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Q12014 LiveBlog Earning Report

Q12014 LiveBlog Earning Report

I'll try and keep up.

SamO | May 7, 2014

Barclays: What is the order book in China

Elon: Blown away by the demand and GOOD WILL. I'm really optimistic how things will go there. We are trying to expand service center and supercharge network to deal with the cars delivered in market. Not very many stores. 90% focus on service.

We'll have to limit the amount of cars we send to China or we'd starve the rest of the world.

Local Chinese production of Tesla will be for local and regional production.

SamO | May 7, 2014

Shipping 2 tons of metal over long distance isn't sensible. Local production will be favored.

Q: Wait times?

Elon: 4-5 months. Long. Some customers in mid sized cities are unhappy we are delaying deliveries. Service is necessary and can't be 500 miles away from where someone lives.

SamO | May 7, 2014

Andrea James: R&D ramping significantly. What components make up that? How much is model X costing?

Depak: Primarily driven by engineering design and testing for Model X and Model S for China, RHD, Japan localization. Not driven by head count.

Elon: Some of that is also we want to make ongoing improvements to the Model S. 100s of small improvements. Collectively they add up to an improved experience with the car. Seat comfort. Fit and finish. We are modifying the rear door to open wider. Software. Very exciting updates coming in the next few months that will improve the entire fleet of customers. Not going to say what they are.

SamO | May 7, 2014

Deepak: Lots more in-country testing.

Elon: More important to service the cars well, charging is sorted out, and when customers take delivery, they have a good experience. Correct this from other market rollouts.

Model X is the biggest driver of expenditures. Really trying to make an amazing car, and more importantly where the production version is better than the prototype.

NKYTA | May 7, 2014

thanks again @SamO

AmpedRealtor | May 7, 2014
Iowa92x | May 7, 2014

Elon saying engineering challenges to X, including ensuring sill doesn't jut out too far and adequate rain protection.

Benz | May 7, 2014

Gigafactory news:

Panasonic signed Letter of Intent.

Joined working team.

YES YES YES

Iowa92x | May 7, 2014

Break ground on giga on multiple sites.

Iowa92x | May 7, 2014

Giga starts next month, CA in the running.

Iowa92x | May 7, 2014

California red tape on green sites a drag/slow, so screw that and break ground elsewhere for now. CA giga may come later.

Iowa92x | May 7, 2014

Gaga = industrial complex, Panasonic creates cells, others may build other components, will need to import extra cells outside factory to meet demand.

Iowa92x | May 7, 2014

R&D eats up 30% of Tesla's $$

Model S deliveries, battery cell availability is limiting factor to production capacity

Fremont factory coming down for 10 days in July to improve factory workflow and to optimize.

Sales=deliveries

Iowa92x | May 7, 2014

Model X production delayed, says Elon

Making sure Model S is perfect before moving too hard on X.

2qtr 2015 for Model X deliveries

Model X production will be sharp ramp up, so car needs to have bugs worked out before release. Otherwise risk recalls and poor customer experience.

AmpedRealtor | May 7, 2014

Model S isn't perfect?

AmpedRealtor | May 7, 2014

"We are putting superchargers in cities, not just between cities."

BAM!

Iowa92x | May 7, 2014

Lithium, no issues finding needed supplies.

Battery's anode carbon structure uses high amount of synthetic graphite, which is trickier to synthesize.

China and Hong Kong, electrical wiring in China not up to snuff so some buyers canceling orders.

Some apartments there can only handle 20 amps. Tesla says should be okay.

China will have Superchargers in cities, not just between cities like in U.S.

London tricky with mostly street parking.

Iowa92x | May 7, 2014

Orders in North America up 10%

Deliveries in north were down, due to increasing Europe deliveries.

Deliveries != demand

Steady increase in demand in North America.

Nicoletta | May 7, 2014

Tesla is putting superchargers in cities for the owners that live in apartments/condos without a dedicated parking spot or with street parking only. London is a particular problem in this regard.

Great news for city owners!

Iowa92x | May 7, 2014

Gross profit steady, revenue down.

Cost improvements/reductions, but Elon says never cuts cost if it makes the product worse. Ha, he says cost savings for example in "getting molecules in the right shape."

28% gross margin by end of year.

Iowa92x | May 7, 2014

2015 forecast, gigafactory, Model X will eat capital next year.

Global expansion aggressive next year.

China, domestic production there, Elon says unsure yet, early stages, service and Superchargers in China high priority there.

Iowa92x | May 7, 2014

Battery factories, two for now, more down the pipe.

Is Tesla spending too much on factories? Nope says Deepak. Necessary in order for the company to get the job done.

Stationary storage low priority for now says Elon. Home storage, flat pack wall mounted, cover, integrated inverter, plug-n-play, And then he hushes.

lolachampcar | May 7, 2014

OMG
Elon is talking home storage theory.

I wonder if the analysts are going to pick up on the concur the world stuff going on here (not just cars)?

Iowa92x | May 7, 2014

Chinese market is largest auto-lux market in the world.

Tesla opportunity huge in the East. Tesla China will become biggest market, period. Rapidly expanding Superchargers there. Elon says spend as much money there without wasting.

lolachampcar | May 7, 2014

Someone shut him up........

What is the CEO of a car company doing talking about home storage :)

lolachampcar | May 7, 2014

Someone shut him up........

What is the CEO of a car company doing talking about home storage :)

Iowa92x | May 7, 2014

Analyst comparing BMW 7 to Model S. (Dumb.question)

Elon says battery about 25% the cost of the car.

July increased Fremont battery automation, robots in beast mode. Incremental few hundred $ savings per car here and there, no large decrease in battery cost soon.

Wrapping up...

AmpedRealtor | May 7, 2014

Home storage is going to be huge and will disrupt another entirely different industry. Go Tesla!

Iowa92x | May 7, 2014

Ha, Elon shut down/hung up on the BMW analyst.

Next analyst trying to weasel out predicted demand numbers, Elon says nope.

jai9001 | May 7, 2014

Interesting market reaction given the fact that they beat expectations and that North American orders were up 10%.

eddiemoy | May 7, 2014

they are already testing the battery storage for residential applications in California only. only if you are a solar city customer. so far they are testing 10kw units think it was $15 per month or some thing...

jai9001 | May 7, 2014

Someone please explain what they mean by "home storage" and how that would work.

mwenn1 | May 7, 2014

@jai9001 home storage would be to store energy from a solar array on the house or business. If you had a large enough one you could go completely off the grid and run on solar and battery power alone.

JZ13 | May 7, 2014

Other comments not reported here yet:

- 1st time Elon has laid out a timeframe for a factory in Europe: 3-4 years around the time of a Chinese factory

- Breaking ground next month on the 1st gigafactory and 2 months later on the second site

- The gigafactory has a good chance of getting MORE than 30% efficiency increases due to scale and procurement improvements

- Freemont will be shut down for 10 days in July to improve the line and add more robots

eddiemoy | May 7, 2014

some places in the us have different rates for different times. the storage is primarily remove the extra the electric companies charge for this peak usage.

another use is for backup power, when grid is down...

Captain_Zap | May 7, 2014

The grid in China is better than they expected because much of it is newer. It sounds like cancellations due to power source issues to homes are limited.

shop | May 7, 2014

Also said that they were talking directly to mining companies for nickel and cobalt. Said the mining companies were surprised to be contacted as most customers don't go directly to the source. The mining companies had lots of good ideas on how to reduce prices and increase efficiency. Elon mentioned specifically a nickel mine in Canada.

shop | May 7, 2014

The Hong Kong cancellation thing was as a question from an analyst and he may have just been fishing for info. Having said that, if you live in an apartment (as many people in HK do), then installing a charging unit may not be easy or even possible.

lolachampcar | May 7, 2014

Do not fool yourself. SC can not become an independent utility if it has to rely on the local utility's grid. Home storage allows you to cut the grid tie which allows SC to become an independent distributed production utility.

lolachampcar | May 7, 2014

Put differently, cars are a big market but pale in comparison to electric utilities.

SamO | May 7, 2014

Biggest challenges: falcon wing door. Utility not a gimmick. Details have to be just right.

Getting the seals on the Falcon wing door to work but not too prominent have been big engineering problems.

carlk | May 7, 2014

Home (or business) storage is a great way to recycle old batteries. One can trade in the old 60/85 kWh battery with, say, 70% of original capacity for a new 100/150 kWh one years down the road.

SamO | May 7, 2014

ELON: We have a letter of intent signed with Panasonic for the gigafactory

SamO | May 7, 2014

JB: Under the letter of intent, we have created a joint working team (daily) heading toward a final agreement in the later part of this year. This is not a big step change. Feel confident in finalizing our deal.

Elon: Highly confident in reducing 30% cost, cautiously optimistic about exceeding that number.

SamO | May 7, 2014

Big conversations with Nickel mines in Canada and positively surprised by cost reductions in producing the precursor materials.

They were surprised to get called by a manufacturer rather than the metal exchange.

SamO | May 7, 2014

Adam Jonas: Is the formal announcement a prerequisite for breaking ground?

ELon: No. First groundbreaking expected on all four sites to minimize the risk to the completion of the giga factory. Next month. Then a month or two after they'll break ground on the second.

California is potentially back in the running, but it's still in the category of improbable. The governor and his staff are trying to do everything they can to make CA a candidate.

The main problem is "time to completion" the gigafactory. It has a complex and lengthy process for approving greenfield sites. Can't afford to wait a year or more to proceed.

SamO | May 7, 2014

Adam Jonas: Other partners in gigafactory?

Elon: Panasonic would be the only company producing cells. Like an industrial factory in one place.

Cells are produced by Panasonic. Other companies create other parts (like cathode anode).

Cell capacity is 35gWh. Other cell factories will supply the other 15gWh. Panasonic will supply some. Other manufacturers will supply others.

SamO | May 7, 2014

ELON: WE ARE ALREADY SOLD OUT OF Q2 PRODUCTION!!!!!!!!

riceuguy | May 7, 2014

Too funny...I always follow these liveblogs by SamoSam and thought the forum was really messed up because these updates keep showing up and it's after midnight--which makes sense once I realized I'm in London today (normally in Austin). Guess the call is still going on! :-)

SamO | May 7, 2014

Colin Rush:

Elon: We are delayed on the Model X. We had to spend more time on the Model S, and it took longer to get to intl markets. Just didn't make sense to rush the X when the S wasn't ready. Now we are good on the S.

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