Tesla AI Strategy: Elon Musk on FSD, Optimus Robots, Dojo Supercomputer, Robotaxi Event

Here's more on Tesla's AI strategy...

Tesla AI Strategy: April 2024 Updates

April 23: Musk and his lieutenants shared several strategic updates during Tesla's earnings call. The updates were particularly timely. Indeed, Tesla's stock had declined more than 40% from January 2024 through mid-April 2024 amid slowing EV market growth and increased competition from China manufacturers. During the April 23, 2024 earnings call, Tesla offered numerous updates on its EV strategy. But the bullet points below focus mostly on Tesla's AI and robotics strategy...

• Robotaxi: Tesla will be "showcasing a purpose-built robotaxi, or Cybercab, in August" 2024, Musk said.
• AI Compute: Musk said: "Over the past few months, we've been actively working on expanding Tesla's core AI infrastructure. For a while there, we were training constrained in our progress. We are, at this point, no longer training constrained and so we're making rapid progress. We've installed and commissioned, meaning they're actually working 35,000 H100 computers or GPUs... And we expect that to be probably 85,000 or thereabouts by the end of this year and training, just for training."
• Full Self-Driving (FSD) Software Version 12: Tesla has pushed the software to 1.8 million vehicles and "we're seeing about half of people use it so far and that percentage is increasing with each passing week. So we now have over 300 billion miles that have been driven with FSD V12," Musk said.
• Optimus Robots: Tesla, Musk said, expects to have Optimus robots "in limited production in the natural factory itself, doing useful tasks before the end of this year. And then I think we may be able to sell it externally by the end of next year [2025]. These are just guesses."
• Total Addressable Market (TAM) for Robots: "As I've said before, I think Optimus will be more valuable than everything else combined. Because if you've got a sentient humanoid robots that is able to navigate reality and do tasks at request, there is no meaningful limit to the size of the economy."
• Energy Storage and Solar Rooftops: Tesla expects the energy storage deployments for 2024 to grow at least 75% higher from 2023, CFO Vaibhav Taneja said. Curiously, Tesla did not mention its rooftop solar shingle business during the earnings call.

April 23: The company is expected to announce quarterly financial results. We'll listen in for potential AI, solar energy, EV charger network, renewable energy and robotics updates -- especially as they pertain to staffing levels and recent layoffs (see April 15-18 update below).

April 15 & 18: Tesla layoffs will impact more than 10% of employees at the electric vehicle (EV) car maker. The layoff plan will include Tesla manufacturing plants in upstate New York -- where employees focus on solar roof tiles and fast-charging EV equipment, Reuters reported. That Buffalo, New York, location also is "set to be the home of its Dojo supercomputer project," the report noted. Still, we don't know if or how many jobs that specifically involve solar roofs, EV charging and Dojo supercomputer experts will be cut.

Tesla AI Strategy: February 2024 Updates

February 10: The Wall Street Journal reinforced questions about Elon Musk's commitment to AI development at Tesla. The article mostly focused on our January 16 entry further below.

January 2024 Updates

Multiple updates included...

January 24, 2024: Tesla's Q4 2023 earnings announcement featured numerous business updates. Here are some takeaways from the earnings call...

• Elon Musk on the sharing of sustainable technologies: "We're obviously happy to give any electric car company access to our supercharger network. We're also happy to license full self-driving, perhaps license other technologies, and anything that could be helpful in advancing the sustainable energy revolution."
• Energy Storage: "Our energy storage business had another record year with deployments more than doubling and revenues increasing by more than 50%," CFO Vaibhav Taneja said.
• AI Opportunities and Stock Ownership: Elon Musk wants more stock ownership in Tesla in order for him to build the company's AI strategy and associated business. He stated: "I see a path to creating an artificial intelligence and robotics juggernaut of truly immense capability and power. And my concern would be, I don't want to control it. But if I have so little influence over the company at that stage that I could sort of be voted out by some sort of random shareholder advisory firm."
• Optimus Robots: "I think we've got a good chance of shipping some number of Optimus units next year," Musk said.
• AI Hardware: Tesla is hedging its hardware bets -- developing its own Dojo technologies while also ordering Nvidia hardware. Musk said: "And we're pursuing the dual path of Nvidia and Dojo. But I would think of Dojo as a long shot. It's a long shot worth taking because the payoff is potentially very high. But it's not something that is a high probability. It's not like a sure thing at all. It's a high-risk, high-payoff program. Dojo is working, and it is doing training jobs, and we are scaling it up, and we have plans for Dojo 1.5, Dojo 2, Dojo 3, and whatnot. So I think it's got potential, but I can't emphasize enough. High risk, high payoff."

January 16, 2024: Musk said he would be uncomfortable growing Tesla's AI capabilities unless he owned at least 25% of its the EV company's voting shares, nearly double Musk's current stake, SeekingAlpha reported.

October 2023 and Earlier - Tesla AI, FSD, Optimus Robots and Dojo Supercomputer Updates

R&D: Tesla has assembled "the best real-world AI team on earth," CEO Elon Musk asserted during the company's October 2023 earnings call. "We’ll continue to invest significantly in AI development, as this is really the mass game changer. And I mean success in this regard in the long-term I think has the potential to make Tesla the most valuable company in the world by far. If you have fully autonomous cars at scale and fully autonomous humanoid robots that are truly useful, it’s not clear what the limit is."

In terms of operating expenses, Tesla's R&D spending "continued to rise due to Cybertruck prototype builds and pilot production testing combined with spend on AI technologies like full self-driving, Optimus and Dojo," CFO Vaibhav Taneja said during the October 2023 earnings call. "We have and will continue to make investments in these areas, and hence our capital expenditure and R&D will continue to grow in the near term."

Among the actual dollar figures to note: Tesla's operating expenses were $2.4 billion in Q3 of 2023, up 43% from Q3 of 2022. The company did not disclose how much of that spending involved R&D for AI.

Tesla Optimus: Humanoid Robots Under Development

Tesla announced the Optimus humanoid robot effort during the company's Artificial Intelligence (AI) Day in August 2021. Also known as Tesla Bot, the humanoid robot could be available for sale somewhere between 2025 and 2027, Musk estimated during Tesla AI Day 2022.

Some critics dismiss Tesla Optimus as hype that disappointed robot experts long before the bot's actual launch. But Musk continues to sell his long-term robotics vision. During the October 2023 earnings call, Musk said: "Optimus a year ago could barely walk and now it can do yoga. So, a few years from now, it can probably do ballet."

Related: This video, released in September 2023, highlights some of Tesla Optimus's capabilities.

Assuming Tesla eventually ships Optimus, the humanoid robots could face competition from well-known companies such as Boston Dynamics -- an engineering and robotics company that spun off from Massachusetts Institute of Technology (MIT). Hyundai Motor Group has owned Boston Dynamics since June 2021.

Describing the competitive landscape, Musk said: "I don’t think anyone is going to do it better than Tesla, not by a long shot. Boston Dynamics is impressive, but their robot lacks a brain or like the Wizard of Oz, whatever. Yes, lacks a brain. And then you also need to be able to design the humanoid robot in such a way that it can be mass manufactured. And then at some point, the robots will manufacture the robots."

Optimus Robots: Avoiding Skynet and Terminator Judgment Day

As robots become more intelligent, Tesla is working to build safeguards into the system to ensure AI doesn't overrun the human race.

"Now obviously, we need to make sure there's good place for humans in that [AI and robotics] future. We do not want to create some variance of the Terminator [movie] outcome. So, we’re going to put a lot of effort into localized control of the humanoid robot. So basically, anyone will be able to shut it off locally, and you can’t change that, even if you put -- like a software update, you can’t change that. It has to be hard-coded."

Still, it's unclear exactly when Optimus robots will be walking among us. "I think at this point, we are not ready to discuss details of the Optimus program, but we will provide periodic updates online," Musk said during the October 2023 earnings call.

Tesla Dojo Supercomputer: What Is It?

Meanwhile, Dojo represents Tesla's move into chip design, supercomputing and AI, Forbes notes. Indeed, Dojo meshes a "a huge mobile sensor and camera network with powerful edge computing capabilities to a backend supercomputer designed in-house to learn from that data is a paradigm we haven’t seen before and elevates Tesla beyond purely a vehicle manufacturer," Forbes asserts.

The big question: Will Tesla extend Dojo for supercomputer use cases beyond its self-driving cars and Optimus robots? And what sustainability safeguards will be built into the AI systems? We'll be watching.

Notes: Blog originally published October 19, 2023. Updated regularly thereafter. Disclosure: Author Joe Panettieri purchased Tesla stock ($TSLA) on April 23, 2024 before the company's quarterly earnings announcement and shareholder call later that day. The purchase was based on Tesla's steep stock decline from January 2024 through mid-April 2024, and Panettieri's thesis that Tesla is an AI network platform company. Panettieri remains long on $TSLA.