Tesla (TSLA) 25 Apr 192019 Q1 Earnings call transcript

Good day, ladies and gentlemen and welcome to the Tesla Q1 2019 Financial Results and Q&A webcast. My name is Sherry and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Martin Viecha, Senior Director of Investor Relations. Mr. proceed. now may you Viecha,

number Thank you, first today Welcome Tesla’s and afternoon Elon and XXXX Q&A good a Kirkhorn quarter Zachary joined J.B. everyone. other webcast. executives. Musk, to Straubel, Sherry of I by am

at results the Pacific at Time X QX as link this updated Our about we the letter p.m. announced were published same in webcast.

as events based our with forward-looking statements. During results make on predictions materially this a and our call, due Actual those recent business number and we outlook in of and could differ of filings expectations will our most SEC. or uncertainties, comments are today. mentioned discuss to the These including risks

Instructions] call, limit into of the jump one opening But Q&A, portion Elon During has [Operator Elon? yourself before please question-and-answer some we question today’s to remarks. follow-up. and one

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Thank think well. much, Zachary have as some you Elon. remarks And very I to would like

the theme Model the mix ambitious The well. was Tesla’s retooling Overall, talk range global and Elon launched as the do thank various to We I huge and and the Martin product was corresponding and had pricing suspension of QX, we you, X, just Model order complicated company upgrade Elon cars. X impact in S most of Model that history the by on can progress the deliverable from about as of expansion one thanks adjustments for of and standards. within was think which it Yes, the reflect that on even in our and X a then implemented work quarters we of Model this quarter. lineup standard

to will Q&A cash the we around key So would there like and is briefly two for quarter. themes it to then up discuss profitability and open I that

on with in cash QX from billion billion $X.X cash a XXXX cash was we This to hand. front, balance, attributed $X.X First, reduction reduction ending exited factors. on is and the this cash our equivalents but two

we because and times, cars those The the through then $XXX QX. in QX balance largest tracking that million to I that X impact we will note we continue in operation additional have the on X. cash convertible operations of statement, more that delivery do both of expect we on increase than be explained are but is the you to history an April cash X cash the first the for is of also flowing in reduction that also repeat off our looking expect our to to Note of balance to which expanding $XXX this is components operations capital flows. amount which will occurred billion the $X.X our month naturally The of stress all deliveries these this the our note not in We And of two quarter meant from factors Model of of overseas. ending is operating transit company. to delivered, working not forward. March the discussed commands million working going to international flow capital paid by

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to want attributed for here is I Within that to the reserve just revenue note the that automotive that business, by I impacted negatively X and million automotive $XXX one thing was noted. increase S

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effectively future look sentiments around can the base our agree done I to product an lineup. products assets the here, different build Elon’s As scale replicate a quickly the and that is have knowledge From financial here and world. into incredible excitement we of we about we standpoint, of with what

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to So the felt more the looking forward the remarks I company future discussion. opening conclude here, of and personally never am excited the just about to I

Thank you very Zachary. much,

first retail submitting been on have their from questions say.com. who Let’s shareholders take some questions

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battery is scarcity. really challenge The cells Sure.

all power As far we as X, order had year, storage basically Powerpack. just production we an as the cells on need produce enough X Model in concerned, as the to for Powerpack. to additional of lines the for full Last convert have the actually to to as support is vehicle to up-sell to well Model opposed Gigafactory of cells

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Yes, X% between XX%, something and like that.

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will from The world. in because cells [indiscernible] through around a that to continue number a then have of the use vehicle in much suppliers [indiscernible] more to using other So, car there don’t are Powerwall are of go decent from quite – cells so a translates I variety Powerwalls. cell Powerpack, adaptable And the to providers. to we of Powerwall variety

and percentage Powerwall that to high see quite expect the very year we a order of some XXX% or So, this Powerpack growth significant on number. maybe

XXX%. XXX, Yes, sorry. confirming Sorry, it,

rate. So this much is faster an It’s big very automotive. growth percentage a than

percentage to we that then time. expect a would time, over over continue storage will and battery be sort growth able and of become bigger bigger So rate Tesla’s hopefully business of

offering finding and also are the and we deliver have product extremely install. much significant be more to we to – solar because have refined also year, finally a that’s this efficient compelling cost in increase We retrofit something

few installation [indiscernible] be do slowed roof streamline is easy, then will which the down with which to process that has next design. balance pretty Buffalo X say weeks a want rate on significantly done radically and necessarily the while that to impressed factory this are we week. the Solar which simple last and Tesla aging to Solar That forward because can sort the we takes Roof was possibly we be accelerate XX we on are you and have been the is and I the the the years Roof to from team and of up ago Version to next. we iterate necessarily to Roof so tile, what warranty XX on XX, a going actually you year to of is of more and And order So, years the scaling before Solar process scale that looking and is confident the up the through and have can on at by because on of

when production and Tesla much. the Thank question you semi Jeffrey, will where from comes The very begin? next

is This Jerome.

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Sparks technically.

Nevada. Northern yes. Sparks,

Yes, Northern Nevada.

current owners purchase retail, And how FSD, from new computer? the should perhaps soon the FSD question that get last

really about point don’t from the different months. I are functionality there hardware. materially X in probably I when releasing car features start on it the you and if or available That’s Version getting think think the from have features set is X upgrade will FSD we no standpoint, the X feature that for

to So, It’s months I especially. before relevant X exclusive get just make replaced. then nobody in – other then. to comment this increase no the to rush obviously will it One rapidly need and your computer from case will it becomes like asked X

For Model the Model vehicle equipment that decision final required California tooling Y. now meantime, and of soon. trying Model to decide all to are we have But should and Y Y be whether ordered for very in in production, a we the production or on we right make expect Nevada

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question queue. the Thank you analyst very go much. to can Sherry, in questions we

you. Thank

Brinkman Our comes question first JPMorgan. with from Ryan

taking for thanks my questions. Hi,

deliveries from year sequential and you? the Can order what it about talk somewhere telling the to to outlook, is full XX,XXX what the second. the XXX,XXX growth maybe the in XQ first XX% for with reservation book when confidence or growth you and guidance project half suggests to that between giving Your XX% particular you combined list

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anticipating and people of upgrade. a of We are. X, And an and of kind S, is really this I with upgrade be the a of game-changer S X then upgraded there lot kind were would think that an

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to we be so believe done it disruption add actually Fremont. Model can to with Y And minimal

you. Thank

you. Thank

from question next Research. Our with comes Pierre New Street Ferragu

the units call. see are really quarter on is think market saw the with more coming I X you in April, weeks thanks see said we numbers for Hey, probably the are pull question you where level a back behind U.S., we on QX. today follow-up and specifically, what for of something or – the of you already is on that Model per that My is demand lot Is S And comfortable do recent not there QX in see first you X? you Elon, that yet? in have and and or that the the Model you based a still hurt And in forward is demand the the S one that us? XX,XXX the

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sorry, And other was what the point?

question QX you My demand moment, at forward run-rate feel the weak of demand still or think about like pull do normal returned the like already? was of the do because in demand in Yes. U.S. you to you see the

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question then And my second on... briefly was

like Sorry, Zach to... would

with the production in out increasing process production Yes. Well, we suspension course that in we to range that, the in to production improved wanted of as the just QX. just of backup over place reduce are and get noted. was longer That the retooling one the put and vehicle was the side to of We S part QX thing of add I X. did on

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us maybe be profit similar price see one-off points is you How costs, loss for of much you volumes? in how points the other could coming take related mix in where where through QX much compared to down QX and had the we much how So will a is to pricing if will QX the and in XQ and things? pain

Sure.

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you. Thank

very you much. Thank

to next question. go the Let’s

Stanley. Adam from is question next Morgan with Our Jonas

Thanks.

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you. Thank

comes question next Maynard from with Macquarie. Our Um

the talked up. follow to And you In just how might about about supplier then what I thanks. think have impact you? Can and update a limitations you that that continue impacting you talk letter, was long Hi production.

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question the to next please. go let’s Okay

Thank you.

from question Research. Dan Wolfe from Galves next comes Our

sorry price Is that order number flow that bit Hi you Model ASP XX adjustments? kind Xs, mentioned us of everybody. A ASP current more like $XX,XXX adjustments? you’re, a since seeing a give couple kind thanks what you I’m a flow? for can little One, of of price kind those as detail of order is the on is questions. February America since the North

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guys. lot, a Thanks Okay.

Thank you.

Bernstein. Our next Toni from with question Sacconaghi comes

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making operate don’t be substitute for think company more I effectively. Yes. the should raising capital

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why If it term. as wouldn’t in the a possible to as mover you it first you really do you believe short raising push want even advantage, meant have quickly capital if

Yes.

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Thank you.

let’s Now go the please. next to question

Thank you.

with Our Jaffray. from Piper Potter comes next question Alex

when headwind challenges a the wondering quarter. obviously Hi I in were the you was say logistical guys,

that basically You your in in and going North longer to... need talked balance deliveries just to about saying try trying America Is to going their China deliveries take to people order to to forward. going are Europe more in that wait to emphasize you’re regionally and

just We dedicated don’t entire essentially all and receive the American of the at they like QX first half customers North the XX where, quarter [indiscernible] situation customers quarter’s is the insane. literally to in again production cars throughout world, It in say, blend actually just were where the cars of in that building No, same instead vehicle the That’s half had would And for cars of means batches, quite a delivered were the that we like worldwide throughout final deliveries their the half time. we is cars, want dedicated that sooner. the to QX. arriving second quarter. this we at cars days of China, Europe

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plan it to So, the to sense throughout just quarter. makes according demand just production the

on was there. that where makes if then the on That there I Okay. Then sense. wondering were of fair of like question, there to market, was just there’s go A time second I noise hedging strategy. some the any period some storefronts. guess look around was company that. amount closing the focused of made it, update And commentary

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Sure.

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to in are no-brainers. add So, we actually stores locations will continue

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information like centers, merchandise, buy a closed. like source kind drive So, are can get sales place mean thing. of that online, test Tesla all you doesn’t But and essentially stores there some all

you Just in Orders on when That’s always it’s means it a closing. online home all store at stores anywhere. do meant. are not phone your what buy car, or doesn’t, the meant or you

Okay very good. Thanks.

you. Thank

Philippe from comes Jefferies. question with Houchois next Our

have them credits Hi to seem cash I’m you agreement if in what might start position? FCA to on of the in are potential and just is you occurring? if of to possibility QX COX Europe means you questions. on comment your for yes, your inflow. with thank taking the chance reached wondering the your any When things those that And there could any cash selling that

so we FCA we with publicly to so I think it’s on we abide and a confidential agreed not by must comment that. deal it with FCA

better deliveries your also Adam I of and on a so these about on coming drama you unfortunately, it reduce some surrounds kind what reserves can early of away was greenhouse And a by you stock. maybe question back ask we the revenue to your don’t that your disclosing of saying get basis just disclosing move of why instead of details the a right some view that monthly

things actually be occurred a much into at even quarterly people in mean, because basis, a I can counterproductive I month. that what too be read think would lumpy.

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So, increase people drama, read that decrease the it. would not

the And ship we’re [indiscernible]. filling XXX%

XXX% ends Filling it’s just the lumpy. being so it ship like up

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Thank you.

with Tambourino Sachs. comes question Goldman next Our David from

our taking questions. for Thanks Great.

it of But flat given quarter. we deposits, like it it’s probably would timing increased customer deliveries have maybe thought the to First could helped I on towards with understand one, that [indiscernible]. end it Model have slightly the the down. it’s essentially looks would have Y some

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just if July out phasing next view would then further Well, you be adjustment price Okay. my the anticipate question a second level X? credit

publicly. unless see changes on you it We future don’t comment price

Okay.

Let’s go please. the question to next

Thank you.

question with next Our Oppenheimer. comes Colin from Rusch

Yes, constrained at quarter better you’ll in vehicles could a XXX,XXX on you be whether comment XQ?

We mean? XXX,XXX. you Self-constrained feel at constrained don’t

chemistry at form And the into the Maxwell production? and able be integrated? comment you how you’ll for close, that battery think get technology look factor quickly And you you then on it could as integrate potential you integration, Technology to do as post changes

I really questions sauce some you’re secret pretty super asking mean, here.

the this. next think an future we’ll think Investor the be like this later but early an year go do and Day criticality will yes, I very Autonomy have cell or of to over probably maybe And technology we just Day and informative have we’ll strategy. think that recognize I battery

so thank Okay you much guys.

you. Thank

Our next Capital RBC comes with Spak from Joseph Markets. question

to that Is First cuts? expect XX% that the gets by the something back outlook and given or of this non-GAAP higher X question is the that price really just a over S clarification in And on margin if what is targeting. end the you’re hit year? gross you so, mid-term of

Model our over more, be an on applies able two One from with on on we’re which is to out working third also natural associated actually a biggest not help apply components. that we’re non-GAAP X, increased revenue take approaches piece functionality will full Yes, rate we’re towards projects for which of Zach but and absorption we year, our S us. although internally, is the place gross the so just full that the achieving number seeing are, that in And the option on that’s targeting end will benefit X, of production that And is sooner. executing back course S there’s S as have reduction the we year. is, of we And are that cost margin offering. lever revenue also roll then X we suite the [indiscernible] and of we as X line, here, fixed given to increase there more Self-Driving there this and that. volume But there a there. cost becomes, The the

all these together internal gives us So of within [indiscernible]. things our

and launched upgraded essentially X the S the significant Model the S motor X of in that extremely made mention powertrain for for was a electronics units is high should we’re magnet volume, cost for version efficient I driving unit took and X. that we which because and and down the we of actually a product Yes, contract

actually and And X get to example. while so, reduction cost we’re car. able improving just the That’s range of [indiscernible]

Okay.

Elon, XX-K, $X.X X. does constraints. I question you’ve that you notice The if question production hour guess billion of some think is, $X.X the to gigawatt that adjust? just XX second at correlate is purchase indicated which can’t And that does to constraints, that rate? reaching of Giga in Panasonic the And hit your because related then looking you’ve is billion obligation, I primarily communication, production

[indiscernible]. is This

contract which So, is purchases we entire mean, the the tomorrow. the make for to not hit. the that need have I XX-K basically for in something Panasonic. we obligation purchase It’s

So this a is of to years. couple going take

Okay.

Thank you.

from Our comes UBS. Colin next with question Langan

the the issue. of tone for product, that when sounds automakers that thanks and for a under the taking to don’t I issue a some margins demand pressure seem see of it from my is but Great there’s you question like pricing there mean, be demand call typically stop

the of So, logic during what the price cuts the is quarter?

our more company, $XX,XXX is because the the a I we it that sort quite important interior mean, about actually our X we between and range realizing clear is think Model offer XXX of as range and the the increased X and affordable thought Model posher with bundled and goal, as XXX difference from Autopilot. create to to very as the then in cars And important we’ve possible. of was make people for been beginning to package

sweet which spot, spot a X consumer raising knows So, I just we that’s really nail is thought and response $XX,XXX product the really sweet the accordingly. just Model the think

introspection, have a just Autopilot a or kind of the didn’t to more thing. that and store. tell buy version have like a software by of call visit of can phone slightly the inconvenience Model You It’s has X $XX,XXX that, course, to make

to the there actually people that complete So, But remain not you it’s there. something. up few offer, very have but us or and course we will it’s take see on like $XX,XXX just obstacle

As up, you Are China the yet to X,XXX follow supplier the year. ramp getting the a a point? the have week? end And confident that’s by of per close in you you’re battery still targeting the still do facility pretty

with from program. daily the from Tom there. Yes, is I the progress day the of Tesla to leads who picture execution one Gigafactory Gigafactory team well. e-mails next underground Shanghai incredibly Tesla our get going

week. obviously getting And we’re discussing updates X so, days a or

I mean, in that Gigafactory So, I’m e-mail.

terms item. important the the of grows That’s as production So, in of very execution, as in course, to [indiscernible] fast bear mind.

of XX% good we So, shape have car. make the in can things

be end with more said, year cars at week, now. of that Giga. it sales Shanghai we’ll have this year. let’s respect to the to than X,XXX maybe with, thereafter. at So, And to That’s X,XXX Shanghai the case shortly what expect reach we the like for be it If Giga the at multiple end of a right looks say, looks it’s this then from end, flyers it volume not like will production

all talking to we very Great. the to look questions, forward today. everyone. Thank you is we our have Unfortunately, all in and this Q&A time quarter. the Appreciate of for your next you much

concludes program. This in gentlemen, participating and conference. today’s Ladies thank you for the

and a wonderful You may have day. all disconnect,