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Fourth Quarter 2011 Financial Results Q&A Conference Call

Just creating a place to post expectations, comments, and links to recordings.
http://ir.teslamotors.com/eventdetail.cfm?EventID=108917

Note to those who are in the same time zone as I am: 2:30 PM PT is 23:30 CET. Just slightly more convenient than the time for the Model X presentation last week.

To get started: What do you think are the most important topics of tomorrows call? Which are the greatest uncertainties that could/should be addressed?

What's the "burn rate" for TM's cash-on-hand for ramping up S production?
Are there any glitches in said ramping?
Have volume and margin projections been modified?
Is production line modification/installation for the Model X under way? How soon does it need to be complete, and what are the costs associated with it?
How advanced is the Gen III platform development, and how much will it impact reserves and cash before it "goes live"?

-- and a few dozen more...

I hope they talk about a 10th of what you mention. I expect they will be tight lipped about production line throughput and R&D spend.

As a public company, there's a limit to how tight your lips can be! Some disclosure is non-optional.

I'm liking that they're confident that it'll be 5 star safety rating all around.

"Today, there are more Tesla-produced pure EV battery packs in the hands of Daimler and Toyota than Roadsters. This gives us a wealth of real-world data to compliment the nearly 20 million miles our customers have accumulated during Roadster driving."

'Wow' @ the first sentence.

Complement* on the second.

Has anyone heard where the "8-10 new stores and 10-15 service centers" will be located? I am just a little apprehensive that there isn't one in Boston.

Here is a great quote from Elon on test drives and resale value:

Elon Musk

Yeah, absolutely. In fact, given the fact that there’s excess demand for the Model S, even if somebody doesn’t like the Model S, they are probably -- should probably take delivery and then sell it, because I expect that the cars will sell for more than the [nominal class]

@HJ-45: In the company overview presented last summer, there were dots showing planned stores. They included (metro) Boston, Philly, Toronto, Tampa, Atlanta, Dallas, Phoenix, and Las Vegas.

The deal(s) with Mercedes are ramping up, with the 'Big One' still to be revealed (maybe with them, maybe not).

It's also funny to listen to the question(s) about IP, protection of. Basically, TM is pretty laid-back about the issue, since it's pushing EV sales in general, and regards the entire ICE market as the target -- in which there's plenty of room. I.e., it doesn't acknowledge the existence of 'competitors' in its own niches. Lots of room for everyone!
This POV is apparently so alien to the analysts that they keep coming back to it and can't quite get their heads around it. LOL

Yes, the drivetrain deal with Daimler is HUGE! That makes two manufacturers who've seen the writing on the wall and gone with Tesla's amazing, magical unicorn drivetrain! Tesla's drivetrain is their killer app!!!

"This POV is apparently so alien to the analysts that they keep coming back to it and can't quite get their heads around it. LOL"

They're right to ask. I don't think so much about it being an alien concept but that, as analysts, they have the outlook that the Tesla company's life is on the line until they show yearly profits. Threats to their IP -- which would likely result in protracted court activity -- would benefit the competition in the short term, which might be long enough to sink Tesla.

brianman;
Think it through. What would another manufacturer do with the IP? Make cars. TM is already willing to license it, so that's the only revenue it would lose. Elon said something like "If someone needed a run of 100,000 (/annum) (powertrains, e.g.) it would make sense for them to license and build on their own."

Playing catch-up with Tesla using TM IP would be a mug's game, and Elon/TM seem convinced the market and demand is there for all comers.

Bottom line: it's the magic mix of IP and implementation that makes TM work. Duplicating it would be a long process, and wouldn't actually hurt TM materially at all.

Ripping off IP in the automotive industry would be tough.

  • There are only a tiny number of manufacturers, all large and public;
  • the goods are all large, and readily obtainable, so it's easy to detect when there is infringing IP;
  • there are a lot of shipments across international borders, which means that customs can impound infringing vehicles.

Every car company buys competitors' models and completely disassembles them to learn what's inside; aside from manufacturing techniques (which are easily learned by hiring away key people), it's hard to keep secrets in the auto industry once you start selling cars that use a particular technology.

So: car companies that want a tech either need to invent around competitors' patents, or they have to license. Licensing is so much easier, especially when you're licensing from a company that you probably don't view as a serious competitive threat.

I thought the call was extremely positive. Not getting a 5 star crash rating in all categories would have been the first time Elon did not produce what he said. Hearing him say they feel optimistic about obtaining the 5 star rating was great. Lets hope it happens for TM and our own safety.

Every day that goes by TM gets stronger and their success is more probable. They are thru the hard part. Once factory is up and cars coming off the line, other cars will follow quickly. TM is just down right impressive.

Its a disruptive technology and it feels great to be in on it early.DD - I agree. What a comment that he feels the car will sell for more to people who dont want to wait. It happened with the iphone, other limited production cars and I believe to the Tesla model s -although the window may be limited - all depends on if they continue selling out the years production early.

They are thru the hard part. (lgagliardi)

I wish they were but I object. I don't consider them "thru the hard part" before they can sustain demand for the Model S beyond the early-adopter reservations, i.e., those reservations that have been made and will be made before the first production vehicle has even been produced. The big hurdles in terms of timely delivery and production quality on a mass production level are still ahead, and those will sway the public opinion and drive sustainable demand.

My favorite quote from the conference call:

Elon: "Well, I'm not sure we’ve actually ever said anything about, you know, we probably (inaudible) so I mean I wouldn’t want people to assume that we have."

;-)

@igaglardi and @volker.

I don't think a company ever gets through the hard part. Running a business is difficult and their our challengers and setbacks everyday. Looks like tesla is ok now, but there are literally dozens of scenarios that could set them back. Fire in the plant, earthquake, ford announcing it's super secret ev program (you never know). Probably their biggest risk is being too successful. They wouldn't be the first business to lose their edge once they left the start up phase. You needn't look any further than gm or chyrsler (although gm did seem to turnaround again).

In real life, any business is at risk at any time. No tree grows to heaven.

@volker and @harryjsommer.

I understand both of your points. I just feel waaaay more comfortable now - have factory, have more than one model, you can actually see the products, cars coming off assembly line soon, etc.... At the start of a company - the risk is highest, yes they still need to sell after reservations have been filled and yes they will always have risks as any business but in the beginning the chance of success one may have thought to be say 10% - now I feel the chance of success is around 70% - thats a big difference.

Seems 20,000 cars annually equals profitability - with 2 different models going to 3, then 4,it seems very attainable especially when they come out with $30,000 model.

Put another way, all those short sellers out there probably felt almost 100% comfortable shorting the stock in the beginning - now my guess is they are less comfortable and squirming a little.

Its just my personal feeling as I see things unfold.

Elon may have meant that the hard part of designing the model S and getting its certification is over. TM has already built thirty model S cars at their factory.

And once the early adopters hit the road and show off their new toy, reservations for the S and X are going to jump.

@Volker regarding...

Elon: "Well, I'm not sure we’ve actually ever said anything about, you know, we probably (inaudible) so I mean I wouldn’t want people to assume that we have."

The transcript messes up the sentence completely (and Elon meanders a bit) but the "inaudible" portion is referencing "$200 per kilowatt-hour" from the preceding question from Himanshu Patel.

brianman, thank you. Sure that's what I guessed. However, I particularly like the transcript precisely the way it is. :-)

Yep, the Essence of Elon! So to speak ...


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