On the earnings call: 100k run rate will be split about half and half between Model X and S.
Should be mentioned that they are primarily upping service centers more than stores since they aren't trying to generate demand but rather service the demand that is already there.
Service times are averaging a day. They are employing a formula one style service in that it is as if a pit crew is attacking your car to get it fixed.
Mr. Burns tries to kill Elon in the Simpsons, but it won't be in an i8
Fuel Cell vs Battery -> Fuel Cells best case cannot beat a current case electric car. Fuel cells "benefits" are range and "recharge" times... both of which are not really hurting EV's too much now, and will be fully addressed in the future.
Quality Control Improvements: They have addresses almost all of the early production issues with current cars. A lot of the "drivetrain" issues were just misdiagnosed, and was actually a problem with the drivetrain. Current issue that needs to be addressed is a differential issue, which is solved by them inserting a "shim", which costs 50 cents. Stressing that a lot of these fixes are not costly.
"The best service is no service"
Aspirations on the car is higher than any other company regarding Quality Control.
Pad is complete for Reno Factory. Going to be doing similar in 1 or 2 other states. Makes sense to have multiple things in parallel. Before moving on, want to make sure things at state level are there that makes sense. Not going for a deal that is unfair to the state or unfair to Tesla. At this point the ball is in the court of NV legislature and governor.
Asking about the 5BN number and on track for suppliers to invest the remainder: 4-5 is pretty accurate up through 2020. 4bn will be pretty close before they get to high volume, as they improve up through 2020 it will likely total 5bn. Tesla will provide 40-50% of the total cost. Panasonic about 20-40%. States 10% and other partners 10,15,20% depending on how vertical they go with the factory. Panasonic was never in doubt to Elon. Actions are what matters, and Panasonic has always taken the actions of an excellent partner. Feel confident hitting the output they need to and the investments they need.
Model S orders vs Model X orders: Just to put orders in context... no cars available for test drive... No info in stores... if someone comes into the store asking they try to deflect people to the S... despite that there is all of this demand for the X. "We will not have a demand issue"
100k exit rate in 2015 and constraint before factory comes online: They see a path to 150-200k cars without the battery factory can't go higher than that without.
Is chemistry going to be the same for batteries? There are improvements to the chemistry and cell improvement. Will see energy density improvement and cost reduction. Seeing 10-15% improvements on the density itself and will be changing the cell shape and size to find the most optimal. Not a lot different from now but 10% more diameter and 10% more height, 30% more energy per cell because of size. Fundamentals of chemistry defines primary costs shape and size don't matter. Chemistry will continue to change to improve.
Vertical integration for Model 3 outsource or no? Outsourcing doesn't seem to decrease the cost, in-sourcing has always made things cheaper for them. How far did that molecule move? did it go all the way around the world 3 times, that is expensive... so it is about making as few movements as possible. Feel confident in 30% cost reduction.
How should we feel about gaps in production vs delivery? Production will always exceed deliveries. Time to delivery depends on mix of local or international. Average time to delivery in NA is about 2 weeks. International delivery is an additional 3-4weeks. Overall average delivery time is 4-5weeks.
The will be slightly over 35k cars this year. Doesn't really need to be much over 1000 a week in Q4 to hit this target.
Asia will be more than just China. 40 Asia pacific region. 40% in NA. 20% in EU because it doesn't seem to be taking off as much but it is hard to say because that could change to 25-30%.
More on Batteries: "I would be disappointed if it took us 10 years to hit 100$ per kwh pack". Do you think it will then be cost comparable to ICE? "Yes". 30% is not just due to logistics. It is not even the biggest. Designing custom equipment that is much better at processing the equipment makes this work much better rather than some "off the shelf" equipment to build these batteries. Again, they don't need a breakthrough in chemistries. In the long term, there are many interesting things on the horizon. It is hitting a place of no contest with gasoline. They are just pushing it along as fast as they can.
Trajectory beyond this year on capex r&d and SGRA, they should see significant improvements in it as a percentage of their revenue. More specifics can be given as they get there.
The reason they feel confident in hitting Q4 is because of the missing 2 weeks in Q3 that would have been which explains the progression from 7800 deliveries to the jump up to 13,000 deliveries needed in Q4. Will be hitting the 1000 a week at the end of Q3, and no logistic issues forseen as they pump these to the service centers for delivery.
Q: Blah blah... How is demand...? "Demand with no be a problem" Can up the demand as much as needed, they aren't pushing the car more because they don't want to make people made because of longer wait times. Since there was already upset customers seen in China. Their sales per sq ft in china is double that of Apple.
Will R&D slow down? No there are a lot of exciting things coming out and our R&D numbers are better than they appear because we haven't disclosed some things that will be coming (this was a very interesting let through!!!!)
How do you see the environment for China on domestic sales? Government has been very helpful, lack of sale tax does apply to non-chinese cars. Charging standards do have to be adhered to, but now that it has been they are committed to meet those standards in order to stay within the sales tax exemption. standard is pretty close to the European standard. License plate exemptions have been extended to foreign companies and is likely to continue as they move into other chinese cities.
Edmunds service report: They had genuine issues but they had an early production unit. Most of their problems are not present in current cars. Service team was ultra proactive with edmunds car, they were doing their best to make edmunds happy. The drive unit replacements are not expensive, they are replaced because it makes it fast, but are moving toward reparing on site at the same speed as a replacement. They are replacing to get people back in the car right away. From a cost perspective the overall impact on warranty reserves in not that great. They are going to work hard until car is 10x better than everyone else on the road.
for 100k production is that big increase happening right now or is there something else that needs to happen? Q1 will have another jump which will be the bringing online of the body line for the S and X joint line. Will be brought up in parallel. Rather than stopping and retooling. In this case it won't impact the overall run. New body line will have a run rate of 2500 a week at a much cheaper cost. Another big upgrade is the paint shop. CapEx will take 2-3 years to pay off for Paint Shop, but it is worth it because of the benefits.
X shown in Extant tv show is a Pre-alpha. The alpha to beta will be very quick because most everything is already there. The alpha is a really advanced alpha and will move from alpha to beta in 2-3 months. Production cars will be on the road in Q1 of next year (but not necessarily in customers hands). Emphasizing how rapid they are moving through these phases. The X will go into full production at several hundred units a week in about half the time it took the S.
1000 to 2000 a week in 2015, taking mid level of that 1500, so what is the target for next year? It is difficult to predict the slope for the production rise. Will exit at 2,000 a week by the end of next year, but unsure where that curve will play out. Certainly more than 60k I would think.
Weight reduction - extended range? weight vs range is not super strong, there is improvement but not much. The Model S has gotten steadily lighter over time. The S in prod today is at least a few hundred pounds less than the one that started production. A big improvement in one area is only a 1% to 2% improvement... so there isn't just one area that can be improvement. So weight isn't going to be a big driver in increasing the range of the S.
end of call.