During this call, we will discuss our business outlook and make forward-looking statements. We were expecting to really greatly increase the Austin service area to well in excess of what competitors are doing. The service areas and the number of vehicles in operation will increase at a hyper-exponential rate. This is actually a very tricky thing to do because as you increase the parameter count, you get choked on memory bandwidth.
The scale of battery demand is, I think, not that many people appreciate just how gigantic the scale of battery demand is. and looking to buy a car, place your order now, as we may not be able to guarantee delivery for orders placed in the later part of August and beyond. Just to give you perspective, since we moved to version 12 of FSD, we've seen the adoption rates really increase. We've started seeing on the automotive revenue front, despite reduction in regulatory credit revenue, the total automotive revenue increased by 19% sequentially, even though total deliveries only improved 14%.
This helped in improving margin sequentially as well, along with improved mix and higher fixed cost absorption, despite an increase in cost from tariffs. I think Elon covered this, that industrial storage will make a difference in this drive towards AI and data center growth. Operating expenses also grew sequentially as we continued our investment in AI projects, including additional expenses related to employee-related costs, including higher stock-based compensation and depreciation for AI compute. Other income grew sequentially, primarily from the mark-to-market adjustment on Bitcoin holdings, which was a $284 million gain in Q2 while being a $125 million loss in Q1.
| Metric | Period | Current guidance |
|---|---|---|
| CapEx | FY2025 | in excess of $9 billion (continued investment in Cybercab, Semi lines, and AI initiatives) |
| Autonomous ride-hailing coverage | end of 2025 | roughly half of U.S. population (expanding at a hyper-exponential rate, subject to regulatory approvals) |
| Lower-cost model ramp | Q4 2025 | ramp next quarter, slower than expected (prioritizing max U.S. deliveries before EV credit expires) |
| Optimus production | within ~5 years / 60 months | aim for 1 million units/year; ~100,000 units/month in 60 months (Optimus 3 prototypes this year, scale production next year) |
| Robotaxi financial impact | around end of 2026 | expected to be material to financials (fleet goes from tiny to gigantic) |
| Metric | YoY | Note |
|---|---|---|
| Total automotive revenue | — | increased 19% sequentially versus 14% delivery growth, primarily due to improved ASPs from the new Model Y. |
| Energy generation and storage | — | margins improved sequentially while deployments reduced; highest gross profit for the business yet, driven by high-margin Powerwall deployments. |
| Other income (Bitcoin) | — | a $284 million mark-to-market gain in Q2 versus a $125 million loss in Q1; will keep creating volatility. |
| Free cash flow | — | $146 million as operating cash flow rose but so did CapEx on Cybercab, Semi, and AI initiatives. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Autonomy / Robotaxi | pre-launch | Austin launched with paid driverless rides, service area expanding | Launched and scaling |
| Optimus | version 2/2.5 | Optimus 3 the right design, prototypes this year | Advancing to scale next year |
| Energy / storage | record energy gross profit | highest gross profit yet, high-margin Powerwall, tariff and bill headwinds | Growing amid policy headwinds |
| FSD monetization | lower V12 adoption | +25% penetration since V12/V13, $99/month subscription | Improving |
| CEO voting control | concern raised previously | Elon flags ~13% stake, wants control addressed at shareholder meeting | Unresolved |