Tesla's Q3 Earnings Call: Elon Musk's Concerns About the Economy and How It Affects Tesla

By Kevin Armstrong
Tesla's Model Y starting price across the U.S.
Tesla's Model Y starting price across the U.S.
Not a Tesla App

Elon Musk had a distinct note of concern about the current economic climate, particularly the high-interest rate environment, during the 2023 third-quarter earnings call.

Tesla's earnings dropped by 37% from a year earlier, marking the smallest profit in two years. The company's third-quarter revenue saw a 9% boost from the previous year. However, Tesla fell short of Wall Street expectations on both fronts.

The company's profit margins have also slimmed. Its gross margin stood at 17.9%, a seven percentage point dip from a year ago. The adjusted automotive margin, a metric closely watched by industry experts, fell by nearly 11 percentage points to about 18%.

Interest Rates and Car Affordability

Musk began by highlighting that buying a car boils down to the monthly payment for most people. "The vast majority of people buying a car is about the monthly payment... as interest rates rise, the proportion of that monthly payment that is interest increases naturally," Musk stressed.

With rising interest rates, a larger portion of the monthly payment goes toward interest, making it difficult for many to afford the car. He stresses, "If interest rates keep rising, you just fundamentally reduce affordability."

This is a particular concern for Tesla, as they are tracking for the Model Y to be the best-selling car globally, not just in revenue but unit volume. Musk explains that high-interest rates can reduce the affordability of their vehicles, likening rising interest rates to an increase in the car's price.

Listen to Replay of the Earnings Call

Historical Lessons from 2009

Musk's concerns are not unfounded. He vividly recalls 2009 when General Motors and Chrysler filed for bankruptcy. Musk recounts Tesla's close brush with the financial crisis, detailing how they closed a financing round on Christmas Eve, without which they would have failed to meet payroll just two days after Christmas. The memory serves as a poignant reminder for Musk, who emphasizes, "I don't want to be going at top speed into uncertainty."

Despite the looming economic concerns, Tesla has growth opportunities. Giga Texas still has ample space to expand production, pointing out that they are "only occupying a tiny corner of the land that we have." However, Musk noted that one of their major challenges is personnel, as the greater Austin area has a limited population, which is further constrained by a housing crisis.

The Importance of Car Price

Musk touched upon price elasticity, comparing Tesla vehicles to other cars like the RAV4. He emphasized the importance of making Tesla vehicles more affordable for the majority, iterating, "Cost is not an optional thing for most people; it is a necessary thing." He further explained that due to rising interest rates, even though Tesla has reduced the prices of vehicles like the Model Y, the monthly payment for customers remains almost the same due to the increased interest component.

The Wider Banking and Credit Situation

Musk also dived into a more significant credit situation. He pointed out that acquiring credit has become a challenge for many. Many banks have become more cautious, and some, like Credit Suisse, have even collapsed, which was an unexpected shock for many. He added, "People are reading about wars all over the world. Buying a new car tends not to be front of mind.

Elon Musk's concerns mirror the more considerable anxieties surrounding the global economy. The call served as a reminder that even industry giants like Tesla are not immune to global economic shifts and uncertainties.

Tesla's Next FSD v12 Update Will Be Available For Users on 2024.8

By Not a Tesla App Staff

Tesla will soon roll out a FSD v12 which is compatible with update 2024.8 Tesla began its public rollout of FSD v12 last month, which brings a much more refined, human-like experience to the self-driving software.

To celebrate the achievement and show owners how big of an improvement FSD v12 is, Tesla offered a free month of FSD to all owners with compatible vehicles in the U.S. and Canada.

However, there was a caveat. The latest FSD v12 (v12.3.4) is Tesla update 2024.3.15. Since Tesla doesn't roll back updates since the process isn't rigorously tested, that means many owners who had already received Tesla update 2024.8.9 were left without a free trial and access to FSD v12.

Subscribing to FSD on Update 2024.8

In fact, if you're in the U.S. or Canada and subscribe to FSD while on update 2024.8.x, you'll actually receive the older, and quite a bit worse FSD v11.4.9.

The FSD v12 update has been highly anticipated and aims to finally upgrade Tesla’s ADAS level 2 system to something higher. Musk has talked about level 4 or 5, and even recently said Tesla is going all-in on FSD.

FSD v12 for Update 2024.8 Is Coming

Rohan Patel, who recently left Tesla, recently said that Tesla is already working on an FSD v12 update that is compatible with users on update 2024.8.x. This means that the next FSD update may finally be based on the 2024.8 codebase.

However, just this morning Tesla released the next major update to the platform, update 2024.14 for employee testing. The update is massive and includes an updated UI, hands-free trunk opening, a full-screen browser and more.

However, Patel never specified which codebase the next FSD update would be based on. If it's based on update 2024.8, then users who are upgraded to 2024.14 in the next couple of weeks may face a similar fate as users on 2024.8 today.

Release Date

Patel said to expect the release of the next version of FSD v12 this week. Since update 2024.14 is still being tested with "wave 1" employees, we'll likely see one of two things happen. We may see the next FSD update be based on 2024.8 and released very soon, or it'll be based on update 2024.14, but it may not be available for another couple of weeks.

Once this update arrives, owners with a Tesla on 2024.8.x will finally be able to update and receive their one-month trial of FSD v12 and finally experience what everyone has been excited about.

Tesla Adds V12 User Interface, Full Screen Browser Button, Nav Improvements, Full Screen Visualizations for All

By Not a Tesla App Staff

Tesla's latest V12 user interface will change the look and feel of some of the vehicle’s operations. This new interface, announced on X, is already partially available on the Cybertruck but will now be rolled out to the Model 3 and Model Y, equipped with AMD Ryzen processors according to Tesla. However, the new Model S and Model X will likely receive it as well, although possibly not at the same time. It integrates several new features and aesthetics that set new standards in vehicle interface design.

The new interface will become available in Tesla update 2024.14, which started rolling out to employees yesterday.

Centralized Vehicle Visualization

A standout feature of the v12 UI update, not to be confused with FSD v12, is the centralized vehicle visualization, which dominates the display while parked (shown in photo). This design choice enhances visual appeal and improves functionality by placing critical vehicle performance metrics, and status updates front and center. Similar to the layout in the Cybertruck, this feature provides drivers with a clear and immediate view of their vehicle's status and shows off the gorgeous 3D model.

Improved Navigation

The navigation system will see several improvements. You’ll now see a little trip progress bar that lets you visually see how far along you are on your route.

If your vehicle has a rear screen, as in the new Model 3, the redesigned Model S or Model X, then trip information such as ETA will also be displayed on the rear screen.

Tesla already has the ability to update your route if a faster route becomes available. You can change some of these settings under Controls > Navigate. However, now the vehicle will show you if a faster route becomes available and gives you a chance to cancel the updated route if needed.

Expanded Autopilot Visualizations

Tesla is now bringing its full-screen visualizations outside of North America. However, there will be some improvements as well. In addition to being able to have the visualizations go full screen, there will now be a small map displayed in the corner as well.

That’s one of the issues with the full-screen FSD visualizations right now. If you make them full-screen, you lose your navigation map completely and only have the next turn available.

This will be the first time full-screen visualizations are available outside North America. It’s not clear whether all the FSD visualizations will be available such as traffic lights, curbs and more will be displayed, but Tesla has slowly been adding additional visualizations for non-FSD users, so there’s a chance that this feature will finally display all FSD visualizations to users outside of North America.

It’s not immediately clear whether this feature will require Enhanced Autopilot or FSD.

Full-Screen Browser Support

With this update, Tesla will finally let you manually make the browser full-screen. While this will make Tesla’s Theater apps a little redundant since they just loaded the website of the selected streaming service, you’ll now be able to stream any video service full screen, as long as the service supports Tesla’s browser.

As expected, the full-screen button will only be available while the vehicle is parked.

Checking Compatibility and Availability

Owners can verify their vehicle’s compatibility with the new full-screen visualizations while parked and driving by navigating to Controls > Software > Additional Vehicle Info on their Tesla’s touchscreen. This update is tailored for Tesla vehicles equipped with the AMD Ryzen processor.

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