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Tesla Q1 Earnings Call: Flufferbot, Model Y, and the ‘Best-Selling’ Model 3

Elon Musk said the company’s Q1 letter to shareholders covered just about all he had to say about the company’s progress and instead wanted to devote the bulk of Tuesday’s earning’s call to questions.

At one point he teased those on the call that their questions were too dry, but ultimately covered quite a bit of ground with his answers. Below is a round up of a few notable comments.

Production – Musk said he’s most excited about “rapid increase of output.” He said Model 3 production has achieved a “peak hour” equivalent to a rate of 5,000 cars per week. Musk said “if you can achieve it even once,” a focus on refinement will help you eventually sustain the rate. Tesla has been able to achieve this by simplifying the production line and studying what tasks deserve automation and what tasks don’t.

Musk said the company was previously automating “silly things.”

“We had these fiberglass mats on the top of the battery pack,” Musk said. “They’re basically fluff. So we tried to automate the placement and bonding of fluff to the top of the battery pack. Which is ridiculous.”

Human hands are “way better at doing that,” he said, and the “flufferbot” was decommissioned.

Best-Seller – Despite production woes, Tesla is still on the cusp of becoming the best-selling mid-sized premium sedan in the U.S., Musk said. He expects Model 3 to have 30-40 percent share by the end of the year, stealing sales from cars like the BMW 3 Series.

Profitability – Musk is “confident” the company will be cash flow positive in Q3. To achieve the goal, Tesla will begin a restructure this month to shed expenses. Most of the reductions will impact third-party contractors. “We’ve got barnacles on barnacles,” Musk said. 

Funding – Musk said Tesla will not raise new equity capital. “I specifically don’t want to,” he said.

Model Y – Investment in the Model Y program will only become significant in 2019. While a clear timeline for production hasn’t been given, Musk said the car won’t hit roads for at least two years. He said the production location has not been decided, but to expect an announcement by end of year.

Musk also made a bold prediction for the upcoming all-electric crossover, particularly given the stress the company’s newest model has caused the company. “I think Model Y is going to be a manufacturing revolution,” he said without offering more specifics.

Tesla Semi – Musk responded to those who challenge the truck’s specs announced at the unveiling by saying the Semi’s range will be even better. Tesla previously said its electric semi truck can travel up to 500 miles with a 80,000-lb load, but Musk was willing to bump the expected range to 600 miles.

Musk said sales are “opportunistic,” as many fleet operators are coming directly to Tesla with inquiries.

Self-Driving – Tesla’s self-driving efforts have had a rough go recently, including a federal investigation into a fatal crash that occurred while Autopilot was engaged, as well as team departures. Jim Keller, Tesla’s VP for Autopilot Hardware, left the company last week for an engineering position at Intel. Musk said there is no plan to replace Keller. The company’s efforts for full autonomy, including the development of its own chip designed specifically for artificial intelligence applications, will be managed by Pete Bannon and Andrej Karpathy, Tesla’s director of AI and Autopilot vision.

Speaking on the proposed Tesla Network autonomous ride-sharing platform, Musk said the company would be ready from a technical standpoint by the end of next year. However, the rollout of such a service will depend on regulatory approval. “We’re making really good progress on full autonomy,” he said.

Musk said Tesla will soon begin issuing a quarterly safety report on the use of the self-driving feature in cars. “Autopilot is safer, no question,” he said.

You can listen to the full webcast of the call here.

 
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With all due respect, I think Elon 'screwed the pooch' yesterday on the CC. It sounds very much like he forgot he was talking to analysts who control all the big money that supports the share price, and instead thought he was speaking to pesky Bloomberg or Barron's reporters, who do not. How wonderful he reached out to us retail investors. But that really should be done in a separate forum; what you want to do in a CC is lay out your vision for the big money that calls in, and frankly, convince them why they should invest in your company. If you want to be a publicly traded company, and have access to Wall Street Capital, that's what you do. Yes, you have to endure dry and 'uncool' questions. Most of us have to do that in our daily work lives. So do it.
Mr Musk is smart enough to grasp this. He makes a superb product and has a real chance of changing the world. Stick to that message please. Do better next time, is all I have to say
 
With all due respect, I think Elon 'screwed the pooch' yesterday on the CC. It sounds very much like he forgot he was talking to analysts who control all the big money that supports the share price, and instead thought he was speaking to pesky Bloomberg or Barron's reporters, who do not. How wonderful he reached out to us retail investors. But that really should be done in a separate forum; what you want to do in a CC is lay out your vision for the big money that calls in, and frankly, convince them why they should invest in your company. If you want to be a publicly traded company, and have access to Wall Street Capital, that's what you do. Yes, you have to endure dry and 'uncool' questions. Most of us have to do that in our daily work lives. So do it.
Mr Musk is smart enough to grasp this. He makes a superb product and has a real chance of changing the world. Stick to that message please. Do better next time, is all I have to say

Indeed. You are correct.

Stocks down 7% today.
 
Indeed. You are correct.

Stocks down 7% today.
Exactly. And while this could very well be a short term move (And let me say, yes, the stock is volatile. Duh. Everyone knows this, and nobody I know above the developemental age of ten thinks a CEO should over concern himself with a stocks short-term volatility), I think this was entirely needless. It is people coming to offer you money, and you turn around and insult their necktie.
As Berman says "Aw, C'mon MAN!!!"
 
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ecarfan

Well-Known Member
Moderator
It does look like he is starting to lose it.
I listened to the earning call and in no way did I think Elon was “starting to lose it”. I applaud him for dismissing repetitive questions focusing on the minutiae of short term changes in production rates or capex spending and for saying that he has no interest in those who day trade (meaning those who don’t care about the long term outlook). Looking at the data on a timescale of weeks or a few months is meaningless unless all you care about is making a quick buck trying to get lucky on guessing what will happen in the very near term.

I loved the way he let the “retail investor” guy (who got on the call because of a twitter exchange he had with Elon) ask a dozen questions that were actually interesting instead of the usual boring crap that the “analysts” ask. I too am sick of those guys.

The “flufferbot” story was hilarious, as was his dismissal of the stupid Nikola suit about the Tesla Semi.

I learned a lot from the call:

From now on, future Gigafactories for cell/pack production will also include vehicle production, all under one roof. Makes sense.

Next Gigafactory will likely be in China now that it has relaxed its rules about joint venture requirements. Good news.

Fremont factory is “bursting at the seams” (if I recall the quote correctly) and there is no room for Model Y production there, and by implication no room for Semi or Roadster production either.. So it will be somewhere else but he didn’t say where. Y production has to be in the US because that is the largest market for CUVs. I’m thinking Reno, next to Gigafactory 1. Recently there have been reports of a large area being developed and graded.

Despite Model 3 production ramp delays, reservation numbers are robust and holding at around the 450,000 level. The significance of that stunningly huge number does not get enough play in the media, in my opinion.

The chart showing BMW series 3 sales declining as Model 3 deliveries increase was intriguing, but of course correlation is not causation. Still, there is likely a connection.
 
I listened to the earning call and in no way did I think Elon was “starting to lose it”. I applaud him for dismissing repetitive questions focusing on the minutiae of short term changes in production rates or capex spending and for saying that he has no interest in those who day trade (meaning those who don’t care about the long term outlook). Looking at the data on a timescale of weeks or a few months is meaningless unless all you care about is making a quick buck trying to get lucky on guessing what will happen in the very near term.

I loved the way he let the “retail investor” guy (who got on the call because of a twitter exchange he had with Elon) ask a dozen questions that were actually interesting instead of the usual boring crap that the “analysts” ask. I too am sick of those guys.

The “flufferbot” story was hilarious, as was his dismissal of the stupid Nikola suit about the Tesla Semi.

I learned a lot from the call:

From now on, future Gigafactories for cell/pack production will also include vehicle production, all under one roof. Makes sense.

Next Gigafactory will likely be in China now that it has relaxed its rules about joint venture requirements. Good news.

Fremont factory is “bursting at the seams” (if I recall the quote correctly) and there is no room for Model Y production there, and by implication no room for Semi or Roadster production either.. So it will be somewhere else but he didn’t say where. Y production has to be in the US because that is the largest market for CUVs. I’m thinking Reno, next to Gigafactory 1. Recently there have been reports of a large area being developed and graded.

Despite Model 3 production ramp delays, reservation numbers are robust and holding at around the 450,000 level. The significance of that stunningly huge number does not get enough play in the media, in my opinion.

The chart showing BMW series 3 sales declining as Model 3 deliveries increase was intriguing, but of course correlation is not causation. Still, there is likely a connection.

I get what you are saying....however aren't you in the least bit concerned about the constant misses? I am in no way dogging Tesla or anything of the kind, but its about time for some of the predictions to come true without them dangling new predictions/objectives.

Maybe its just me.
 
Exactly. And while this could very well be a short term move (And let me say, yes, the stock is volatile. Duh. Everyone knows this, and nobody I know above the developemental age of ten thinks a CEO should over concern himself with a stocks short-term volatility), I think this was entirely needless. It is people coming to offer you money, and you turn around and insult their necktie.
As Berman says "Aw, C'mon MAN!!!"


Unfortunately short term is getting longer and longer each day. I wonder how long the term "short term" actually lasts.
 
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Unfortunately short term is getting longer and longer each day. I wonder how long the term "short term" actually lasts.
Well one of the analysts made a good point when he said something like 'good quarters are built on good days, and good years are built on good quarters'. I have no idea how long the 'short term' vs long term volatility will last, but my instinctive reply is 'a long time indeed'.

One other thing; if a building is burning, you are supposed to throw water on it, not gasoline. CEOs should not overly concernt hemselves with short term volatility. But neither should they add needlessly to it
 
It’s refreshing to have a CEO who cares about the company long term rather than the quarter-to-quarter changes in the stock price.

Hmmmmm.

Thousands of companies had CEO's that cared about the company more than the quarter to quarter changes in the stock price.

Unfortunately there is a common reason as to why we don't know who they "were".
 
Well one of the analysts made a good point when he said something like 'good quarters are built on good days, and good years are built on good quarters'. I have no idea how long the 'short term' vs long term volatility will last, but my instinctive reply is 'a long time indeed'.

One other thing; if a building is burning, you are supposed to throw water on it, not gasoline. CEOs should not overly concernt hemselves with short term volatility. But neither should they add needlessly to it

Tesla is a "publically" traded/funded company. The public has invested a tremendous amount of money in Tesla.

Are you saying that Elon should not pay attention to the public and only concern himself with the company? Should he say....yeah...eventually we will make money......but don't worry about it.......It'll eventually happen in a few years or so. If so.....I wonder if Tesla should have ever gone public.

The primary purpose of the Earnings Call is to let all of those people who gave tons of money to Tesla - know how their investment/money is doing.....and what Elon is planning to do with it...short term and long term.
 
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Big Dog

Active Member
Mar 7, 2016
1,916
2,175
Irvine, CA
I applaud him for dismissing repetitive questions focusing on the minutiae of short term changes in production rates or capex spending

I enjoyed the call, but disagree that Capex spending is minutiae. Investors want/need to know if Elon plans another funding round in the near term bcos it directly affects their ownership %. I can understand the question as to why he thinks current cash burn is ok and that they won't run out of money.
 
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