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Below are my short hand notes I recorded from the Q3 earnings call today. These were summarized in most cases as I took the notes on my phone to keep up.
Most interesting notes
The Model S and X will have a 3% increase in “power” and the Model 3 will have a 5% increase in “power” via OTA updates in the upcoming weeks. Later mentioned “range”, not sure if power = range.
The SR+ model will be updated via OTA giving it the ability to charge faster at super chargers.
When asked about clarity about when FSD is complete, Elon was slightly annoyed, and responded with ” FSD means the car is able to drive from house to work most likely without interventions. It will fill gap between low speed autonomy and high speed autonomy. It still needs to be supervised. The timeline has 3 levels. 1. Autonomous with supervision at times, this is considered feature complete. Means most of time. 2. Another level, car is safe enough without supervision . 3. Lastly regulators feel car can be driven without supervision. “
…..and also about FSD
Q: FSD rates, since regulations in different markets , can you provide prices of FSD by individual features by market instead of bundled?
A: no , we have hwy AP and smart summon. Working on Traffic lights and stop signs and windy roads in suburban neighborhoods. You’re going to want it all. We are at the point where we are uploading software enabling robo taxi , expect functionality by end of next year. Base functionality by end of this year , to the point we are comfortable by end of next year depending on regulatory jurisdictions.
About Model Y production: “1,000 units per week my middle of 2020. Do not expect to interfere with Model 3 production. Body line is separate, do not expect model 3 downtime. Model Y margin is higher. Cost of Y puts cost at equivalent to model 3. As it stabilizes expect a higher margin in product .”
Full notes below
Smart summon used 1 million times. Expect a number of improvements in the coming weeks and months.
Tomorrow v3 of Tesla solar roof. Finally ready for the big time. Scaling up at our buffalo factory.
Q3 was great for Tesla.Key points Returned to profit. 22.8% growth margin. Higher production of S and X Reducing material costs. Model 3 reduced Recognize $30mill in deferred revenue due to release of smart summon. YTd positive cash flow. $5.3 billion in cash
First phase of Giga Shanghai is ready.
Energy storage grew by 15%.Small medium and large solar price sizing.Elon: “do you want something that prints money? If it doesn’t work we’ll take it back.Zillow shows 4% increase in value with solar. In CA having battery backup is beneficial.”Since Tesla does online sales you pay for product and not sales.Fast order to install times. Reduced complexity, usually only need one visit to a customers site. Opened generic permits with most local jurisdictions making permit process more simple. More than 350 townships and counties have accepted it. This is more important for solar roof installs. Process has sped up from months to days. We’ve streamlined process…minimized process….Similar for commercial space. Removing long term complex contracts and made simple for businesses.
Questions:Institutional investors: do we expect advertising in near future?A: no plans to advertise at the time. Word of mouth is working good.
Q: other than robo taxi what are you most excited about..?
A: expect Tesla energy to be roughly same size as auto sector. This is the most unappreciated group…solar plus battery is least appreciated element . For almost 2 years had to apply to model 3 production ramp. During this time stripped energy resources ….didn’t have enough car sales. Now Model 3 is in a great places restored resources to storage. There is going to be crazy growth here. Tesla’s mission has been to provide sustainable energy. You’ll see we are producing compatible amounts of energy that is used by our cars. We are solar powered company .
Q: FSD rates, since regulations in different markets , can you provide pierces of FSD by market instead of bundled?
A: no , we have hwy AP and smart summon. Working on. Traffic lights and stop signs and windy roads in suburban neighborhoods. You’re going to want it all.We are at the point where we are uploading software enabling robo taxi , expect functionality by end of next year. Base functionality by end of this year , to the point we are comfortable by end of next year depending on regulatory jurisdictions.
Q: model Y launch time, model 3 downtime?
A: 1,000 units per week my middle of 2020. Do not expect to interfere. Body line is separate, do not expect model 3 downtime. Model Y margin is higher. Cost of Y puts cost at equivalent to model 3. As it stabilizes expect a higher margin product .
Q: update on FSD attach rates. Will you lower price to drive volume?
A: don’t think we will lower FSD PRice, we expect price will increase as functionality improves. Unrecognized revenue due to tax rates. There is 1/2 billion in unrecognized revenue.
Q:details on traffic lights and stop signs.
A: beat scales improve efficiency for self compute. This was a tiny acquisition.
Q: reports suggest giga is producing model 3 for production, what is second building?
A: trial production, ramping up. Expecting volume in a few months. Second building is for battery production and prepping model Y proclduction
A: launched in CA. Take rates are high by industry standard. Work behind scenes on purchase flow. Working to get other states and internationally, can’t give timelines. Goal is not to have N outsized market share, goal is to offer another option where prices are high.
Q: skepticism on FSD feature complete.
A: car is able to drive from house to work most likely without interventions. Fill gap between low speed autonomy and high speed. Still be supervised. Timeline 3 levels. Autonomous with supervision at times is feature complete. Means most of time. Another level, car is safe enough without supervision . Lastly regulators feel car can be driven without supervision.
Q: hoping for color on growth margin .
A: on China there are always ramp inefficiencies which could affect. Will impact
Growth improvement, s and x improved in Q3. We’ve adjusted price on products based on market demand. Cost reduction has helped. On every line item there is a tremendous amount of good work there. Smart summon, debatable on whether we can regain revenue as feature are delivered.
Q: once Shanghai is ramped, the model 3 in China will be most profitable car you sell?
A: expect roughly to same as Fremont model 3. Need to ramp inefficiencies down.
Q: it’s been 7 years since mode S, could we see Tesla supplying EV architecture to other manufacturers to help sustain energy transport?
A: it would be consistent to help battery and power train front. We open source patents . We are open to supplying batteries and power trains to other car companies.
Q: version 10 had a lot of functionality . Long term plan for software platform? Monetize opportunity?
A: goal is what is the most amount of fun you can have in a car?It’s not just a transport utility with no character. We want it to be something you Love. People are generally spending hrs a day in car. A lot of time . haven’t thought about monetizing it. As autonomy gets better more entertainment opportunity.
Q: opportunity for mission credits in EU?
A: ongoing dialogues with Oem. Tax credits are not a big percentage of revenue . 1 1/2 % of revenue.
Q: insights on truck.
A: not the right forum for truck.
A: s and x are niche product. We are Continuing to make them for sentimental , great cars, not as important to future . X is faberge egg if cars.
A: there’s never been an instance in time where software makes the car better than ever.
Q: learn from a and x for Y?A: bit expecting cannibaliztion of since one is sedan and other is suv.
Q: giga 3. Targeting 3k units. How smooth week to week basis? How lumpy in a quarter?A: if u had crystal ball we would love to use it. Should be smooth. From week to week it will be bumpy. In 2 to 3 quarters it will go past 3k per week.
Q: optimistic on Tesla energy. Where is growth? Solar or storage?A: solar will grow fastest. Both will grow faster than auto, starting from smaller bays. Euro growth will be incredible. Over a year gigantic. Increase. Solar is hard to install in winter especially in east coast during winter.