Market News Call

Tesla Inc (NASDAQ:TSLA) Q1 call notes; stock Falls About 3% In AH Following ER

Tesla Inc(NASDAQ:TSLA): Asked about limitations of EV in transportation… Musk: Absolutely confident that electric vehicles will occupy every segment of the transportation industry; everything except for rockets (ironic because of SpaceX)

Have seen evidence that people believe the Model 3 is the next version of the Model S. To clear up confusion: Model 3 is smaller more affordable Model S with fewer features. Model S/3 will have same level of technology… current Model S is fourth version (RWD, then AWD, HWD1 autopilot and now HWD2 autopilot with new grill). Model 3 was supposed to be model E but Ford (F) sued.

Continue to see lower battery cost on improved chemistry and scale. Powerwall highest quality product at lowest cost on the market. Targeting 120 KWH battery cost by 2020

Finished vehicle inventory was up slightly Q/Q due to increased Model X test drive EVs and service loaner. Loaners are always top of the line (P100, ludicrous model).

Model 3 will be roughly equivalent to or slightly better than the best auto production line in the world.

Model Y will be even better, on a different platform than the Model 3, targeting 2020 release where 1 million units will be achievable.

Wont need to partner for the semi-truck

Adam Jonas: Apple (AAPL) has enough cash to buy Tesla 3x over… Does Apple have anything that could help Tesla in achieving autonomous transportation — asking about potential partnership? Musk says they make good products but doesn’t really answer. AJ: Are they a competitor? I don’t know what they are going to do on the car front.

Expiration of EV credit pulled forward demand in Hong Kong, won’t impact delivery target for Q2

Asked about order growth for Q2, which co did not disclose this quarter; Musk doesn’t divulge but does say confident in 100K production target for S/X and demand at that level.

Seems the Model S/3 confusion may have impacted orders near term but that is speculation and co sees demand for 100K units this year.

Demand at Model 3 price point will be 30-70x higher than Model S price point.

Tesla has ~1/3 of the luxury market share in the US.

Musk reiterates he will be involved at Tesla as long as possible; not necessarily CEO forever, though. Product design and technology is his forte.

TenCent (TCEHY) investment is passive.

Plans to add 100 retail, delivery and service locations this year (+30%)

Tesla developed a MBLY (INTC) chip in-house in 6 months after the co’s ‘breakup’.

Tesla can grow at a moderate pace with no dilution, fast with some and very fast with more dilution.

Most people who have put a deposit on the Model 3 should be able to realize the full tax credit. Net Model 3 reservations continue to climb despite anti-selling, no test driving, advertising.

GM can recoup losses on the Volt by selling tax credits but that is only effective at 20-30K units per year; Musk says Tesla’s competitive advantage improves with scale as incentives go way. Tesla did not actually receive $1.3 bln in a tax credit from Nevada, they have to earn them with sales/output over time.

When asked about a prior comment about achieving a ~$700 bln market cap, Musk says he sees a pretty clear path but he ‘could be delusional’. Tesla will need to get incredibly good at building the ‘machine that builds the machine’. It will require a ton of complex software. It will be hard for manufactures to copy.



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