Tesla’s 4th quarter 2018 conference call just launched. You can listen below [actual call starts at 17:00]. We will also update this post repeatedly as we jot down highlights.
Notes from Elon at the top of the call:
Tesla’s top priority in Q1 2019 is improving service in North America. Tesla tow truck and loaner car will be on their way even before your car comes to a stop if a problem/accident is detected, even for something like a flat tire.
Tesla will start stocking all service parts at its service centers for much quicker repairs and turnaround.
Elon is optimistic about being profitable in Q1 — not by a lot, but he’s optimistic about being profitable.
Tesla Model Y has something like 76% in common with the Model 3, and production is likely to happen at Gigafactory 1 in Sparks, Nevada.
Tesla expects Model Y to sell perhaps 50% more per year than Model 3, but could be even double the Model 3, due to it being in the most popular vehicle class (crossover/CUV).
Model 3 production should be rolling strong in Gigafactory 3 in China by the end of 2019.
Elon Musk’s best guess of Model 3 depend in a good economy is 700,000–800,000 vehicles per year. If in a recession, that could be significantly lower, perhaps even 40% less, but still approximately 500,000/year in terms of worldwide demand, according to Elon’s expectations.
Model S & X demand should not be hurt much even in a recession in terms of the money they bring in for Tesla.
Full Self Driving update: Already works in developer mode, just needs to get reliability to the proper level and get regulator approval. Reliability is perhaps something like 98% right now, but needs to get to something like 99.999%. Elon expects it to be ready, per Tesla’s opinion, by the end of this year, but then it depends on regulators.
Tesla has no plans to use 2170 battery cells for the Model S and Model X.
Hard to predict Model Y production ramp, but they are confident they will be at volume production by the end of 2020. Tesla Semi similar. First Semi usage will be internal — for Tesla’s own needs.
Tesla pickup unveiling may be this summer. It will be unlike anything else, something very special.
Deepak Ahuja: “The purchase of the land [for Gigafactory 3] is a 50 year lease with the government of China.”
Tesla has first wholly owned manufacturing facility of any auto company in the world in China.
Tesla vs. Waymo: Tesla has an advantage that no other company has — a massive, massive training fleet, ~300,000 vehicles. Everyone else combined, miles driven might be 5% of what Tesla has (being generous). The difference is increasing — will be probably a million Tesla vehicles with the hardware in 18 months. “I’m just not sure how anyone else competes with that,” Elon says.
Jerome Guillen: “Our manufacturing keeps improving quarter over quarter … actually, week over week. … We will try to make sure that the car never breaks down.”
Elon still estimating an average selling price of $42,000 for the Model 3, eventually. But it’s just an estimate, a guess.
Elon: “We expect to introduce [the Standard Range Model 3] in the middle of this year. … We’re way smarter about how we spend money and we’re getting better every week.”
Elon: “For a company making EVs, we have the least access to incentives.” In China, Tesla has never had any tax credits, but will be eligible once the Shanghai Gigafactory is online.
Elon: “It’s cost, cost, cost, cost. … Getting those costs down, marginal costs and fixed costs,” is what will allow them to lead the world in the sustainable energy and clean vehicle revolution.
Deepak: Tesla obsessively focused on improving capital efficiency. “We have dramatically cut back on capital expenditures.”
Regarding China, Elon says: “China — we don’t even know what’s going to happen with the trade negotiations. We want to get them there while there’s a de facto truce.”
Elon: “Demand is one of the last things we’re thinking about.”
Elon: “We’re thinking about demand almost zero right now.”
Regarding Tesla Gigafactory 3, Elon says “We’re only talking about phase 1 here. Phase 1 is probably only 10% of what we’re thinking for the gigafactory.”
Side notes regarding analyst questions: lol. OMG. Gaaaaaaaawd. You’ve got to be kidding me. Elon is so patient with these fools.
Elon spoke directly with head of Panasonic about new Panasonic–Toyota joint venture and the Panasonic exec assured Elon this would have no impact on Tesla. But Elon sounded a little nervous to me.
Side note from Vijay: “Not one congratulations for two quarters of profit in a row.” smh
Tesla’s previous parts storage process has been super dumb, boneheaded*. Tells story of parts made in China, sent to a warehouse in New Jersey, and then sent back to a Chinese service center. Elon: “It’s going to get waaaaay better.”
Analyst mentions how the analysts have been wrong on Tesla for something like 7 years and essentially asks how they can get better. Deepak basically says (not a quote): “Believe us when we tell you something, and work that into your models.”
Elon: “We would have done more in stationary storage last year, but we were cell-starved. … I expect [stationary storage] to grow twice as fast as automotive.”
Elon: “I’m confident that Tesla will remain slightly profitable even if there is a significant recession. … We have to be super hardcore about [cost].”
Deepak is retiring (again). ;(
Zach [something, but not Shahan] — oh, Zach Kirkhorn — is the new CFO. Joined Tesla just under 9 years ago, but had a break to get an MBA at Harvard, which Elon said was not necessary, but such is life.
*Elon said the word “boneheaded,” then seemed to realize its connection to a previous conference call, started chuckling and said it was self-referential. I was laughing so hard, and it seemed Elon had a hard time containing himself.
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