Key Takeaways from Tesla’s Q2 2020 Earnings Call

Elon’s Overview

  • Tesla has started work on building a new facility in Texas for Cybertruck/Semi production
  • Tesla Solar is now the lowest-cost solar roof in the United States, with a lowest-price guarantee ($1.49/watt with a tax credit)
  • Tesla introduced the first production car with more than 400 miles of electric range (Model S now has a 402-mile EPA range, even at highway speeds)
  • Full Self-Driving: support for traffic lights and stop signs released, testing software for interactions and city streets — software is “profoundly
  • better than people expect,” Elon gets to work with almost no interventions even with construction and other obstacles
  • Profitable quarter overall
  • Next 12-18 months: three new factories, Cybertruck, Semi, Roadster, Full Self-Driving
  • “Hardcore engineering” on autonomy and manufacturing
  • Financials

  • 4th consecutive quarter of profitability
  • Cost-saving on COG’s and operating system
  • Automotive gross margin reduced from 22% to 18.7% due to shutdowns
  • Q2 savings passed on to customers
  • 2020 credit revenue roughly double that of 2019
  • Production-constrained in energy business
  • Cash flow increased to highest level of $8.6 billion
  • Questions from investors

  • Compact vehicle of some kind as well as a higher capacity vehicle on the roadmap, with a “long way to go for Model 3 and Y as well as Cybertruck”
  • Asset increase of Full Self-Driving to be the most valuable for Tesla, add 5x utility
  • More productivity and entertainment apps will be added in the future
  • Full Self-Driving worth “at least $100,000 per car” per Elon
  • Traffic lights, stops, turns coming to FSD later this year
  • “The smartest people don’t realize AI can be much smarter than them”
  • 10,000% more engineering required for the factory than the product itself
  • Tesla is focused on manufacturing, and designing unique production lines
  • “Far more opportunity for innovation in manufacturing than the product itself”

    Additional questions from online

  • Long-term Tesla Energy will be roughly the same size as Tesla Automotive
  • Sustainable vision: solar and powered by wind
  • Mission of Tesla is to accelerate sustainable energy
  • Real limitation on Tesla growth is cell production at an affordable price, to be discussed in detail on Battery Day
  • Expanding battery business with LG, Panasonic, possibly others
  • Tesla Semi production to include a lot of tech Tesla engineers have been dreaming of
  • Range of almost 300 miles with an iron phosphate pack on Tesla Semi
  • “Please mine more nickel” – Elon’s plea to battery companies
  • New standard for EPA range on electric vehicles will be 300 miles
  • Working super hard on insurance, think of the current version as 0.9
  • Tesla Insurance will ultimately use data from individual vehicles (with the permission of customers) to assess premiums
  • Tesla Insurance coverage will be provided for vehicles in the ride-hailing network
  • Analyst questions

  • Model Y was profitable last quarter, slightly more expensive than Model 3 to produce
  • Sourcing supplies/parts locally lowers costs at international factories
  • The business isn’t managed with the expectation that regulatory credits will continue
  • Continued decline in the cost of producing vehicles
  • Possible to go way beyond industry margins while still having the cars be affordable to more and more people (almost everyone with autonomy)
  • Important to make the cars affordable, “what bugs me most is our cars are not affordable enough”
  • Okay if profitability is 1-2%, the goal is to make Tesla’s cars as affordable as possible
  • Demand “definitely” not a problem
  • Battery Day likely to take place within the next three months

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