Fourth Quarter 2013 Financial Results Q&A Conference Call - LIVE BLOG

[callmesam]

​I will be live blogging the conference call at 230PM PST. If you have any thoughts or suggestions before we go live, please post them now.

Here is the link to audio:

Tesla - Events Presentations

LINK TO REPORT:
http://files.shareholder.com/downloads/ABEA-4CW8X0/2967652535x0x727013/9885dd26-2e82-4052-b171-3685fd8150b3/Q4%2713%20Shareholder%20Letter.pdf

Here are some links to previous blogging done by me on TM:

Tesla Motors, Inc. Third Quarter 2013 Financial Results QA Webcast - LIVEBLOG | Forums | Tesla Motors

Live Blog 2012 Shareholders Meeting June 4, 2013 | Forums | Tesla Motors

Live Blog Tesla Announcement April 26 - Elon Musk | Forums | Tesla Motors

 

[bonnie]

thank you!

 

[callmesam]

I'm getting excited. So in order of items affecting the future of Tesla:

1. Gigafactory
2. EPS
3. Chinese Demand
4. Supercharger status
5. Model X status
6. 6.0, AWD MS
7. Gen III

 

[MikeC]

Thanks buddy!

 

[callmesam]

I will cross-post this post (as primary) on TM Model S forum.

Thanks for the encouragement from everyone. I will endeavor to do my best. It's especially hard to keep up with the analysts who ask 3 run-on questions at a time.

 

[callmesam]

From The Report above:

"To further enhance the driver experience, new Model S customers will now receive free data connectivity and Internet radio for four years. As an added benefit to our existing Model S customers, the free four year period
starts on January 1, 2014. To be fair to all, in rare cases a customer may be charged for extreme data use."

- - - Updated - - -

"For the quarter, non-GAAP revenue was $761 million, up 26% from Q3. GAAP revenue for Q4 was $615 million,
up 43% from Q3."

- - - Updated - - -

Both Toyota and Daimler powertrain programs remain on plan and contributed $13 million of revenue in the quarter. Q4 sales also included $15
million of regulatory credits revenue, but no zero emission vehicle (ZEV) credit sales.

- - - Updated - - -

"We expect to deliver over 35,000 Model S vehicles in 2014, representing a 55+% increase over 2013. Production
is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year."

- - - Updated - - -

"Very shortly, we will be ready to share more information about the Tesla Gigafactory. This will allow us to achieve a
major reduction in the cost of our battery packs and accelerate the pace of battery innovation. Working in partnership
with our suppliers, we plan to integrate precursor material, cell, module and pack production into one facility. With this
facility, we feel highly confident of being able to create a compelling and affordable electric car in approximately three
years. This will also allow us to address the solar power industry’s need for a massive volume of stationary battery
packs."

 

[Dborn]

Anyone who can, PLEASE ask about pricing and deliveries to Australia. That is WHEN CAN WE EXPECT TO SEE PRICING ON THE WEB SITE?

 

[NigelM]

Mod Note: Thanks @callmesam. Thread temporarily sticky. I'll leave it like that for a few days.

Comments and discussion here - Q4-2013-results-data-points-projections-and-expectations

 

[callmesam]

It's starting . . . replay will be available later today.

- - - Updated - - -

bla bla bla GAAP v non-GAAP . . .

 

[carrerascott]

Gigafactory information coming next week, along with capital raise information.

 

[callmesam]

Adam Jonas MS: Opportunities in the battery business . . . pull in fresh capital to plan for force majeur?

Elon: That's a smart move. Will talk about that next week about the Gigafactory. I can't say much right now, but your advice is good.

AJ: Would a capital raising be a prerequisite?

Elon: I think it's necessary to have it occur in three years. It's not necessary if we allow that time frame to expand.

- - - Updated - - -

John Lovalo: Cash flow?

Depak: I think that in 2014 we expect to generate significant cash flow. It's early to give clear guidance for 2015 but we see this a great year for accrual.

JL: What is a mid-term margin/operating profit longer term?

Depak: Our long term target OM is in the teens. That has not changed.

Elon: Emphasize reinvestment opportunities are significant for a long time. Our profitability, near term, will be less than that. Mid-teens is very achievable. Car business is $2T/year just in sales. Big ramp ahead for reinvestment.

JL: Distribution licenses in China? How were you able to deal with this issue?

Elon: Sales and Service is not a problem, only local manufacturing. They expect you to partner with a local entity. This is the early stages of selling in China. Short to medium term there is no need to partner.

 

[CyberDutchie]

Love this from Elon about Model X reservations: "Sort of like fish jumping in the boat"

 

[AudubonB]

Elon (Model X): "The fish are jumping in the boat".

 

[callmesam]

Brian Johnson: $140M in deposits to $163M. Can we infer increase in order or change in mix?

Elon: Model X demand is VERY high. We dont' disclose exact numbers and there is no marketing. The "fish are jumping in the boat" We aren't even trying to sell the Model X.

Depak: that's on top of Model S deposits.

BJ: Where does the order book stand geographically?

Elon: Probably work to do in Europe, mostly because of a number of charging issues. it's one economic market, but not one charging market. That's slowing us down temporarily, but we'll address that in the near term.

Depak: Lots of demand in China.

Elon: Based on current trends, we will be unable to satisfy demand in China.

- - - Updated - - -

Ryan Brinkman: Drivers of margin expansion? COGS or supplier price reductions?

Depak: All of that and design improvements. As we expand production, our suppliers see cost savings. All that contributes to gross margin improvements.

Elon: 25% to 28% margin improvements just comes from scaling up and assumes that the mix of option uptake drops. We'll sell more of the affordable and still hit our higher margins.

RB: Incentives for Tesla in China? What kind of volume assumptions for China?

Elon: Not going to break out the market percentages. It appears that we will NOT be able to get everyone in China a car this year.

Depak: We are working with the Chinese Gov't but we are working on the assump0tion that we will NOT get any of the local incentives.

- - - Updated - - -

Andrea James: What is that status of partners and what will be the project pack cost reductions?

Elon: More than one partner. Panasonic is our primary currently. Default assumption that P will partner on gigafactory. There will be other partners for anode and cathode production. I don't want to talk now, but will talk next week.

AJ: 16% increase in deposits . . . what are you seeing?

Elon: At first we saw a drop in demand due to the fires. We were quite worried about it. But as consumers realized this was a media-driven thing. Our sales have improved and continue to improve. Consumers have started to realize that MS has a half-order of magnitude safety over gas cars and their fears have subsided.

When the fans are flamed by media, and without social media, we would have been in real trouble.

AJ: NHTSA report?

Elon: We anticipate a positive result. We have been cleared in Germany, Britain and Japan already. US is the lone holdout. We have provided info and we await their decision, hopefully soon.

 

[AnOutsider]

clearly people like what they hear

 

[pz1975]

Elon said he expects a positive outcome from NHTSA.

 

[callmesam]

Lynn Quai: 1000 cars a week . . . 2 lines? Shed light on what's getting you there? Will that max you out?

Elon: We are constructing a new line in the factory. The full answer is a little complex. Some are production constrained. Some are not. To get to the 1000 rate, we do need a new "final assembly" line which we are constructing. Shift over at the end of the 3rd Quarter.

The new BODY IN WHITE line is not needed, but it will be used for the Model X and S.

LQ: 1000 a week. That's not maxed out? Additional capacity beyond that?

Elon: Fair to assume we'll be able to go to higher numbers if the demand is there.

 

[Clprenz]

Fair guess that Model S demand will sustain 50k a year, Model X should Go beyond that gain

 

[Mario Kadastik]

WOWOWOWOW... Gigafactory will consume ALL of its own production and may need to still bring in cells from outside so no expectation for other customers.

 

[callmesam]

Len Kello: Evolution in demand from a year ago. Where can it be 2 years from now for the S? Loop that in with production expansion.

Elon: Difficult to predict. In relative terms, X will see as much demand as the S. Guess that X demand (speculative) will exceed S demand. As far as S demand if there is a global recession (macro factors). Seems likely to sustain demand at 1000 units per week of the S.

LK: Should we expect customer offtakes of the lithium ion batteries?

Elon: We'll have a dedicated call next week. The gigafactory will absorb all the cells it produces and we'll likely to need more production from outside factories.

LK: On the verge of profitability?

Depak: Should be profitable in Q1.

Elon: We could have aimed for a higher delivery number if we gamed delivery, by becoming a "contortionist". We decided to just produce cars. Our revenue number will be less than if we played games with domestic v intl markets. Q1 will be lower than it otherwise it might be.