Tesla (TSLA)’s quarterly earnings calls are increasingly less about electric car sales and more about its tech-heavy experimental projects like artificial intelligence and self-driving. During the company’s second-quarter earnings call yesterday (July 19), CEO Elon Musk said Tesla plans to spend well over $1 billion over the next year on Dojo, a supercomputer designed to support A.I. training for Tesla’s Full Self-Driving (FSD) software.
A beta version of FSD has been installed in more than 400,000 Tesla cars in North America. The software has drawn a fair amount of criticism for failing to live up to its name (it can’t drive a car without a human’s supervision yet). But with the advancement of A.I. training, FSD will soon reach full autonomous driving and open up new revenue streams for Tesla, Musk said.
“In order to build autonomy, we need to train our neural net with data from millions of vehicles. Tesla has more vehicles on the road that are collecting this data than all of the companies combined,” the CEO said on yesterday’s earnings call.
More than 300 million miles have been driven using FSD beta, according to Tesla’s internal data. “That 300 million mile number is going to seem small very quickly. It’ll soon be billions of miles, then tens of billions of miles,” Musk said. “And FSD will go from being as good as a human to being vastly better. We see a clear path to full self-driving being 10 times safer than the average human driver.”
Unlike the A.I. hype this year that largely focuses on large language models (LLMs), Tesla’s Dojo is designed for training video data, instead of text.
“You see a lot of A.I. companies doing LLM and whatnot. I would say if they’re so great, why can’t they make a self-driving car? Because it’s harder,” Musk claimed.
A.I. is one of the drivers behind Tesla’s monstrous stock rally this year. Before yesterday’s earnings release, Tesla shares had jumped roughly 170 percent. But investors found Musk’s lofty A.I. promises and Tesla’s strong EV sales insufficient to justify the company’s valuation boom.
For the quarter ending June 30, Tesla reported a record $25 billion in revenue, of which $2.7 billion was net income. Both numbers beat analyst estimates, but analysts are concerned about Tesla’s shrinking profit margins due to price slashes on electric cars, driving the stock down 7 percent today after the earnings. Musk said its A.I.-centric products like FSD and a robotaxi program could open up new revenue streams in the future.
“In the long-term, autonomy is going to just drive [sales] volume through the ceiling next level. And our robotaxi products have quasi-infinite demand,” Musk said.
Tesla delivered 466,140 cars in the second quarter. The company targets to deliver 1.8 million vehicles this year.