00:00 Speaker A
Meanwhile, Tesla tempering expectations around its biggest long-term bets. Well, Tesla CEO Elon Musk warning that early production of its Cybercab robotaxi and Optimus humanoid robot will be in his words, agonizingly slow.
00:10 Speaker A
For more, bring in Yahoo Finance senior reporter, uh, autos reporter Pras Subramanian. Pras, so Musk saying early production of that robotaxi and robot agonizingly slow before accelerating over time. What’d you make of that news? Does that surprise you?
00:23 Pras Subramanian
Um, no, not really.
00:24 Pras Subramanian
I mean, so, so, so we knew, we we saw the tweet just now was in response to something last night talking about how for Cybercam and Optimus, almost everything is new, right? So the early production rate will be, as you said, slow, but eventually end up being insanely fast. And that’s the part that the Musk sort of bluster, insanely fast, right? So, you know, look, we we see technology, things pace ramps up depending on complexity, right?
00:43 Pras Subramanian
Uh production speed inversely proportional to the number of new parts, whatever, so that’s what he thinks gonna happen. Um Tesla said uh they’re on track for Cybercap production in 2026 and with Optimus output, hopefully uh towards the end of the year. Now, Morgan Stanley had a new note out today telling about previewing Tesla earnings, but also talking about how they think they have a couple timelines here, right?
01:02 Pras Subramanian
They think Cybercab still on track for April 2026 launch because, you know, we’ve seen prototypes out in the wild testing. Uh they think for Robotaxi, the big thing needs to be the big catalyst needs to be, when are they going to remove the safety driver from these cars, right?
01:13 Pras Subramanian
We we have a bunch of them out in California and in Austin, but still with safety drivers. Um they expect in addition to the catalyst at some point, they expect 1,000 robot taxis by the end of the year, uh out in the wild. And finally for Optimus, they think that spring, Tesla will debut a Gen 3 Optimus robot. That’s sort of what they’re looking at uh for these, you know, these big, big non car, right?
01:31 Pras Subramanian
Uh well, they’re car. Cybercap is a car, but it’s a robot car, right? And a robot Optimus is the two big sort of levers for Tesla here.
01:37 Speaker A
So if I was a Tesla investor, not a not a trader, but I’m an investor, I’m in there long-term, do you think did I read this headline today about the robot tax and the robot, did it have any kind of impact on sort of the long-term bullish thesis?
01:49 Pras Subramanian
I don’t think so. I think he Musk was just saying that we expect things to be kind of slow at first. We’re going to they’re we Tesla’s going to release these products, you know, in in in prototype form, and they’re going to take time to ramp. Cybercab is huge, right?
02:04 Pras Subramanian
It’s potentially no pedals, no steering wheel or it might have pedal and steering wheel. Uh, it’s supposed to be their purpose-built robotaxi. Um, they would say we’re hitting our goal production, but it’s going to be really slow. I think Optimus is a different story. I think that’s that’s that’s a problem that’s way out there. Um, and so I think we’re going to see this new gen 3 robot, but whether we see them in the factory by the end of the year is another story.
02:23 Speaker A
Finally, uh Tesla earnings results, right? What’s important? What are you making a B-line for?
02:27 Pras Subramanian
Yeah, next week we’re going to have earnings for Q4 and the full year. Uh, you know, three things here that Morgan Stanley noted aside from, you know, the headline numbers is one, they expect increased cash free cash flow burn, uh, due to a higher than expected capX spend, right? Because Tesla’s spending on all these, all these, uh, uh, initiatives like AI chips and potentially restarting Dojo, right? Uh, they expect gross margins to be down, to be lower than consensus because of the fact that they think volume growth will be lower and they can’t, you know, sort of have that, uh, what do they call it?
02:51 Pras Subramanian
Um, operating uh what’s the word I’m looking for? Uh, It’s when you can basically when you increase volume, it increases profitability. Yeah. Uh I forgot the term, but anyway, uh, and we’ll get back to.
03:03 Speaker A
We’ll get back to you later, right.
03:04 Pras Subramanian
Yeah, we’ll get back to it. And deliveries down 9% compared to consensus for 2024. Again because of the fact that you have a number of headwinds like loss of tax credits, um, in this country at least, decreased demand or or consumer demand for softness for EVs, but but not globally.
03:17 Speaker A
All right. Pros, thank you, buddy. I appreciate it.
03:18 Pras Subramanian
Operating leverage.
03:19 Speaker A
There it is.
03:20 Pras Subramanian
I knew it would come to me.
03:21 Speaker A
There it is.
