be able to afford a Tesla. It’s quite a difficult thing for them to do, and remarkable that it’s the best-selling car in unit volume, despite being much more expensive than other high-volume cars.
