Highlights from Tesla's Q1 Earnings Conference Call - Tesla (NASDAQ:TSLA)

Below are some highlights from Tesla's

TSLA

first-quarter earnings conference call:

CHINA/INTERNATIONAL MARKETS

Tesla doesn't think that they have a demand problem in China.
They are trying to expand their centers and supercharger coverage in China as fast as possible
Tesla is likely going to do local vehicle production in China in 3-4 years
Vehicle production in Europe as well in order to minimize logistics costs
Tesla is trying to get the wait times down in china; some of their customers are unhappy that they are delaying their deliveries
Tesla is not really seeing a lot of cancellations and has not seen many problems in the electrical grid in China

MODEL S/X

R&D expenses went up exactly as planned
Primarily driven by engineering design costs and testing the Model X in order to get it ready for China and other markets
Some of the R&D is ongoing improvements to the Model S
Very exciting software improvements are coming out in several months
Its more important to Tesla that they can service their cars really well instead of delivering them quickly
With the Model X Tesla wants a car that is better as a production car than as a showcar
Tesla will have the production design articles for the Model X out at the end of this year
Tesla will make sure the Model X is solid before they ramp up production

GIGA FACTORY

Tesla has a letter of intent signed with Panasonic and it doesn't think that it is a big deal that Panasonic did not sign on the dotted line yet
Tesla expects to break ground on multiple sites in order to minimize risk
Tesla expects to break ground on the first Giga Factory probably next month
Probably a month or two later Tesla will break ground on the next one
Under the current contract Panasonic will be the only company producing in the Giga Factory
Tesla has several other companies producing the pre-cursors to assembly in the Giga Factory
If Panasonic won't be able to meet the demand, then other suppliers will be brought on

GENERAL INFO

There is a lot of opportunity for innovation and cost reduction
Improving labor efficiency is one of these cost reductions that Tesla is pursuing
Tesla has had interesting conversations with companies that mine nickel and cobalt
Tesla clearly sees that if revenue is going to pick up significantly, then portion of revenue on R&D will be in single digits
For the first half this year Tesla were constrained by cell supply, which is most likely going to be alleviated by q3
Things are on track for Tesla to be able to meet 35,000 deliveries
In Tesla's case sales means deliveries not demand if production was better Tesla could deliver more cars
Tesla is seeing steadily increasing demand in North America
Gross margin improvement is occurring because of cost reduction
Tesla doesn't reduce costs if it makes the product worse
In a number of cases Tesla has added costs to the car because something needed to be improved