Musk interprets Q3 financial report: every production line of Tesla is an independent start-up company

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 Musk interprets Q3 financial report: every production line of Tesla is an independent start-up company


In the earnings call, Tesla executives talked about plans around the company for the next few quarters, especially the battery production strategy. In addition, executives mentioned future project updates, such as cybertruck, semi and roadster, as well as the introduction of fully automated driving features.

The following are the key points of Tesla financial report conference call:

Musk first called the third quarter the best quarter in Teslas history. He also talked about battery day, which he called the pinnacle of the companys many years of work. In a few years, musk points out, if production costs are lower, the price of batteries could be halved.

Musk also discussed software updates for full self driving (FSD). Thanks to the special efforts of his (Tesla) driving team to re launch their new autopilot system. Mr musk said the updated software for autopilot is likely to be available to more drivers by the end of the week and widely available by the end of the year. Musk stressed that rewriting the autopilot architecture is a general method to realize the full automatic driving function. In other words, the vehicle does not need special sensors to achieve autonomous operation.

In terms of automobile capacity, mask referred to the expansion of the Shanghai plant, as well as the Berlin plant under construction and the Texas factory in the United States. We have made progress in the construction of three major factories and the performance of Tesla China team is always impressive, he said Mask also noted that production at Berlin plants will slow down at the beginning, and then production will gradually increase over time, thanks to the development of new technologies. Berlins plant may take about 12 to 24 months to achieve full capacity.

Zach kirkhorn, Teslas chief financial officer, said Tesla had been profitable for five consecutive quarters. The companys regulatory credit sales continued to be strong. Despite increased spending due to Musks compensation plan, the companys performance is still quite impressive. Kirkhorn said production and operating costs continued to fall.

RJ Johnson, head of Teslas energy division, discussed the development of the energy business. By 2021, we will have more demand than supply, he said Megapacks demand is expected to increase in the coming year. As costs fall, sustainable energy technologies will replace fossil fuel driven solutions, he said. Other Tesla energy products, such as autobidder and Powerwall, continue to be more adopted. In addition, the solar roof business is also promising, as Tesla is gaining more experience and installing products more quickly.

Questions from shareholders

The first question for shareholders was about the Tesla 4680 batteries, and whether they would be produced at the same time as the vehicles at the Berlin plant. Drew Baglino, senior vice president of Tesla engineering, gave a positive answer.

Shareholders also asked about solar roof installation restrictions. Johnson said the main limitation today is the installation process itself. For Tesla, making sure the solar roof is easy to install is crucial. So far, feedback from third-party installers has been quite positive. Musk points out that the real potential of solar roofs is likely to emerge next year.

In response to the idea that Tesla might spin off some businesses, musk said Tesla was essentially a collection of start-ups. Every major product is a start-up, and every big new factory is a start-up, he said. Frankly, sometimes we have to learn a few lessons to fully understand that.

Musk also pointed out that Tesla does not rely on enterprise software, which means that all of Teslas operational software is developed internally. However, Tesla has no plans to divest anything, and musk believes that it will only increase complexity..

An institutional investor asked about Teslas HVAC program, particularly with regard to modelys heat pump. Bagrino points out that modelys heat pump does provide Tesla with some of the basics. Musk points out that the company has the technology to develop household products.

Mask stressed why Teslas cars were afforded a crucial reason. All of these margins look ridiculous, given automation, he said Kirkhorn said Tesla is selling as many electric vehicles as possible. He added that despite the price cuts in Teslas various models, sales and margins have increased. In addition to reducing costs, cars become better, which is why more consumers buy the companys cars.

Analyst questions

Wolfe research analysts focused first on the goals announced by battery day. Its hard to predict Teslas actual production, musk said, but 20 million vehicles are a possible number, accounting for 1% of this years car production. After all, Teslas mission is to accelerate sustainability, and it needs to increase sales to do that. When asked about Teslas battery production, musk pointed out that Tesla can and will change all aspects of the companys batteries. Over time, Tesla will explore the different chemistry of its battery. In a way, its Teslas tradition, as the electric car maker continues to demonstrate its trend of innovation.

Oppenheimer analysts asked about Teslas internal processes and operations. Tesla believes in crazy vertical integration, Musk points out. Tesla will first design the machines, then the company will build them, and then use them to produce machines to minimize outsourcing. This makes it very difficult to replicate Tesla, Musk said. But musk admits hes not sure crazy vertical integration is a smart move, but so far it seems to have worked well. Musk was then asked about Teslas balance sheet and how the company would operate in the near future. Were trying to spend as fast as we can, but not a cent, Musk said

Newsstreet research analysts asked about cybertruck and its ramp. Musk points out that he and the Tesla team are working to ensure that cybertruck will be better than the prototype released last year. He said the car has a lot of minor improvements that make it better than the already impressive prototype, which will be built in Austin. Musk reiterated that cybertrucks rigid exoskeleton may pose some challenges to the manufacture of vehicles. But still, if all goes well, Tesla can complete a small delivery by the end of next year. He predicts a large number of deliveries in 2022 and 2023.

Baird analysts asked questions about OEMs and how Tesla would integrate. Musk pointed out that even after the era of electric vehicles, there will certainly be other car companies. He points out that Tesla designs and manufactures far more cars than traditional OEMs. Its not very risky, and all the parts end up looking the same because theyre all supplied by the same supplier, he said. Our level of vertical integration may be an order of magnitude higher than other companies.

Jerome Guillen, President of Teslas automotive business, said Tesla was working with several parties to ensure that semi has a legal charging infrastructure. Musk added that the battery power consumption of the electric truck is about five to six times that of a traditional car, and Tesla needs to address battery limits. When asked if semi could become a substantial business, musk said there was no problem. The technology used in the companys other vehicles is the same as those used by Tesla, the company said.

Levy analysts asked about Teslas pricing strategy, especially about cars made at the Berlin plant. Kirkhorn explained that this is affected by different factors, although Tesla is trying to increase production to optimize pricing.

Jefferies analyst asked a final question about Teslas business model for fixed storage. Johnson noted that Tesla has benefited from products such as Megapack and Powerwall. Using hardware and software platforms in the form of autobidder, Teslas energy business has great potential.

Analysts at the agency also asked about Teslas skateboard design culture, which musk confirmed would be obsolete in the long run. Its very few vehicle parts and components sought by Maestro are made a little bit like the way large toy cars are made. The way batteries are used in airplanes and rockets may also apply to cars. Through such a strategy, Tesla is actually learning from the design concept of orbital stage rocket. getting rid of the skateboard design culture wont happen overnight, but its sure to happen, musk said. (small)

Source: Qiao JunJing, editor in charge of Netease science and Technology Report_ NBJ11279