Model S is MotorTrend’s Car of the Year – “Most Coveted Award” By end of year expected to be producing Model 3 in volume at Gigafactory Shanghai for the Chinese marketPreparations for Model Y have begun, expected to be easier to ramp for production (3/4 of all parts shared with 3) Manufacturing cost to be about the same for Model 3 and YTesla is doubling all cumulative production every year, expanding at an exponential rateTime to wait for parts and collision repair significantly improved, with in-house collision repair improving customer happinessTesla is at the point of self-funding, will be pre-cash flow positive in future quarters with the exception of quarters where the company launches new productsExpect to be around break-even this quarter, profitable next quarterDeliveries: expected 360,000-400,000 for this quarterQ2: record production and deliveries, gross margin improvements, strong pre-cash flows, raised $2.4 billion in net proceeds, ended quarter with$5 billion in cash and cash equivalentsAutomotive growth margin only reduced slightly with price changesAverage sale price for Model 3 is $50,000 with an improved gross profit per carAutonomous driving suite to continue to develop over next six months, with more Full Self-Driving features expected
Takeaways from the Q&A:Tesla is lowering car costs to ensure more people can afford to buy them, despite the strong value. Elon refers to the Standard Range Plus as the base Model 3, by saying it costs $1,000 more with the expiration of the tax credit. “Making Tesla more affordable is part of the Tesla mission.”Expected Model 3 gross margin will continue to grow over time.Uptake rate and revenue recognition for Full Self-Driving will continue over time, as price increases to $7,000 in mid-August Tesla opening service centers as fast as they can, with 25 new centers open this quarterShipping parts same day to ensure people don’t have to wait, with more service improvements on the way#1 service visit is an explanation on how to use AutopilotTesla will source cars from Fremont until they have an operational Gigafactory in EuropeGlobal demand for Model 3: 15,000 units/weekQ3/Q4 next year to be “incredible”Some “cannibalization” of Model S/X due to Model 3, overhaul for S/X not coming but the newer models (refreshed this past quarter) are significantly betterMost of the fleet has not purchased Full Self-Driving yet, with significant potential for the Tesla fleet to upgrade as features are rolled out30% gross margin likely in about a year, with significant cost reductions on Model 3 each weekTesla’s priorities in the future are Model 3 and Model Y, not Model S and Model XExpected 2 million units from 3/Y per year, with S/X at 80-100k units “from volume standpoint not all that important in long term”Full Self-Driving expected to be offered everywhere except the European Union due to regulatory committees and approvals that need to be changed
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