LNG: TESLARATI

Tesla’s (NASDAQ:TSLA) fourth-quarter earnings call comes on the heels of yet another blockbuster quarter that saw the electric car maker posting $7.38 billion in revenue and an earnings per share of $2.14, beating the Street’s estimates.

As revealed in the company’s Q4 and Full Year 2019 Update Letter, Tesla is GAAP profitable once more and is likely on track towards even more stable financial ground. The company generated $1.1 billion of free cash flow for the year, propelled in part by the sustained, stable demand for the Tesla Model 3.

For today’s earnings call, Tesla executives are expected to address questions surrounding the company’s plans for the coming year, as well as the electric car maker’s upcoming projects such as Giga Berlin and the ongoing expansion of Giga Shanghai.

The following are live updates from Tesla’s Q4 2019 earnings call. I will be updating this article in real-time, so please keep refreshing the page to view the latest updates on this story. 

16:29 PT – Joseph Osha from JMP Securities inquired about Tesla’s acquisition of Maxwell technologies. Musk referred once more to the company’s upcoming Battery Day, where the company will discuss its plans with the company’s technologies, including its supercapacitors and dry electrode innovations, which Musk said will play an important part in Tesla’s future plans.  

16:26 PT – While answering an inquiry from Pierre Ferragu of New Street Research, Musk remarked that Tesla has gone way deep in battery technology. “Wow, we really know a lot about batteries,” he said. 

16:25 PT – Dan Levy of Credit Suisse reiterates the idea that Tesla should raise capital now to acquire more companies. Elon Musk jokingly asked the analyst which company should Tesla acquire now. Levy seemed flustered. 

To be fair, Musk has a point here, and Kirkhorn discussed this point too. There’s not a lot of sense in raising money right now since Tesla is already spending its funds as much as it can. 

16:20 PT – Elon Musk and Kirkhorn noted that at this point, Tesla’s priority is all about lowering its costs and increasing its margins. This will apply to the Model 3 and Model Y ramp, with the latter likely enjoying a lot of demand. The Tesla executives also mentioned that Tesla is now testing the waters when it comes to products that are low cost and high margin, which are represented by paid software upgrades such as the Model 3’s Acceleration Boost Upgrade. 

16:15 PT – Gene Munster of Loup Ventures takes the floor and asks a question about the Cybertruck, particularly its expected demand and costs for production. Elon Musk declined to release specific figures, though he noted that demand is healthy for the all-electric truck. He also stated that the focus with the Cybertruck is all about battery production. This makes sense, especially since the Cybertruck, as well as vehicles like the Semi, require a lot of batteries. This is a challenging endeavor, and it will be discussed in Tesla’s upcoming Battery Day. 

Elon did state that Battery Day could probably happen after this quarter. 

16:05 PT – Adam Jonas of Morgan Stanley issues his inquiry, asks if Teslas will be compatible with Starlink. Musk stated that this is something that can happen in the future, explaining that Starlink is a high-bandwith system. It’s a lot of bandwith for a car, but it can be done, though the antenna to receive Starlink signals are about the size of a pizza box. Musk then added that he doesn’t really think about it very much. 

16:00 PT – Addressing retail investors’ questions, Kirkhorn noted that the vehicles produced in Giga Shanghai will be just as, if not more profitable than vehicles produced in the United States. Musk added that it’s mostly a matter of costs. There’s just far more optimizations that can be done if a factory could produce vehicles for that specific region. 

When asked if it is wise to raise money now, Musk stated that Tesla at this point is actually spending what it can right now. “We’re spending money efficiently, and we’re not artificially limiting our progress. In line with that, it does not make sense to raise money at this level,” Musk said. Kirkhorn believes this strategy, explaining that Tesla has gotten smarter about how the company is when it comes to spending money. 

But what’s the most encouraging part here is that both Musk and Kirkhorn promised that there will be no slowdown when it comes to Tesla’s growth. 

15:55 PT – Tesla starts taking questions from retail investors. First up, solar installations. Musk stated that Tesla is working with firms to take on the roofing market for the Solarglass Roof. In the future, the CEO stated that homeowners would simply have the choice of having a roof that generates power, or a roof that’s simply a roof.

Another question from retail shareholders involved the Tesla Network, and if it can be deployed even before FSD is fully approved. Elon Musk stated that such an idea makes sense. Kirkhorn added that Tesla intends to allow customers to have the choice to enter their vehicle to a ride-sharing network.

When it comes to Tesla Insurance and its existing coverage, Kirkhorn stated that the priority right now is to expand the service. “There’s a significant amount of innovation in this space,” the CTO said. Musk also stated that there will be a discount in Tesla Insurance if owners use Autopilot. Higher use of Autopilot would mean lower insurance costs. 

Musk also noted that Tesla’s feature complete FSD will likely happen within the next few months. He added that he was very optimistic about its target timeframe, which was initially set for the end of 2019. 

15:45 PT – Kirkhorn sets expectations for Q1, describing that the company’s profitability may be impacted due to unexpected headwinds in China such as the outbreak of the Coronavirus. Ongoing projects such as Giga Berlin and Giga Shanghai would also play a part.

15:43 PT – CTO Zach Kirkhorn stated that 2019 was a key year for Tesla. The company transitioned from meeting a reservation backlog to generating more demand for the Model 3. Capacity-wise, Tesla learned a lot in the Model 3 ramp in Fremont and Giga Nevada. These were aggregated and applied to facilities such as Giga Shanghai.

Kirkhorn also mentioned something notable — Tesla is starting to earn from its software services. This is huge, as the company could generate quite a lot of profit from its software-based services. The Acceleration Boost alone is notable.

The CTO added that the Model Y’s margins will likely be better than the Model 3. This bodes very well for the electric car maker. The MIC Model 3 is also seeing healthy demand in China.

15:38 PT – Elon further notes the company’s rationale with the Cybertruck, and how Tesla opted to stay out of the box with the vehicle’s design. The CEO added that the brutalist vehicle actually has quite a lot of demand.

“The demand has been incredible. I think we can make for as many as we can sell for many years. It’s going to be pretty nuts,” he said, adding that the product is better than what many people realize. This totally makes me want a Cybertruck even more.

“(We’re) super fired up where Tesla will be in the next ten years,” Musk said.

15:33 PT – Martin Viecha opens the call and introduces the participants of the call. Elon Musk takes over and mentions Tesla’s strong demand. He focuses on Tesla having the highest demand EVs in the world with zero advertising spend. Musk also noted that Fremont is already at a production pace comparable to NUMMI’s peak before. And this is before the Model Y.

Elon specifically mentions Giga Shanghai and congratulates the China team. “I think it’s going to be an incredible asset for the company. There’s a lot of good progress there,” he said.

Musk also revealed that Model Y initial production has begun. The crossover is efficient like a beast — 315 miles per charge. This is more than what the company initially stated during its unveiling last year.

15:30 PT – And it’s time for the earnings call to begin. But so far, it seems like the call will be starting a bit later than expected. Elon Time V2? Let’s see.

15:20 PT – Hello and good day, everyone, and welcome to yet another Live Blog coverage of Tesla’s earnings report. With the electric car maker posting yet another profitable quarter. I’m no prophet, but there’s a good chance that 2020 will be far kinder to TSLA shareholders than in 2019.

Other Tesla Q4 and Full Year 2019 Highlights

• Tesla confirms timeframe for first Model Y deliveries
• Tesla nearly doubles Mobile Service fleet to improve customer service
• Tesla Model Y will have 315-mile EPA rated range
• Tesla launches Model Y Performance Überturbine 21″ wheels

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Tesla’s (NASDAQ:TSLA) fourth-quarter earnings for 2019 saw the electric car maker post $7.38 billion in revenue, exceeding estimates from Wall Street. The results, which were discussed at length in an Update Letter, were released after the closing bell on Wednesday, January 29. Tesla entered and ended the fourth quarter on a high note. Propelled by a surprise profit in the third quarter, TSLA shares experienced a radical rise that has continued until today. The company also delivered 112,000 vehicles over Q4 2019, while producing 104,000, setting new records once more. The following are the key points in Tesla’s Q4 2019 and Full Year Update Letter.

REVENUE

Tesla reported revenue of $7.38 billion for the fourth quarter. In contrast, Wall St. expected Tesla to report revenue of $7.047 billion. Estimize expected Tesla to report revenue of $7.158 billion.

EARNINGS

Tesla shareholders saw earnings per share of $2.14 in the fourth quarter, beating Wall St’s estimates. In comparison, Wall Street expected Tesla to report a gain of $1.62 per share for Q4 2019. Estimize, a crowdsourcing platform that aggregates estimates from Wall Street analysts, buy-side analysts, company executives, academics, fund managers, among others, expected gains of $1.79 per share.

FREE CASH FLOW

Tesla notes that 2019 was a huge turning point for the company. Thanks to consistent, strong demand for the Model 3, Tesla returned to GAAP profitability in the second half of the year, generating $1.1 billion of free cash flow for the year. The company also credits cost control across the board for its strong cash generation.

DEMAND SUSTAINABILITY

Over the course of 2019, Tesla notes that most of the orders for its vehicles were from new buyers who did not hold a previous reservation with the company. This showed that the company’s reach is growing, and it was able to do so without spending on advertising.  

TSLA STOCK SO FAR

Tesla shareholders have received the electric car maker’s results positively. As of writing, Tesla shares are trading +6.64% at $619.57 per share during after-hours trading.  Tesla’s Q4 2019 and Full Year Update Letter could be accessed below.

Other Tesla Q4 and Full Year 2019 Highlights

• LIVE BLOG: Tesla (TSLA) Q4 2019 earnings call updates
• Tesla confirms timeframe for first Model Y deliveries
• Tesla nearly doubles Mobile Service fleet to improve customer service
• Tesla Model Y will have 315-mile EPA rated range
• Tesla launches Model Y Performance Überturbine 21″ wheels

Tesla Q4’19 Update Letter by Simon Alvarez on Scribd

  Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

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Tesla’s (NASDAQ:TSLA) retail and institutional investors are aggregating a number of inquiries that will potentially be addressed by the electric car maker’s executives in the upcoming Q4 2019 earnings call, which will be held later today, January 29, 2020. The questions are aggregated from verified TSLA shareholders by Say, a startup that aims to create and develop investor communication tools.

Using the platform, Tesla’s retail and institutional investors have been submitting and voting on inquiries they wish to be discussed and clarified by the electric car maker. Here are a number of notable questions that garnered a high number of votes from the company’s retail and institutional shareholders.

Retail Shareholders

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Tesla is set to report its Q4 2019 earnings after the bell rings to close trading on Wednesday and if the electric car manufacturer announces during the call that Model Y delivery will begin soon, expect TSLA stock to skyrocket.

A stellar Q3 2019 performance helped Tesla stock gain momentum and set up Elon Musk’s electric car brand for its final push in the last few months of 2019. Analysts are optimistic following its historic fourth quarter, when it was able to deliver 112,000 vehicles and produce more than 104,000 units. This helped TSLA rise to a $100 billion valuation, bumping German auto giant Volkswagen on the second spot in the list of the most valuable carmakers in the globe.

UPDATED: Tesla $TSLA shares soar following confirmation of Model Y first deliveries and breakout Q4 2019 results

As for the much-awaited all-electric crossover, the production schedule of the Tesla Model Y has moved up from Fall 2020 to Summer 2020 but all signs hint that it may even come sooner. From several sightings of production-ready Model Y units, the publication of its  CARB certification, VINs registration with the NHTSA, and phone calls to future Model Y owners, rumors that the first deliveries of the Model Y will begin in February are highly-likely true.

If the Tesla Model Y premium electric crossover indeed hits the road next month, expect movement in the price of TSLA stock. And the only direction to look is up.

Early delivery of Model Y should scare competitors 

Tesla has struggled before in keeping its promises of delivering vehicles to customers on time. Skeptics had a point because every carmaker must do its best to meet the demand and keep their customers happy. Elon Musk and his team fine-tuned kinks in production and proved to critics that they’re taking steps in the right direction as Tesla delivered 367,000 vehicles in 2019 — that’s a 50% jump from its numbers in 2018.

Deliveries of vehicles is an accurate barometer of how Tesla is starting to walk the walk, a clear sign that there’s an improvement in the company’s fundamentals as a whole. Initial production of the vehicle is being handled by Tesla’s Fremont plant in California but the company has also started its Model Y program in China. Giga Berlin will contribute to its production as soon as July 2021, with the facility set to start its operations with the production of the all-electric crossover as well.

The early delivery of the Model Y to consumers also means that Tesla has underpromised and over-delivered. This is a screaming signal that competitors should worry cause whatever “advanced manufacturing technologies” Elon Musk mentioned when he recently spoke about the Model Y could work wonders for the carmaker. These innovations may be related to a casting machine that can practically cast most of the vehicle’s body in one piece, rigid wiring system, and other technologies that the market will learn about soon.

“Model Y will also have some advanced manufacturing technology that we will reveal in the future. I think it will be exciting to show the kind of manufacturing technology associated with the Model Y and it will be exciting to learn about these technologies,” Musk said.

If these manufacturing technologies take Tesla a step closer to perfecting its production line design, then it can hit its production goals in Fremont, Shanghai, and Berlin in the near future. Of course, this efficiency in Model Y production will have a chain effect across its factories and product lines. Better production means a smaller gap between supply and demand. With better efficiency, trust in the brand can soar and sales go boom.

Tesla Model Y will be king of SUV/Crossover Segment

The Tesla Model Y electric crossover that has a range of 300 miles and an impressive 0 to 60 mph time of 3.5 seconds for its quickest variant is positioned perfectly.

Demand for sedans in the United States has been going down fast in favor of more spacious and more functional rides such as SUVs and crossovers. There were 17 million vehicles sold in the US in 2019 and only 28% of that are cars.

Focusing on the crossover segment, the Tesla Model Y has some formidable competition in the form of the BMW X3, Audi Q5, Audi e-tron, Jaguar I-PACE, and the more affordable Toyota RAV4 and Honda CR-V.

In terms of price and size, the Model Y is comparable to the rest of the pack but the Model Y will have an option to accommodate seven passengers that others cannot offer. And of course, the other electric crossovers are all from internal combustion engine producers and they’re not doing very well. The Audi e-tron only sold 5,369 units in the US while the I-PACE sold 2,594 units. The picture is similar for other mid-sized SUVs.

With the preference of consumers leaning towards roomier vehicles, the Model Y will further prove the credibility and popularity of Tesla brand.

Model Y can help push Tesla to sustained profitability

During the Q3 earnings call, Musk was quoted about his expectations of the Model Y.

“I’ve actually recently driven the Model Y release candidate, and I think it’s going to be an amazing product and be very well received. I think it’s quite likely to — this is just my opinion, but I think it will outsell S, X, and 3, combined,” Musk said.

The Model Y is the ultimate bad news for critics and competitors. If Tesla found a way to accelerate production and start delivering its all-electric crossover in February, that just means Model Y sales would be added to the books and help raise the company’s earnings in 2020.

While the Model 3 is the first mass-produced vehicle of Tesla, the Model Y will be the first affordable electric SUV that can help push it to sustained profitability.  The electric crossover that starts at $39,000 shares 75% of its DNA with its sedan sibling but even with a higher price tag, the innovations in production that Elon Musk mentioned will push the cost down.

Tesla will not only have a good profit margin for the Model Y in the United States, but there’s also a good chance that its margins will even be bigger in China where the locally-made Model 3 has received a warm reception.

The Palo Alto, California-based company can push the margins for its electric crossover further by doing what it plans to do with the Made-in-China Model 3. Localization of components will be key as this will allow Tesla to push the vehicle’s price down and practically create demand. That will work well, according to analysts from Chuancai Securities, an equity firm in China.

The Tesla Model Y will be a game-changer in the industry. If Model 3 was the straight punch to its competitors, the Model Y will be the power uppercut punch that will knock out its rivals.

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