There will be again a lot of boneheaded questions at this week’s Tesla earnings conference call for the results of Q2 2018. We have collected the most important questions we expect and put them into two categories.
The first category is: “Look in our spreadsheet for the answer.”
The second category is: “Use some first principles reasoning to get to the answer.”
More complex questions that require second or third principles reasoning are omitted. Only “The YouTuber” will ask them.
1 – Look in our spreadsheet.
Answer: losses don’t grow when you make profits.
¤ Mr. Musk, can you add some color to the future of electric trucking? Daimler has announced that it will offer a 200 miles electric delivery truck in 2021. Aren’t you afraid Daimler will have cornered the market when you enter it with the Tesla Semi?
Answer: The Tesla Semi is scheduled for Q3 2019.
¤ Mr. Musk, the analysts of Goldman Sachs computed that you need $10 billion in new capital for your investments in the next two years. Are you not very late with starting to raise this large amount of capital?
Answer: And on what should Tesla spend all that money? Look at the CAPEX tab of our Tesla Financial Model.
¤ Mr. Musk, you airlifted a new production line for the battery production from Germany. Is the financial extravaganza wise considering the cash position Tesla is in?
Answer: Land–sea transport would have taken 3–6 weeks longer. Extra cars produced at least 1,000–2,500 per week. Marginal profit potentially 40%, but let’s be safe with 30%. Minimum cash contribution of air lift 3 weeks * 1,000 cars @ $50,000 and 30% is an extra $45 million. Maximum cash contribution over 6 * 2,500 * $50,000 * 30% is an extra $225 million. Considering the cash position, it was not an extravaganza.
¤ Mr. Musk, is the decision to build cars in a tent not an act of desperation. And how is the quality of cars made in a tent?
Answer: Permit is for 6 months, 20 weeks production of at least 1,000 cars per week, that is an extra $300 million in cash. And those are the performance models build in the tent, with the extra quality control to make them performance models.
2 – Think! (Using first principles).
¤ Mr. Musk, it is claimed that the laws of physics will prevent you from building the semi trucks with the specifications you mentioned at the reveal. Could you add some color to the problems you are encountering in this regard?
Answer: The trucks as specified are driving around in this physical reality.
¤ Mr. Musk, I did read an analysis that the base Model 3 cannot be produced at a profit. When will you announce that it is no longer part of the product lineup?
Answer: Tesla accounting department answered this question over 2 years ago, before the launch on 3/31/2016 — it will be profitable.
Answer: Are you serious? Together, they are less than 10% of Model 3 production, worldwide.
¤ Mr. Musk, you said you are eager to start designing the Tesla pickup truck. Will it use the same chassis as the Tesla Semi?
¤ Mr. Musk, building a new truck factory costs at least $5 billion and takes years.
Answer: The recent Protera and BYD factories in California did cost some tens of millions and were operational in less than a year. Some thought of Musk on this topic would be appreciated, but please, think before you ask.
3 – What the ??? (in a class of its own.)
Answer: Does he know Elon Musk is a numbers-driven, first-principles thinking, logical acting human (or alien) being. When the numbers say no need, and the further in the future you look, there is less need to raise capital, what is your argument?
Of course, there are many more boneheaded questions. The thoughts of analysts never fail to amaze me. Please help in the comments to collect more. Musk can perhaps use your thoughts to prepare for the conference call. And if he misses this post and your comments, it sharpens our thoughts when thinking about the Tesla future.
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