Market Overview

Highlights from Tesla's Q1 Earnings Conference Call

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Below are some highlights from Tesla's (NASDAQ: 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

Posted-In: Earnings News

 

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