Posted on May 05, 2016 by Matt Pressman
Tesla Motors [NASDAQ: TSLA] released their first quarter 2016 financial results* ratcheting up its forecast to account for the influx of Model 3 preorders. For 2018, the Shareholder's Letter stated, "given the demand for Model 3, we have decided to advance our 500,000 total unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned." And that's not all. On the conference call, CEO Elon Musk noted that, the "2020 target for vehicles is closer to a million." That's double Tesla’s prior forecast. Musk proclaimed that Tesla wants to: "get as many electric cars on the road as possible.”
Looking at this year, Tesla restated, "we remain confident that we can deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016." And, Tesla reaffirmed that, "Gigafactory construction remains ahead of our original plan." Already the Gigafactory is producing Tesla Energy products including delivery of: "over 2,500 Powerwalls and nearly 100 Powerpacks in the quarter throughout North America, Asia, Europe and Africa." As always, there's lots of really big news to cover from Tesla's financial results. I'll recap some major highlights below.
Tesla Model 3
Tesla stated that, "Our objective with Model 3 is to create the world’s best car with a base price of $35,000, before any incentives, with a range of at least 215 miles on a single charge, and with strong gross margins. We plan to incorporate our best technology into Model 3, yet keep it relatively simple to build at high volume and with high quality."
Musk emphasized Tesla planned to "design the car to be easy to make... [that's] a fundamental difference” when compared to Model S and X. He also described rapid progress noting that already, "the production [Model 3] drivetrain was being used at launch event." He still predicts Model 3 deliveries towards the end of 2017 but noted that July 1st is the internal date Tesla is holding suppliers to in order to be able start customer deliveries by the end of 2017."
Tesla VP Jon McNeill said that for: "93% of [Model 3] reservation holders this was their first interaction with Tesla.” He also remarked that the "demographics are a bit different” from the customers who buy Model S and X. Musk added that the future looks even better for Model 3: “It's only a fraction of the demand, when people understand what the car is capable of and are able to do a test drive.”
Hellbent on Manufacturing
Elon Musk was emphatic that, "Tesla is going to be hellbent on becoming the best manufacturer on earth." He explained that this was now, "the primary focus of Tesla." How serious is Musk about manufacturing? “I’m personally spending an enormous amount of time on the production line. I have a sleeping bag and desk at the end of the production line which which I use quite frequently,” said Musk. Referring to manufacturing new hires, he mentioned that Tesla has some, "exciting announcements coming in the next few weeks." Already, Tesla is, "adding world-class aces in production with each passing week." How is he attracting such talent? He explained, "Model 3 is the most compelling product program on earth."
Could the Tesla factory handle all the future growth forecasted? Musk was coy answering questions about additional manufacturing plants but admitted, "at some point its going to make sense to have a plant in Europe and China... [and that it] makes sense to do localized production on a continent basis." In light of these future investments, he noted that a capital raise is likely in the cards at some point in the future.
Tesla Model S and Model X
Tesla announced, "Q1 Model S net orders rose 45% compared to a year ago, and grew at a faster pace than last quarter. The more rapid pace of growth was driven by increased order growth in North America and Europe, and a more than 160% increase in orders from Asia compared to a year ago. Model S continues to be the market share leader in North America and Europe among all comparably priced four-door sedans." In addition, the Shareholder's Letter issued an important reminder: "Notably, this [increased Model S] demand level was reached ahead of the Model S refresh, before Model X could be seen in stores, and prior to the unveiling of Model 3, which we believe is stimulating demand for all of our vehicles."
"With respect to Model X, greater production has led to greater availability. In April, we launched online Model X configuration in North America and began to deploy Model X to many of our stores in the United States. Model X will be in the rest of our stores by year end."
AUDIO: TSLA Q1 2016 Financial Results Call
Source: Every Elon Musk Video2 via Tesla Motors*
BONUS: World Energy Innovation Forum
Tesla's Q1 announcement wasn't the only big news yesterday. There's more. Prior to announcing Tesla's financial results, Elon Musk was interviewed at the World Energy Innovation Forum which actually took place right at the Tesla factory. As reported by Electrek, while discussing underhanded propaganda efforts from the fossil fuel industry, Musk issued a rally cry: “We need to appeal to the people – educate people to sort of revolt against this and to fight the propaganda of the fossil fuel industry which is unrelenting and enormous.” It's a fascinating and provocative interview. Check it out below...