Tesla 1Q15 Earnings Call Notes

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Expecting a big production ramp with Model X in 4Q

“Sure. So, yeah, I mean, that’s about right. I mean, actually with Model X production ramping up quite heavily in Q4 depending upon how that ramp goes and obviously it’s difficult to predict that with perfect clarity, but our volume essentially doubles in Q4. So depending upon how the ramp goes. So, I do want to emphasize that, like sometimes people don’t totally appreciate is that, there are several thousand unique parts in a car and if even one of those parts is not available for any reason, then you cannot ship, you cannot scale production.”

Like, crazy, demand for powerwall and powerpack

“et me just talk more broadly about the response to the Powerwall and Powerpack because I don’t think that’s really the question you should be asking. The response has been overwhelming, okay, like crazy. In the course of like less than a week, we’ve had 38,000 reservations for the Powerwall, 2,500 reservations for Powerpack. The Powerpack, it should be noted, typically this is bought by utilities or large industrial companies for heavy industrial work. So, typically Powerpack, it’s like at least 10 Powerpacks per installation. So if there’s 2,500 reservations, actually 25,000 Powerpacks.’

There’s, like, no way we could satisfy demand this year

“there’s, like, no way that we could possibly satisfy this demand this year and we’re basically like sold out through the middle of next year in the first week.”

It’s, like, crazy off the hook

“it’s like crazy off the hook. ”

If somebody wants to go off the grid with these powerpacks, it’s going to be more expensive than being on the grid

“f somebody wants to do a daily cycling, basically go off grid. It’s going to be more expensive than being on grid. This doesn’t mean that people won’t buy it because there are people who want to go off grid on principle, or they just want to be independent.”

Target for the battery pack is markets where there’s a feed in tariff for electricity

“the main target application for the daily cycling battery pack was actually were several markets not in the Continental U.S. and particularly Germany and Australia are very strong markets where it does make economic sense today based on the feed in tariff and the electricity rate structures in those countries.”

Battery packs should have ~15yr battery lives

“And the daily cycler one, I mean, we expect it to be able to daily cycle for something on the order of 15 years. Actually the warranty period would be a little bit less than that. But we expect it to be something that’s in the kind of 5,000 cycle range capability, whereas the high-energy pack is more like around the maybe depending upon on how it’s used anywhere from 1,000 cycles to 1,500 cycles. And they have comparable calendar lives’

We already feel like we need to make the gigafactory bigger

“we’re fairly confident at this point like so that the entire Gigafactory output could just do stationary storage. I mean it’s like, wow, okay. Well, we need to make cars too, so we’re just trying to make the factory bigger.”

I guess we’d pick cars, but stationary storage demand is just nutty

“Well, I guess, we’d pick cars because we got this whole other plant here in Fremont making cars. So, cars will get the priority. Yeah. That would be a logical priority. And yeah, but I mean, it really feels like, man, the stationary storage demand is just nutty. Like worldwide, it’s just crazy.”

We still haven’t seen large advances in battery chemistry

“we’d love it if somebody could come up with a better internal chemistry for the cell. But it’s worth noting that nobody has sent us anything, a sample cell that’s better than the cell we’re producing, or that something that we will produce in the Gigafactory. So, we’d love it if somebody would do that, they just haven’t. So, there’s like always things, which are big on promise and short on delivery when it comes to battery chemistry, and it’s just a real hard problem.’

We need to get you all to think differently and have an expectation of innovation

“it is tricky as companies grow to maintain a consistent culture. I think we’re doing okay. I think it’s measured relative to most companies. But we do need to get you all to think differently and have an expectation of innovation. I mean, I think we’re doing okay on that front.”

I hope Apple gets into the car business. You can figure out a lot of stuff from Linkedin

“‘I certainly hope Apple gets into the car business. That would be great. But no, we’re not really seeing significant attrition of engineers to Apple, for anything, car or otherwise. And actually, anyone can like figure this out by just going on LinkedIn. LinkedIn can produce statistics on what the relative flow of people is from one company to another. And I think it’s like – something like – if you look at like the trailing 12 months, Tesla has recruited five times as many people from Apple as Apple’s recruited from Tesla. It’s like some – it’s a fairly high number.”

Hoping to show off model 3 next year, production in late 2017

” we are hoping to show off the Model 3 in approximately March of next year. Again like, don’t hold me to that month, but that’s like – that’s our aspiration. And that’s – and then be in production with Model 3 in the, I’d like to say mid, but probably closer to late 2017 timeframe. Late 2017 is probably more realistic.’

exponential ramp of production fall in Q4

“Things are looking pretty good for Q4. I think it’s hard to predict full quarter exactly because that whole quarterly boundary and where does the exponential ramp of production fall exactly on that side of Q4 boundary. But I think it’s extremely likely that cash flow is really good at the end of Q4.”