Key Takeaways from Tesla’s Q3 2019 Earnings Call

Oct 23, 2019   
  • One million Smart Summons to date, with an improved version coming next month based on fleet learning.
  • Early Access release of feature-complete Full-Self Driving by end of this year.
  • Having three Gigafactories will more than triple output over time.
  • More advanced batteries and more efficient powertrains coming in the future.
  • Version 3 of Tesla Solar Roof will be released tomorrow afternoon. Scaling up production at Buffalo Gigafactory, “ready for big time.”
    Q3 earnings: return to profitability, automotive gross margin expanded with higher production outputs.
  • Model S and Model X average sale price increased, with Model 3 ASP only declining slightly due to the international market.
    Reduced operating expenses.
  • Strong free cash flow, despite increase in leasing.
  • Cash balance increased, with highest ever end-of-quarter cash balance of $5.3 billion.
  • Lease rate increased by 50%.
  • Global order rate increasing, with quarter-to-date orders significantly higher than last quarter.
  • Focus on increasing Model 3 and Model Y production.
  • First phase of Gigafactory Shanghai production-ready.
  • Tesla to continue reducing costs.
  • No long-term contracts on Tesla Solar; however, most people buy rather than rent which Elon referred to as a better investment. Solar adds ~ 4% value to a home according to Zillow.
  • No advertising, no marketing, and no salesforce for Tesla Solar allows the company to offer industry-best pricing.
  • Working on making solar permit approval easier with an innovative new approach involving a generic template rather than a custom template for each case.
  • Streamlined installation to require a single visit to install solar in most cases, with ordering taking a minute online.
  • Word of mouth is more than enough to sustain demand that exceeds production.
  • Some point in the future Tesla may do advertising in a non-traditional sense.
  • Lack of appreciation for the growth of Tesla Energy in the long-term, which should grow to roughly the same size as Tesla’s automotive business in the future.
  • All of the company’s resources had been diverted to Model 3 production, with resources restored to other sectors of the company.
  • Tesla products are producing equal amounts of sustainable energy as the energy used by its cars.
  • Takeaways from the Q&A:

  • Tesla will continue selling Full Self-Driving as a bundle that includes all current and future features.
  • Robotaxi functionality should be possible by the end of next year, and will no require a driver’s attention.
  • Will lead to the biggest increase in asset value in history.
  • Model Y will be roughly the same in cost as Model 3, with a slightly higher ASP and margin.
  • Tesla is open to helping other automotive brands with batteries, powertrains, and software to accelerate EV adoption.
  • Tesla’s goal is to make vehicles that are fun and entertaining.
  • Tax credits only make up 1.5% of Tesla’s revenue. Business is not dependent on tax credits.
  • People will buy electric cars just because they’re fundamentally better cars, not just because their previous car had worn out.
  • Model S and X are niche products. Tesla is making them for sentimental reasons, with minor importance to the future.
  • Model S won MotorTrend’s “best car in history.”
  • OTA update coming to improve Model 3 power output by 5%, Model S and Model X by 3%.
  • Improved single-pedal driving coming which will improve the range.
  • Faster Supercharging for Standard Range, Standard Range+ customers in the next update.

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