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Below is a copy of my shorthand notes taken from the earnings call today.
Most notably, Elon stated that production of the Model Y will occur in small quantities at the end of Q1 and then will be ramped up.
Another big statement was that the Model Y EPA rating is 315 miles for the AWD variant and has been reflected on the website. This is above what was previously stated.
Full shorthand notes here:
Fremont we produced same level as 2006, we expect to exceed that this year. There is a lot of potential to go beyond this. Shanghai will be an incredible asset. We broke ground on Model Y factory in Shanghai.
Modely: We started producing Model Y in small quanities. Model Y 315 miles EPA rating. Above what we previously stated.
Cybertruck: We tried to build a product superior in every way without preconceived of what it should look like. What’s the most badass futuristic carrier of any pickup truck. We will sell as many as we can make, it’s nuts. The product is better than people realize. It’s just great.
Cash flow great. In 2019 generate $1B in cashflow. While making investments in capacity..testament to Tesla team.
Thank Tesla team for cost control. Gets us to good numbers with incredible pace.
Model Y, Giga Berlin Solar roof, Cyber truck, battery tech, FSD, next gen roadster. Hard to think of another company with …Fire up to think where we will be in 10 years. If you look back, we will production 1000x more cars in 2020 than in 2010. We have powerpack, where will we be in 10 years.
Zach: This last year has been transformational. On demand, over course of year went from model 3 orders on backorder to new and organic demand. Stabalized asps in Q4. Greatly learned from model 3. As result, new capacity with less cost. Financially, multiple quarters of strong cash generation, higher volumes, ..continued improvement on opex costs. Positive cash flow in Q3 and Q4. Also made recurring software based revenue with premium connectivity and upgrades via app. Also, stock based compensation, increased by $82M. Result of improved financial performance of company.
Look ahead to 2020, task is to execute growth.
Model Y expected deliveries later this quarter, ramp over subsequent quarters. Higher gross margins on Y then 3.
Strong order rates on local 3 in China.
Significant progress which result in reduced capital spending.
Will set us up for our strongest annual performance yet.
Q1, ramping Model 3 Shanghai and Model Y which will weigh on expenses. May be temporarily shut down due to a gov shutdown. Closely monitoring if there are any delays in fremont. Sufficient cash..
Q: Sage tech. Since solar is required for new construction in CA, any large builders?
Elon: we are seeing a small base, expontential growth in demand for solar glass roof. Demand is strong. Working through Tesla installers and new home builders and roof industry. We see a lot of interest, it’s a question of we are refining the installation process.. Over time expect a significant % of new roofs to use solar glass. Do you want a roof alive with power or dead without? Looks good, lasts a long time, it’s the future we want. Since it’s a new a revolitionary product, problems will be overcome.
Q: will you release tesla network app and change terms to allow owners to be drivers on the network?
Elon: it will make sense to enable car sharing in advance in a giant robo taxi fleet. This can be done before FSD is approved by regulators. It will be enabled before FSD robo fleet is enabled. Super chargers at airports?
Elon: we will put superchargers any where we think it makes sense.
A: it is our intent to get insurance ready for robo fleet.
Q: What is target for Tesla insurance in 2020 to lower cost based on data from cars?
A: Currently available in CA. Working on expanding to other locations. Preparing our processes to go through regulatory in other locations. Adjust our rates in CA which also have to go through regulatory processes.
Q: Will there be a discount for using AP on our cars?
Elon: Yes, it would make sense to lower insurance cost from lowering probability to injury. Insurance will be a big part of Tesla over time. you can least a model 3 for $400 a month, typical owner in CA can pay between 100-200 per month on insurance. Because insurance co doesn’t have good info about the drivers. We can do that real time. An advantage insurance companies don’t have.
Q:When will we see retrofit computer on older models. Feature complete?
Elon: To be clear I said I was hoping to be feature complete by last year. Might be feature complete in a few months. This means going from home to work with no interventions, doesn’t mean features are working well, it just has better than zero chance. Looking like a couple months from now. What isn’t obvious is how much work has been going into the foundational elements of autonomy. The core AP/AI team…We are only starting to take advantage of FSD hardware. has been making great progress. The apparent progress as seen by consumers will appear to be extremely rapid. …having a strong foundation. Moving to video training in terms of video training. All 8 cameras simultaneously, a 3 order of magnitude Improvement in labeling efficiency …[better].
Q: Does it make sense to take questions from ..
Elon: Retail investors have better insite…some of the smaller retail investors..better insight than investors.
Q: you have spoken about shanghai being 60% better compacity, what changes?
A: Shanghai have been remarkable, capex premium is lower. Labor cost, localization (bettern economics), inbound logisitics, cost savings on lower import costs. Slide in shareholder letter showing layout, simplification of flow is evident in layout. Add all of this up, internal estimates are lower in China than fremont.
Elon: There is a pretty big efficiency gain for making car on the same continent where the customers are. [don’t have to ship those cars], no tariffs, imports..
CA regulatory requirements are high, it’s very complex. Just having a factory in China/UA/Europe is a massive improvement in operational efficiency.
Q: Why not raise capital now, and accelerate giga, cust service…
Elon: we are spending money quickly, there is no holdback on expenditures. If there is good value on money, the answer is yes immediately. Despite all that we are generating positive cash. It doesn’t make sense to raise money because we expect to spend cash..
A: Model 3 held back our ability to sell. Unintended costs…now we have a good foundation, we aren’t holding back on growth. 2 vehicle launches will consume resources. We want to be sustainable so we don’t make the same mistake we made a year and a half ago.
Q: Geographic workloads?
A: increase in opex expenses. Automating things that need to be automated. Opex will take off. Support international footprint and growth of the company.
Q: If S and X have stayed flat. When will S and X use different batteries
Elon: 18650 has improved over the years. it’s more a form factor vas opposed to a core technology. We’re rapidly approaching a 400 mile range for the S. It won’t be long before the S is in the 400 mile range.
A: The 18650 lines have been running good. Don’t see a reason to turn the cell supply of.
Elon: The S and X have more range than we are stating on the website. Actual range is above what website says. [existing cars already being made,] somewhere in the 380s.
Q: Adam from Morgan Stanley: Do you see potential for tesla to be fitted with starlink in the near future?
Elon: it’s something that can be happening in coming years., focus on starlink is low latency high bandwidth. This requires a medium pizza size form factor. You could stick it on a car, it will work..
Q: assuming we get the form factor cost effectively and aerodynamically, how compatibility improve the tesla network?
Elon: recommend he cell connectivity. If in the country you could connect with the starlink antenna. You could use 20/30 MB it would be fine. ..not thinking about it very much.
Q: Dan galves wolf research. What is capex going to be this year? Is there a rule of thumb for capital expenditures per unit of production capacity?
A: I don’t think we want to say what our capex is going to be this year. We are spending money as fast as we can in sensible ways. It’s not artificially limited. We will spend a lot of money this year for sure. The challenge is finding ways to spend ways to spend than deciding on a capex number.
A: we challenge teams to always become more efficient.
Elon: you wouldn’t necessarily notice as an end customer, some will. There are things like our internal OS team, improve core automation of the company makes a big difference to the company, you wouldn’t notice as a customer.
Q: Your operational cash flow is $4B right now, future that could fund 250K per year, is that something that is feasible to execute on?
A: Our internal plans are faster…growth rate, as production increases can fund additional factories, not as limited as you described.
Elon: if tesla grew a rate in excess of 50%, still hold to that belief.
Q: Jene Loop Ventures. Cybertruck, how many can you make? Cost?
Elon: we don’t comment on detailed numbers. Demand is more than we can make in 3 or 4 years. Thing to focus is on is increasing battery production capacity. If you don’t increase…you don’t produce more electric vehicles. That’s why semi…don’t have enough cells. Accelarating semi would result in less 3 or Y. Need to improve cost of cost per kWh of batteries. Battery day will explain our plans more. This makes sense end of this quarter. Tentatively April we will do a battery day and what the challenges are. How do you get from here to a couple thousand GWH?
Q: High passenger density vehicle? Any progress?
Elon: We got to improve total battery capacity. Will we do a high capacity vehicle? Probably, but we have to make the batteries for the cars we already make. People do prefer to drive cars by themselves. With autonomy maybe goes from 1.2 to 1.4? Will it make sense to go to a mini-van or sprinter van? We have to scale battery production to crazy levels that people can’t even fathom today, that’s the real problem
Q: Diff between 3 and Y. Are other features that will differentiate the models? Will model 3 sales expand with introduction of Y?
Elon: introduction of X increases sales of S. Actually causes increase. We’re not worried about demand, we’re worried about production. It’s always hard to predict the exponential part of the S curve. We are going as fast as we can for Y. There are some things that will differentiate it, don’t want to talk about on this call.
A: Keep Y in context of 18-24 months. Y will be produced in all locations.
Q: Colin Openhaimer: Target for gross profit per vehicle?
Elon: we are trying to make them affordable as possible as fast as possible, good cash flow, good cash balance.
A: order rate supports pricing. We are working on increasing production. China first step in toward global localization accesible price.
Elon: High volume and high margin. High volume comes from autonomy. FSD is better is US than China, so less buy in China. As it gets better, more and more compelling.
Q: Higher voltage for power train? Speak to power train cost reduction?
Elon: power train is pretty damn good. Model S has 100 kWh pack. S is approaching 400 miles of range.
Q: how do we drive the cost down? Power density?
Elon: the plaid power train is mind blowing, yeah. Coming out later this year end of year. This is like Aline technology, it’s insane. I didn’t think, there’s no way. Tesla is all about hard core engineering.
Q: Emanuel Deustch bank. Avg selling price being stable in 2020. How do you see the metric of Y higher price, China has lower price…
Elon: Adjust according to what demand looks like. Maybe that will change.
A: It’s fair to assume the price is stable.
Elon: Portability improved dramatically, Tariffs go away, ax exemption, local supply, don’t have to send across the ocean.
Q: Dan Credit Suisse. Make sense to raise capital to accelerate autonomy.
A: Broader, as we look forward to cash in business according to plans.
Elon: we are going to steadily pay down debt.
Q: Pierre New street research..End of this yr should have 800K units. Seems like competitors…Seems like you are struggling to grow capactiy. Why are you confident you can do this and others can’t?
Elon: It’s pretty hard, the fact is we already demonstrated growth in giga in nevada. We’ve gotten pretty good at that, we’ve worked with panasonic. They have been a great partner. We’ve added some additional partners like LG..talk about in more detail battery day. We are super deep on cell module battery. Rabit hole goes down pretty far.
A: we have a decase plus of what a cell should be and how to integrate into car.
Elon: wow, it’s next level.
Q: Sense of impact of ramp in Shanghai?
A: we were negative in Q4. There was a slight drag but not significant?
Q: Joseph Osha: Plans for maxwell tech?
Elon: we will talk about on battery day. It’s going to be a compelling story. It’s going to blow peoples binds. It’s going to be cool.
Q: Is maxwell part of plan?
Elon: Some retail investors have put together pieces of puzzle.