Tesla (TSLA) 29 Apr 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to Tesla's Q1 2020 Financial Results and Q&A Webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to conference like speaker, to now Mr. would hand over the your I Director Investor Viecha, for Martin Senior Relations. ahead, go Please sir.

joined Musk, Thank you, of Quarter I'm First Welcome other to by Sherry, and good XXXX afternoon, executives. Q&A a Kirkhorn and Zachary everyone. Tesla's today number Elon Webcast.

the link Our results as in this at we published p.m. Pacific about webcast. QX deck X:XX at announced Time were update the same

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

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

Thank you.

gross this margin, X we've years that and become our credits a excluding learned income automotive up few we despite So, major we net the obviously GAAP is weeks. After lot new a being XX% here. seasonally -- get ramp we've learned from all ramping achieved Even run the a faster is challenges, with products. challenges final have Model the This QX strong first time weak two first in in positive What the regulatory three quarter. products quarter from ago, while ended a profitable achieved many sooner.

than schedule quarters. Shanghai Most in quarter ramp Model any far, more in product we profitable Y Model in the Y surprisingly, of were first in the in we otherwise, ahead we produced are we the faster with two that surprisingly, Most its quarter ramp been Model QX, in achieved past. the Thus ahead something was even already Giga of production, has haven't QX. of Fremont the In as already. first than the first Ys Xs Model

and last package a and stop traffic new U.S. Self-Driving Users software signs to update all we Access lights just in March week. for Early Full to Autopilot, released Regarding with customers

at traffic of sign say functionality but to a or cars not good more car until only capable about we it actually than proceed. quite stop driver feel automatically Our are a probably will this, that we improvement. the is each confirmation is I much should that gets stop where the safety light and feel we exposing

driving collecting the people will data number are more intersections month over as grow as this We from update million point. get X every again. exponentially people start and at more This

from over Soon, X intersections billion per be we collecting data month. will

are the and training better and of reality Essentially, the All effectively those confirmations better. driver under labeling labeling is action -- and drive making driving they old as methods. them taking went

of else quite orders I think this advantage is magnitude one and combined. that else has, no more literally than everyone we're an

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as those through drive we all drive a end a the the an by it to with intersection no all of most your that confident extremely time feel would the be possible year. will And office from to your I of that, as home able confirmation feel be -- to we're do So, and really of interventions certain training cars confirmations well without make and to turns.

car. this leading-edge -- driving we So, can the do almost Alpha [indiscernible] this is already with the

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there. we're special. of over Tesla details time acceleration continuing range and improving handling, and forward We're pushing those to looking make that And not stopping course, for improved all

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isn't there par that two-piece even the Y. casting with fact, In the is anything Model on for

envelope as to structural reduce weight of the really very allows manufacturing. excited the cast it every way essentially. we're I'm It's engineering about improve in us So, vehicle and the better and on pushing NVH. this approach

to which a car we pump, also Y, new For introduced allows a revolutionary have range. the Model higher heat

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positive. has Y So our the -- the customers who best-selling been product thus feedback and will from far this getting ever. we're be Model product universally We're confident received have

a Giga -- Y to and continue. we Model I speed when forward-looking statement continuing will looking absolutely let in just at us our and conclusion, are guess expansion here in full Berlin this forward, Shanghai at Giga So capacity and is they Fremont both

over China bring competitive cost Localized the in Europe even time. production in products our making more and will down,

metal and expanding on cutting are We're pedal company. back are companies on other to opposite. products investment, the doing many new we the While the absolutely

really and well America, Europe units a forward global year, factories in X we're of million being looking And sometime and major in truly a China capacity with a to next manufacturer year. North over

there's to to going a tell tremendous amount forward you. wait can't to look happen. what's to you and So we Thank

opening you. to And now remarks. Zach's Thank

I'm to ramped significantly mentioned, of on of what Y, Model second and efficiency. A Elon product our very in cost of Martin evidence schedule. control Model team progress we've launch to X the thanks, as large-scale of Thanks, made highlight it's profitability ramp is This successfully the and and We quarter. launched, just XXXX since and Yes. ahead accomplishments things the Elon. few to mentioned. past proud the and Tesla add demonstrated this Elon

hard of It's production. in its this significance first of understate the to of demonstrating quarter profitability program

since while last through in year, production QX in Xs of full also Our Fremont. Shanghai the margins Model dramatically at built nearing This shutdown is early despite managing Model running X capacity, of equivalents not improved February. yet

and will QX. also expiration a related ASPs not positively of variant end announced rates, we order experience X China. government impact We Model much of road in long-range at the did the map, to incentives of impact On performance of which for our an

quarter with In again. our backlog yet fact, exited highest-ever we the

credits, Automotive downtime. profit. of with accomplishments, products, we charges all in first-ever able remained despite taken regulatory to margin, strong QX are these production by the excluding for gross QX our achieve Aided impact associated

service other and on make to margins. efficiency, progress our well as as continue OpEx We

as shutdown in limiting Our energy business activities by was QX impacted deployments. well

experienced also which of launch our expected profitability. with We efficiencies Roof, version the impacted third associated Solar overall

that be balance on we can generally before, credits by cash contribute seen noted increase receivable sheet. This from relative of which the most we revenue I've increase to sales, other carmakers the As credit and credit with it's in expect to QX did in time. And QX, to the regulatory note reflected our sell QX. to accounts not the

suspension cash operations. flows. free the by interruptions occurred, these of inventory quarter and resulting end free by – from were all of cash record products towards impacted in the flows were Our production for delivery and strong pacing not a increase our deliveries temporary Had of we temporary quarter the abrupt

on it mentioned, long-term road we that extremely plans is technology map. Elon to achieve As important and our remain track

progress to actions Shanghai. and investments. are Y continue in Model the in near-term making in Model Fremont taking Y as Model improving for are proceeding We we're on and those Berlin planned X and required Shanghai capacity

near as that's soon to increasing level In remains of factory profitability company. our production Shanghai an restarting cash the flows term, and as operational, towards possible. In contributing Fremont, the we're working

are We the were of deliver cars to that quarter. first unable we also the at continuing to end deliver

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are delivery and online prior in have world, many still paused to many of product customers sales the our orders, inability the despite for While receiving ordering. to areas operations experience we

the unavoidably, work shutdown However, ramp an we'll to production prior and near-term need impact how have on Fremont able extended to levels. will financial through be performance to will we our quickly in

this while the Tesla efficiencies during flows managed managing the reduce taken cash or also appropriately. done continuing we We've investments expenses More lever drive ensuring Working is time. to job our management, and material particular, in are important flows in to most business. here. The actions broadly, remain single on our has focused optional team eliminate great non-critical a throughout cash capital raw inventory

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you and thank success again the in to turn for QX, team we to Tesla So questions. will

Thank very much. you

investors the Safe institutional take questions first we'll from Technologies. So by compiled

have to experience deepen consider adoption The data is, all having FSD to most advantage? or investor purchase accelerate necessary you you levers could from premium vehicles FSD, a What For institutional first most hardware. pull subscription? the as Tesla and owners example, your offering despite yet question could

make FSD we it as in as a doing. the that to FSD And offer off will is an probably is but will confident option is FSD future. buying towards be buy this consumer will as still of think of benefit investment subscription it people are my end we opinion, Self-Driving an to option sense in not view, service, I the regret consumer. the In pay will Full say, I investment our year. -- something it should the that will to buying the

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some leased So or who do did ownership option that understand we customers not that upfront. have purchase have their vehicles

of And spread so to out or those time. this enable over cost will FSD subscription ownership of the customers

absolutely. At and happiness. high that, think loyalty Yes, goal our that a goal. that's guest our companies to under what it's kind loyalty. thing – maximize the try the we level, area results to That should curve And the of in is of long-term all creation And customer is the do. overall value

customers So the confident us. to best will that that, do behave the the behave to we're way always same if our in goal is we customers, for really thing the like and turn

you. Thank

benefiting what subsidy? subsidy The to to in to China pass manufacturing To from from the its is, is changes costs can announced NEV buyer, Tesla investors from qualify for question China vehicles subsidies. the program so there recently and they room for savings those Tesla lower extent that disqualifies second

Yes.

costs price excited actually making in basically So tomorrow, China. progress that this And on will of we time. the the range call to we're Model are reducing China the we standard production on rapid be announce X lowering

China tomorrow, good will tomorrow, after And that price time. gross limit. there that California So delivers be still that's will a subsidy be the below day margin. a feel time, the confident And we vehicle but a

produce lower and than significant portion vehicles out. Fremont, in cost there's in the question, cost QX cost to Model is And still manufacturing left X in the the to of the already Shanghai of Yes. opportunity on take the costs produced

will occur So cost and absorption rest supply chain QX the yet. from production fixed volumes, were of the on are the year higher which fully through localized not occurring in

the of lot is opportunities and it's a complete, there's additional while chain so there. supply And not localized,

margin continue And the reduction expand -- range and price costs even and on the expand Elon down that in version the bring so to standard of mentioned we'll margin this with down vehicle. price

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uncertain So of Anything long-term It's a But ahead. future prospects I to bit are guys think bumpy extremely I good. an think a that there's clearly want add? you road. the

great. on and The on is which key Elon. the enable prioritization think with faster agree efficiently to will projects I I us more execute them, Yeah,

our would experience that the possible. at make as as The other I digital that always is, to Tesla it's and improve one been vision add customer

delivery. Touchless Yes.

Yeah, So on that touchless progress lot has touchless been sales on. very Mobile we've of made and delivery. service a something been focused

Yes. your that The a Effortless. the have car to all the Tesla paper car delivered with it. done. on you doorstep can less can than minutes five and order everything and in your is order you phone, literally it That's only

And many customers do that.

And it, yes. they're doing

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is by to next and The from us time Battery institutional you steps highlighting a question is, introduction? cell for brief investor improve the generally give can Day density is Tesla preview of taking energy line

either it timing out to in Texas. third be think timing. preempt right to we for right Not be figure upon probably right just May. we're Battery days the day, that's trying the in probably exciting be allowed probably we to what -- the or be -- exciting a but to lot the will We of leave the Actually, most And And exciting the would firm were want We Day. we're to we history Yes. the just for giving don't want Tesla's news think timing I of think week do, that news date, depending tell. and a it will will that. but that there one California of

And institutional from on progress much Self-Driving? update revenue and last How have stores development you could you Okay. recognized far? of commercialization the so investors, question please Full

So there Full couple things is Self-Driving. the a financials on of for

other associated in We into North will with half $X,XXX released as with currently, the revenue. revenue, goes half option. deferred and for roughly of time. as so, an that America, that take sold And be it it's That's of features

balance grow. a bit to $XXX little Our is deferred revenue It's over continuing million.

deferred value into we we quarter. the that end with features we as and every look for features financials can release what released quarter, release revenue take then have that from our a time, associated of at so the And been at

released, the can going cars forward, is then recognize And that once revenue. feature we

reduce recognize we So revenue of that can the within amount deferral, period. we and

think So, the will I the time mean, gross most levers one rolled this is one suite we with margin out. of what of as feature be powerful is

the will beat as Autopilot we or talked -- of amount turn our we And potential untapped basic in simple just end as upgrade as there a enable year, Self-Driving. a of subscription. could also the just that's or towards Autopilot Full about that purchase on tremendous the There's in Absolutely. to out earlier, something

in a that's great potential it's revenue think portion, certainly not there. fruition. just is which That's deferred So we line, a untapped deal the large but to reach potential that of a lot obviously, deferred is likely

line Thank you. past. still Tesla's the And would or from ambitions for now target? vehicles mentioned XXXX. and one, XXXX XX% investors. in more Elon vehicles million annual the growth more Tesla compound XX this Is target a years? with in be let's go five for Is retail in through next XX% XX the Question in questions number to than X realistic million This has

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When question for next How you the do The planned from Gigas, Okay. the five will you investors. announce next have years? retail next many Giga?

as that the possibly not will three as next This announce in – next I month. could would may month. U.S. as saying. months that soon as think a within month. And soon happen. is Giga just will prediction, We not a It one That's and – certainly we possibly the be be

in years, not be. I today. than that I'm know some years, five more how several in sure, today. there for are I many would number – be don't exactly as than But not guess, five So it what I'm number be more will now would what but right

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start Yes. called being Tera. they Larger,

multiple products with as Yes, well.

be one similar that's Giga each the but ultimately build factories, having larger. integration absolute as significant lines as under may one much might much just all And number belief that is and in vertical same by of roof, and possible we as less, our under so facility. the product possible, And efficiencies as

Roof How per per of can question the give The many able you. an installations end Solar us ramp? Thank What target week for you your you next install update on is week? is, XXXX? are currently to

The closed. COVID gaining ability with from down, permit places. COVID, Roof We places, install both but XX offices shut and to get were the us actually before the interest were sheltering the Solar permits. momentum essentially ability And we're to

install get permits, if it. So we then – physically impossible. you obviously can't you basically the can't and do It's cannot

long-term So snow but taking to seasonality on a rate the spring, extremely Glass don't roofs Solar that, even X,XXX confident is let's in know, the year rate like, by next, not where I – like at ice. think to – we and hard X,XXX and of should That's hit trend or allowing something, or—maybe for actually demonstrated winter good, ability the have the for hard install of week Roof for year, that But end I installing a of it's are Roof be a Solar already. middle in say, plus I'm installing, within which is seasonality, We covered say I think the build the it's part. week.

the out channel up a teams, So It's the installed installers. problem. that's installers, not building the building roofing industry third-party

installations. to less which to We demand gets least than week little X,XXX want an a week Production see you is have or and we perhaps do at good. a a install week is Solar X,XXX roof Roof teams a with install, internally, good. – taking And

the – then companies Roof think industry really beyond also diverse roofing far scale us build all Solar the training, install, scale to that, week. the install to it's allow also X,XXX a the and out very in group So will of I about like

interest outside North We're of also of a lot America. seeing

be we Roof. and seeing from that this So on product a the China actually tremendous to is interest expect a amount of international Solar

this confident will time. we're for product significant a very So be company the over

HVAC can consider you of some Can plan water how and/or is, question heater basics will on you provide market market? Tesla's enter as residential next Will the your pump The you. work? Thank well? the to system commercial elaborate heat you

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need it of is the instead it a or the heat when way you use cold And other Yeah. outdoors, the source, outdoor if around. as really

of options. So lots

could a be of hell product. a It

So the we whether potentially continue we to have to product Tesla have on just front. –

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technologies. New

Powerpack, Megapack. Yeah, Powerwall, exactly.

than We storage, for more for we are demand XXXX. seeing stationary can supply, tremendous at least

sense lending it and storage? them? like Tesla instead them convert question and battery Hornsdale to last from Thank when you. Tesla Reserve retailers, acquiring for of bigger most make plants the Does start Power utilities the buy will selling And

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overarching power is you've of power, the three you've generation, elements the are advent of then sustainable storage. help stationary to accelerate to got then that have got electric energy. And store goal transportation. Our the And sustainable to

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very think analyst we can now questions. move And Thank to I much. you

Thank you.

Our Jonas Adam go ahead. will Morgan first from Stanley. with come Please question

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the of people So people's against in rights, constitutional came forcibly I or shelter or, imprisoning homes this why it, and outrage. in that my the opinion, frankly, in But place all that extension -- what freedoms their is the America ways in their built people wrong are breaking and Excuse not would fuck? country, call me. horrible to outrage it’s an

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to of past. spend a the is what Sometimes, these of for we -- and yeah, we transportation about not are lot it? we money the future, need the thinking So be on gaining really but transportation things, of what the

to steam was Obviously you do XXXX, want be engines engines. engines? or investing steam not that’s in this commercial If in

is right rights, and think So happening infringe to the is also upon right people's about this as is the future now. to it what time to ask,

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Okay.

next please. question Let's go the to

you. Thank

Our next go Rosner from question Deutsche with Please ahead. comes Bank. Emmanuel

a was for the it Hi, on on Model already good Y. drivers should mean with Y? gross commonality I app And little is margin does a Model evening. elaborate you for X, what can more what about? Model we hoping much function of how of think the the low such Question positive the eventual the at How gross volume. bit of factors is on other that the margin flow

Zach?

there for thoughts of couple A Sure. Y.

a carry ASP. higher does it first The is,

of the a And deliveries started on that we it the higher side, than the revenue with ASP So of were cars. higher ASP Model carries X. the versions

initially. started performance we with deliveries of So

time And similar so more will And trends ago. years the margin. a mix. the come we have of that steady-state down of that more variants we are it's But that two and with had with Model helps that ASP create as we in Fremont to when some released, X product launched

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with here in are similar And knowledge existing well, in to workforce addition Model that and have so existing well. Shanghai. as and with factory an that, we Model X helps in And and to as then experience both manufacturing processes very to X with well Fremont as it have

relative the of is -- a and So built There there. ecosystem to the number remain continue lot opportunities to of support limited take goal. is of the to car. we that our product quite the quarter costs out take launch first vehicles to the in And

the better. of out costs product take We car good. the and to It's make

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next The go Please Baird. ahead. from Ben Kallo comes with question

very you much. thank Hey,

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Ladies and gentlemen, this conference concludes participation. today's you call. Thank for your

may disconnect. now You