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Second Quarter 2012 Financial Results Q&A Conference Call on Jul 25, 2012 at 2:30 PM PT

Second Quarter 2012 Financial Results Q&A Conference Call on Jul 25, 2012 at 2:30 PM PT

The Q2 2012 Q&A conference call is scheduled for Jul 25, 2012 at 2:30 PM PT. Live audio broadcast will be available at:
http://ir.teslamotors.com/eventdetail.cfm?eventid=116710

I bet the number of listeners will break new records...! ;-)
(Just hoping they will be able to handle the load, technically.)

The Q2 2012 financial report with some basic news and the latest public numbers will likely be made available at the same URL shortly before the event.

Brian H | July 19, 2012

Less than a week! Yes, this could be the most interesting and arguably important quarterly report yet.

I assume the "big news" Elon promised dealing with long trip range anxiety will be released there. Some elaboration on the Supercharger network, we're all assuming.

Volker.Berlin | July 20, 2012

For your reference, the discussion that entailed the last Q&A conference call:
http://www.teslamotors.com/forum/forums/first-quarter-2012-financial-res...

Volker.Berlin | July 24, 2012

If you were actively participating in the call, what would you ask?

Brian H | July 24, 2012

Hm! Based on info and projections already public, not much. But depending on what is in the presentation and new outlook, possibly some clarifications.

One area of curiosity is what changes and alterations and disruptions will be involved in putting the Model X production line in place in time for (?? late 2013 ??) production start-up estimates. Will they impact next year's Model S production?

ddruz | July 24, 2012

Volker.Berlin, I would ask:

When will the details be available for the general warranty, battery warranty, service costs, internet data plan(s), optional console options and actual EPA mileage for the 40KWH and 60KWH cars?

steven.maes | July 24, 2012

I would ask for the reason of the delay in production and a possible future planning.
Second, possible improvements for future versions and timing.

ddruz | July 24, 2012

Volker.Berlin, What would YOU ask? Very curious.

stephen.kamichik | July 24, 2012

I would ask when would Canadian pricing be announced.

Volker.Berlin | July 24, 2012

Volker.Berlin, What would YOU ask? Very curious. (ddruz)

Honestly, I'm not sure. I feel a little detached lately, b/c now that we really get to the meaty details of production cars, it's up to anyone's guess which of these details are relevant for me as a German reservation holder, and which details will change for the German (or European) version of the Model S, anyway. At the same time, for asking this very question -- which details will change for the roll-out in Europe? -- I feel it is not yet the right time. Currently Tesla focuses on getting the car out the door in the US and they probably couldn't care less for us Europeans in the next couple weeks (and rightfully so). Thus, even if I would get an answer, it would be a preliminary one, which isn't really better than no answer at all.

Of course I want to know if there are any unexpected problems in ramp-up, and if so, what they are. But IMO that question is similarly pointless since they will find some evasive answer that essentially is meant to say "don't worry, everything is going according to plan". That doesn't help me any.

Thus, I rely on the investors on the call to find the right questions and squeeze some new information out of Elon and Deepak. I'm looking forward to the call, obviously.

mbcaffe | July 24, 2012

a couple of conflicting analyst reports

Tesla Motors, Inc. (NASDAQ:TSLA) is expected by Wunderlich to deliver Q3 guidance lower than consensus expectations with its Q2 results on July 25. The firm thinks that Tesla will probably produce fewer cars during Q3 than the Street estimated, and the company states that its test drive for the new Model S suggests that there are a few issues remaining in regards to the interior and the range. Wunderlich keeps its Sell rating and $28 price target on shares of Tesla.

Tesla Motors, Inc. (NASDAQ:TSLA) is expected by Needham to maintain its near-term objectives, including making it to profitability next year, in the course of its Q2 earnings conference call. Needham thinks production of the Model S electric vehicle is ramping to internal plan and maintains a Buy rating on Tesla stock with a price target of $40.

Soflauthor | July 24, 2012

What would YOU ask? Very curious. (ddruz)

I'm certainly not V-B, but here are a few investor-related questions I would ask:

Elon, we've heard rumors that TM will not meet its self-impossed delivery quota of 5,000 vehicles in 2012. Are you still confident that the company will meet that quota? If you are, can you give us some insight into how you'll roll out deliveries in the 5 months remaining in 2012?

Elon, can you provide any indication of the quality issues you have encountered since the last conference call and whether any one or more of these has created production delays?

Elon, are you now satified with your suppliers and the quality of the OEM components they are providing? Is your supply chain management ready for 1,600 cars a month?

Elon, there has been some criticism of the Model S interior on blogs and in some reviews? Is any of it justified? Are you worried that the current interior might not meet the needs of future buyers going forward into 2013, 2014? (sorry, I know this one is parochial, but I really would ask it :)

dahtye | July 24, 2012

I think the answer is somewhere between, but leaning a tad toward Wunderlich.

I don't know what all TM said to the "street", but they may have been coy enough to leave certain details out....such as ramp plan. There are many ways to get to 5K units by the end of the year. Some analysts may assume a straight line ramp and others may assume a geometric ramp and yet other may assume an exponential ramp. The first few months of production will vary wildly depending on how they "plan" to ramp production.

Other informaion suggests that they are in fact pushing out deliveries slightly. The delivery month stated on our MVPAs are only estimates based on then current information. When it comes to ramping up technologically advanced products, anything can and will occur during production ramp.

Also, since image is very important to TM (at this early stage in the company and I hope for a long time), they won't want to rush to a delivery schedule at the expense of quality and reliability - I certainly wouldn't want them to and would rather wait another month or two to ensure that I get a quality product.

One other comment: Any changes in the product this late in the game will likely add delays to production ramp. They made a few changes in the last several months, which means new tooling for plastic parts (center console), testing the tool to get it "just right", and making mods if needed. These take time (unless they were already in the works long ago).

At some point, the program managers and execs have to say "this is enough changes" and let the product move to production. I certainly hope they've gotten to that point by now, otherwise ramp will be slower than expected.

brianman | July 24, 2012

+1 soflauthor's questions

I would adjust this one though:
"Elon, can you provide any indication of the quality issues you have encountered since the last conference call and whether any one or more of these has created DELIVERY delays?"

"Production delays" is wishy washy compared to delivery delays.

Volker.Berlin | July 24, 2012

Elon, we've heard rumors that TM will not meet its self-imposed delivery quota of 5,000 vehicles in 2012. Are you still confident that the company will meet that quota? If you are, can you give us some insight into how you'll roll out deliveries in the 5 months remaining in 2012? (Soflauthor)

We never actually reported what third quarter production will be. The only number we talk about is the production target of 5,000 this year. It’s not a demand issue: We have orders for well over 10,000 cars. We’re confident that the 5,000 number will be approximately correct. The production ramp is very narrow as we iron out the supply chain, but it ramps up very quickly. We want to be careful about the quality of each car.
(Elon Musk, July 23, 2012)
http://www.plugincars.com/elon-musk-talks-several-more-years-helm-123364...

[...] they will find some evasive answer that essentially is meant to say "don't worry, everything is going according to plan" (myself, above)

Brian H | July 24, 2012

VB;
Elon recently responded to a quota question by re-iterating it was a target, not a quota. While reasonably sure that number will be reached, he was very sure the 2013 20K would be met. I think the market (and owners?) are trying to put words in his mouth, or pushing for a commitment, while TM is refusing to put themselves in that position.

IMHO.

Brian H | July 24, 2012

VB;
Heh, your italicized patch-job threw me off a bit.

If you think their answers are evasive, I wonder what you would expect/wish them to say in the present circumstances. Specifically, in the first-ever run-up to production of their first car (taking the Roadster as an assembly job rather than manufacturing one.)

But all quibbles aside, I think the goal will be to hit the 4th quarter in good stride. 3rd Q is where most of the line and product tuning happens; output is secondary.

Volker.Berlin | July 25, 2012

Heh, your italicized patch-job threw me off a bit. (Brian H)

I agree, I could have done a better job formatting that "dialog" between Soflauthor and Elon. It is hard to see who says what in my post.

If you think their answers are evasive, I wonder what you would expect/wish them to say in the present circumstances. (Brian H)

Do you know what the present circumstances are? I don't. It's tricky: I'm afraid that their answers will be (almost) no different, whether or not they actually have problems with ramping up production. If they have problems, they will certainly try to keep them under wraps as long a possible, sending a message that "everything is ok". And of they don't have problems? Well then they will also say "everything is ok". So, what would you expect to learn from this kind of answers?

That little information that may be found in these kinds of answers is in the subtleties, of course. Thus, when Elon says "We're confident that the 5,000 number will be approximately correct", I hear "We think it is not unlikely to not hit that number", because otherwise he would just say "We're confident that we will reach or exceed the 5,000 number." And when Elon says "We want to be careful about the quality of each car", I hear "Getting the quality right is trickier than we thought, so be prepared for some delays", because otherwise he would just say "We don't have any problems and quality is as expected."

Brian H | July 25, 2012

Fair enough. OTOH, TM and Elon's practice has been to try and avoid saying anything that might have to be backed down later. So if Elon says he's sure of something, he's likely to be really sure.

I don't think TM is going to do much to "stroke" the stock market, or worry much about share price, till it's much later in the year. Pandering to analysts or even to shareholders at the expense of actual operational effectiveness is a greased slope to oblivion.

bsimoes | July 25, 2012

I still want to know about service schedules and pricing, service locations being extended and supercharging stations.

uldry2000 | July 25, 2012

the stocks are going down and down...

do you think they'll become a boost after the results?

Brian H | July 25, 2012

Yeah, looks like a major buying opportunity! >:)

mbcaffe | July 25, 2012

will be interesting if O'Neil from Wunderlich is correct when he claims that production for 212 will be reduced from 1000 to 500 per month.

http://www.forbes.com/sites/greatspeculations/2012/07/25/tesla-earnings-...

Volker.Berlin | July 25, 2012

The Second Quarter 2012 Shareholder Letter is online now:
http://files.shareholder.com/downloads/ABEA-4CW8X0/1860381136x0x585609/2...

BYT | July 25, 2012

The call starts at 2:30 PM PT

blurry_eyed | July 25, 2012

Current production as of today is 10 cars a week - information below is from the quarters letter to investors.

"We are maintaining our revenue guidance of $560 - $600 million and our Model S volume projection of 5,000 units for 2012. We expect to deliver approximately 500 vehicles to customers in Q3 with the balance delivered in Q4. In June we were producing cars at the rate of about 5 per week. The pace of production has approximately doubled as of this week and we are ramping methodically. This plan gives us more time in Q3 to ensure quality production and allows us and our suppliers time to ramp operations commensurate with our delivery schedules."

Volker.Berlin | July 25, 2012

Elon: "A total of 40 production vehicles have been produced so far."

BYT | July 25, 2012

I am also on the call via the net cast.

Volker.Berlin | July 25, 2012

Elon: "We will be at a higher production rate than 20k/y by the end of the year."

BYT | July 25, 2012

He mentioned production quality concerns with things like the shinny door handles. They are FOCUSED on quality which is what I wanted to hear.

Volker.Berlin | July 25, 2012

Elon: "We're expecting that the battery packs have a useful life time probably double the time of the warranty."

Volker.Berlin | July 25, 2012

Elon: "It's almost entirely on one shift. In principle we could comfortable have a production rate some time next year that is 50% greater than 20k. By the end of next year there's a pretty good chance we'll have a 30k/y continuous run rate."

bshortell | July 25, 2012

Tesla will deliver 5000 Model S cars by years end. Here's the quote from the shareholders letter.

"As our capabilities scale, we plan to continue making customer deliveries on a methodical ramp with a target to deliver 5,000 units this year."

Volker.Berlin | July 25, 2012

Elon: "There are probably a couple dozens suppliers where we have some challenges, where we either take it in-house or find a new supplier. Let me be clear that these are not big things. Some are incredibly silly things like [...], but these small things can be incredibly annoying. It's thinks like [...] interior trim."

Translation: Interior finish is still improving! :-)

Same holds true for final touches on the body, like how doors close etc., is still being tweaked.

Volker.Berlin | July 25, 2012

Elon: "I'm a huge proponent of leasing, particularly for electric vehicles. [...] So we're gonna be very big on leasing in the future. We just didn't have to do that til now because there's currently more than enough demand for buying."

Volker.Berlin | July 25, 2012

Deepak: "As of today we're looking at about 1000 people who have locked-in and fully configured their cars."

Volker.Berlin | July 25, 2012

Elon: "There will be more demand for cars than we can reasonably produce during the next year. We will not have inventory."

GB: "Our goal is in the long run to have three to four months of reservations ahead of production, so we never have inventory expense, we basically aim at a run rate of three to four months ahead of production."

He implied that it is part of the model to adjust production to achieve this reservation/production ratio.

Volker.Berlin | July 25, 2012

Elon: "We're seeing demand acceleration without trying."

GB: "We don't have a Model S at all in Europe or Asia, and we're sold out in Signature in EU [...]"

Brian H | July 25, 2012

They seem simultaneously elated and nervous about the effect that "actually trying" to sell (with demo cars and so on) will have on sales. There were questions about whether 2013 would be pre-sold by Jan. 1, but I get the take-away that they will ramp up production to try and get within 3 months pre-order level, and hold there and follow demand.

That implies that if orders explode over the early part of the year they will have to crank up production considerably. Since EU will start seeing a few cars "on hand" in Q4, that could also impact production levels fairly soon.

The expression "a tiger by the tail" springs to mind. ;)

John56 | July 25, 2012

Overall, I very much like what I heard. All of us that have followed Tesla for a long time and have had reservations for a long time (about 3 years now for me) are obviously huge fans. Nonetheless, we have been very watchful (sometimes super critical)of how the S is now rolling out and have been quick to point out every little issue that we've seen during the test drives as well as with the ordering and delivery process. But make no mistake, it is with huge passion and pride that we do so. We want Tesla to be a big success and game changer. I certainly hope that any of the press or others reading these forums (including folks at Tesla) don't misread our comments or our commitment to the success of this company. I am also a long Tesla stockholder as are many of the current reservation holders. I think I speak for most of us when I say that we share Elon's commitment to quality and a little delay at this point to "get it right" only strengthens our passion and commitment. Hats off to all at Tesla!!

mbcaffe | July 25, 2012

@john56
totally agree. hopefully the proof will be quite a few reservation holders being asked to configure their car in August and September. I can't wait!

Tesla229 | July 25, 2012

@john56

+1

Well said - I couldn't have said it better myself!

Brian H | July 25, 2012

1,000 configured now suggests that's about the total produced by late October. Wonder how many will be added the last week of July.

Volker.Berlin | July 26, 2012
Volker.Berlin | July 26, 2012

Here's an interesting remark that I wasn't able to transcript live although I tried to...

Elon: "We’re finishing up some construction activity on that. It’s looking like probably a September event, but that’s contingent on finishing some construction and getting all the permits and whatnot for the [super] chargers. But I’m really excited about that announcement. I think it’s way cooler than anyone realizes. I think it’s going to have a profound effect on how the public sees electric vehicles. There’s going to be a few surprises there. Almost no one knows the full story. There will be some cool things there."
http://seekingalpha.com/article/750201-tesla-motors-ceo-discusses-q2-201...

steven.maes | July 26, 2012

Yeq Volker, I noticed that one to. I guess it's Elon's next ace up his sleeve... I am curious ...

Brian H | July 26, 2012

I think he said something along the same lines in the Q1 session. Got the impression then he was going to reveal all quite soon, but evidently the red tape was/is stickier than expected!

Epley | July 26, 2012

@john56 I agree completely!

BYT | July 26, 2012

He was also really excited about the SuperCharge network but isn't ready to share information on that yet.

Brian H | July 26, 2012

BYT;
Sit up and pay attention! That's what we've been talking about. >:p

BYT | July 26, 2012

Sorry, like my wife tells me, I'm always in my own world that nobody understands and would be scared to visit.

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