
Tesla Q1 2020 Update - vaibhavgandhi12
https://ir.tesla.com/static-files/c1723af4-ffda-4881-ae12-b6f3c972b795
======
chollida1
Since, things are slow, my notes....

Misc:

\- Fremont plant idle since March 23rd

\- raised 2.3B in February, which seems really well timed now

\- Musk venting with "FREE AMERICA NOW" tweet makes him seem almost crazy

\- can see why Elon is going crazy on twitter, he'd almost turned around Telsa
and now they may be in the worst cash crunch of their long life

\- Shanghai Giga reopened on Feb 10th, showing the importance of multiple
factories around the world( around 150,000 in capacity once they get going for
Model 3, Model Y not yet and should be incremental on top of Model 3 number)

\- Berlin Giga scheduled to start producing Model Y's in 2021, so capex drain
for rest of year and probably into 2021

\- TSLA trying to run an amazon HQ2 like process for Truck and Model Y
factories, look for small, southern, and poor cities to bid and probably win

Numbers:

\- 1Q Revenue $5.99B vs Estimate $5.81B

\- 1Q Free Cash Flow ($895M) vs Estimate ($604.4M)

\- GAAP net income of $16M for 1Q

\- sale of ZEV in 1Q $354 million vs $133 million from Q4, not going to have
this to bail out their quater in 2Q

\- 35 Megawatts of solar( down by about a third Q/Q)

\- sitting on $8.1B of cash, sweet!! but burn rate is approx ($3-4B) a year

After:

\- semi not until 2021

\- not reaffirming numbers, will check in again in 2Q, makes sense

Want to know:

\- Solar roof? give up or start committing, hard to sell to consumer during
shutdown

\- battery storage for energy, growth area or sign of lack of focus and minor
distraction to core business?

inventory growth? Building cars no one is buying or still not able to keep up
with growth or finally found balance between the two?

\- Will Elon stop with tweets that hurt Tesla? Appoint a CEO, or COO to run
things to take pressure of Elon?

~~~
xiphias2
\- Will Elon stop with tweets that hurt Tesla? Appoint a CEO, or COO to run
things to take pressure of Elon?

I have read this from so many people for the last 5 years all the time. Sure,
the tweets show that Elon wants faster growth, and frustrated, and I didn't
like that tweet either, but if you want a conservative CEO, buy IBM or Oracle
stocks, please leave Tesla alone.

~~~
Touche
I just don't want a batshit crazy person running a company I invest in.

~~~
mettamage
I'm not the best in expressing this, but I believe to think like Elon Musk
(except I'm lazy and not that bright), I think there are quite a few that
think like Elon. Yes, I know how it sounds, but if you're obsessed about truth
there's a chance you think like him as well.

IMO Elon Musk is rational and also expressive. He thinks from first principles
(aka how does the world _really_ work?) and he communicates that way.

Most people can't handle that. They can't handle when someone is expressive
(aka the Tesla @ 420 tweet, he simply expresses his opinion) or reasoning from
first principles (weed is legal right? Yea, might smoke it, might not, does it
matter? New experience is new data, hmm, doesn't seem too interesting).

They think he's insane. He isn't. He does live a bit in a bubble where he
sometimes forgets that other people are judgmental, mostly in a conservative
sense (compared to how he thinks). But those judgmental people don't see one
thing: the guy is hunting for truth, finding it and he applies it to its
product.

Nothing beats truth* (the fact that we're using computers now and not an
abacus is evidence of that)

* All the standard considerations of science apply (falsification, learning from your mistakes and so on).

~~~
jonny_eh
> Most people can't handle that

Right, we can't handle a billionaire demanding that everyone risk their lives
to boost his stock price.

And since when are arguments derived from first principles delivered in 3 word
all-caps tweets?

~~~
megaman821
You think Elon Musk's motivation is greed? That people going back to work or
not will greatly affect his lifestyle?

Is there any nuance when it comes to Elon Musk, or only fan-boys and haters?

~~~
Barrin92
Not the OP. I don't think his motivation is greed in a strictly financial
sense but he's a complete narcissist. When a government guy comes and shuts
his factory down due to a pandemic he apparently can't live with the fact that
he's a non-essential business and needs to lay low for a while.

It's the same thing with the mini-submarine paedophile fiasco. Some regular
dude who has experience in what he's actually talking about tells him to go
away and he can't handle it because he thinks he's Tony Stark or something.

I don't think his eccentric behaviour really leaves much space for nuance,
that's not really on anyone commenting here.

~~~
wonderwonder
He has lofty goals that require massive resources. Each also requires a long
timeline. Specifically he is attempting to populate another planet, link
computers to brains and turn transportation green. Each is an earth shattering
accomplishment on their own. He is trying to do all 3 and in his mind at least
he is driven by saving humanity not greed. He feels the current restrictions
are going to have severe impact on what are for him lifetime goals.

Now is it narcissistic to think that he has to do it? Maybe. Often times
though I would think that the people that changed our way of life have to be
narcissistic. Gates, Jobs, Rockefeller, Ford, Edison. They are real people
with flaws but sometimes those flaws also drive them. Not malignant
narcissistic though, there is a difference.

He is definitely ill served by his twitter account though and these recent
tweets are not great in regards to the opinions of many of those that support
him.

~~~
jkachmar
Along the lines of what others have said elsewhere in this thread:

No one reasonable is criticizing Musk for being a visionary CEO, someone who
is interested in taking risks that overcome historically difficult challenges.

They're criticizing him going completely off the handle; calling someone a
pedophile on Twitter when they disagree with him, talking completely out of
his ass about "taking the company private", or trying to play armchair
epidemiologist when he _clearly_ has a vested interest in a potentially risky
avenue of behavior.

I'm very happy to see the things that SpaceX has achieved [0] and I'm also
happy that Tesla has done such a good job popularizing EVs [1], but I'm blown
the fuck away whenever I see people responding to _entirely justified_
criticisms of Elon's character by pointing out what he's accomplished and how
lofty the rest of his goals are.

Do we just not have standards for people in Musk's position? Do folks really
think it's reasonable for someone to comport themselves the way he _routinely_
does?

[0] Although let's be honest, the company treats its employees pretty damn
badly.

[1] Accurately representing the self-driving capabilities of their vehicles,
on the other hand, leaves quite a bit to be desired.

~~~
wonderwonder
I mean at least 45% of the country things its totally fine for the president
of the united states to 'comport themselves the way he _routinely_ does' so I
have to think that many people are willing to overlook how Musk acts. For the
most part I am too (in regards to Musk), I don't expect perfection from
business leaders. He is a flawed person as are we all. Unfortunately for him
he chooses to amplify his flaws to a massive twitter following.

I think the guy is a once in a life time visionary. With that said I would
never want to work for him but I hope he succeeds.

------
yalogin
Am I reading this right? They have 25% profit margin on each automotive? Feels
like a tech company's margins. Does anyone know how it compares to traditional
automakers?

~~~
coherentpony
Is 25% high? I have no clue.

~~~
artursapek
For cars, yeah

~~~
coherentpony
And for tech?

~~~
alteria
SaaS has really high gross margins (>65%?), but I'm not sure that gross margin
number is comparable with the 25% that Tesla reported.

~~~
llsf
Does anybody know why Saas on average have such high gross margin ?

~~~
jlbnjmn
It doesn't cost much to add a user to SaaS, but it costs a lot to write the
software and convince people to pay for it.

Gross margins are calculated from per unit costs, so advertising expenses,
servers, supporting SaaS, and the salaries of programmers and sales people are
not included.

Also, physical products are made from relatively scarce resources. Software is
typed, and words are not scarce.

SaaS companies have benefited from demand outstripping supply. SaaS replaces
human labor, so it takes a SaaS competitor to drive down prices.

------
vgchh
Serious question: I am confused as to why do we see so many comments
lamenting, what is essentially freedom of speech of EM? I mean, it's not like
he is conclusively wrong about "Free America Now" comment. He may be proven
wrong over time or even right.

~~~
s9w
HN is the most "doomer" place on the net, vehemently anti free-speech and
insanely jealous of Elon musk. This is the perfect storm.

~~~
dlivingston
Is it? HN seems very pro-free speech and EM compared to places like Twitter
and Reddit.

~~~
s9w
[https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...](https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=free%20speech%20absolutism&sort=byPopularity&type=comment)

edit: Also not exactly the most sane places to compare :D

------
dmode
Hmmm, I have been a ardent Tesla supporter for many years and actually own 2
teslas (my post history would confirm that), but alas starting today I am done
with Tesla and Elon. I have given him a pass for \- Promising autopilot in 15
days (after they abruptly terminated their contract with mobile eye) when I
bought my model S in 2016 \- saying FSD features are 3-6 months away in 2016
(some of these features launched this month in 2020) \- pedo guy tweet \- 420
tweet \- other absurd hyperbolic claims like battery swap, coast to coast
driving in 2018, top line Model S loaner cars for everyone, blah blah blah \-
a neural net driven rain sensor that barely works

I still believe that Model 3 and S are the two best cars I have ever driven.
But I can't support Tesla anymore, which is not build for a mission, but seems
to be build to squeeze workers and lie to customers.

~~~
ianai
I wonder if it’d be better with him more removed from the CEO role. I really
like how innovative their designs are. But being abusive is a damnation.

------
milansuk
Page 16 blew my mind. From 70 pieces of metal => 2 pieces of metal. Does
anyone know how they do that?

~~~
Obi_Juan_Kenobi
Tesla is going ham with thixotropic aluminum casting. Big-ass machines, big-
ass castings, no heat-treat.

The goal is to get that down to a single casting. Not only does this simplify
production further, but you can do it with no machining afterwards, no datums,
nothing. You just tap the holes and put it together.

[https://www.youtube.com/watch?v=pih4kU6yvz8](https://www.youtube.com/watch?v=pih4kU6yvz8)

The Y is realizing a lot of things they were promising with the 3. It's a much
more exciting vehicle from a production standpoint.

------
11thEarlOfMar
Curious to know how Tesla will (if it will) repatriate China profits. Perhaps
they don't, but just ship China-sourced parts to Fremont and Berlin paid for
with China profits?

The political climate could take a very ugly turn, China will want to keep
cash within its borders.

~~~
jacobkranz
According to their loan agreement w/ China, they must pay off their loans
until they can repatriate anything.

------
zaroth
As an investor, I like the format these results are presented in. The slide
deck approach is a lot more approachable than the typical text-only SEC
filing. An average investor is much more likely to open this and read it than
the typical financial statement. It's not over-the-top marketing agency gloss,
but it has some nice touches. Of course, you also get the text-only filing to
follow.

As far as the key numbers, Tesla continues to push profitability and I think
beat estimates by pulling off a profitable quarter in Q1. I can't imagine they
will do it again in Q2, and they've suspended their guidance, but compare and
contrast to, e.g. Ford, which is currently drawing all their credit lines to
the max to stay afloat (to the tune of $15 billion).

They've never had spare inventory before, it will be interesting to see how
fast they can clear it when things pick up. In a _very_ long shutdown
scenario, Tesla will come out way ahead of standard auto makers because their
cars somewhat forego the "New Model Year" craze, and they can software update
all their inventory. So while most carmakers will be looking at bursting full
lots of "late model year" new cars, Tesla will be selling "Model 3" and "Model
Y" through their configurator same as usual.

It's been fun watching the Munro tear-downs of the Model Y. I'm curious when
and how quickly those improvements will make it back into a redesigned Model
3. They have definitely improved and simplified the design in important ways.
They highlighted this in their slides at the end showing underbody components
of Model 3 (70 pieces) vs Model Y (2 pieces, eventually 1).

Solar is unfortunately MIA in this report. Buffalo managed to get Solar Roof
ramped up to 4MW per week (1,000 homes per week) just as the shutdown hit. I
would imagine a lot of momentum has been lost in their installer recruitment
and training efforts. I would have been very nice to see some ROI in 2020 from
Solar Roof, but I'm not sure we'll get it this year.

Looking forward to getting to see a Model Y in person and feel how much more
space it has. It seems like they've left a good deal of acceleration "in the
tank" to unlock in future software updates, that will also be fun to see.

~~~
jillesvangurp
Not an investor, but Tesla is looking increasingly like a money printing
machine to me with so much untapped potential that they could pivot to in many
ways.

The genius of the whole setup is that it's a car company that is basically a
battery company but also a power infrastructure company.

IMHO, any battery produced in the next decades will have some way of being
sold profitably. It just so happens that cars are a very profitable way to
monetize them right now. But there are lots of other places where batteries
could be equally useful (which Tesla has been exploring). When EVs commoditize
over the next decade, they are ready to start pivoting to other things that
will have a similarly insatiable demand for battery. Tesla using the same
batteries in cars, semis, and grid storage means that any penny invested in
more production capacity for batteries is not lost.

The reason semis are delayed is that they lack production capacity because
it's maxed out. They're adding capacity as fast as they can at a jaw dropping
pace and it's maxed out. That's not bad news but good news for Tesla.

Solar is a risky but genius move as well. I know they've gotten a lot of
criticism for that and the so far underwhelming adoption rate. But it's a
smart move if they can get that working. Pairing solar with batteries and car
charging options (and maybe car to grid/house) is going to be a killer deal.
And that's just the consumer market.

There are a lot of solar panel manufacturers out there but not a lot that are
also selling grid storage solutions, mass producing cars, or have experience
with building out direct sales to consumer type organizations. Add to that
their approach to innovating mass production of batteries, cars, and indeed
factories & machines. Tesla does all these things for the very simple reason
that the sum of these things is more than the value of them individually. IMHO
they'll bang on this until it starts working just right in a couple of years
while dropping production cost at a pace that basically very few will be able
to match and own the solar market as well.

~~~
sunstone
I expect the prospects for the cybertruck are good enough to require an entire
new battery factory of its own.

------
neilalexander
Numbers and all aside, the Solar Roof photo is very satisfying. Very clean and
elegant for a solar installation.

------
treebornfrog
This is the craziest rollercoaster of a stock I've seen.

Props to Elon for everything he does.

He gets a lot of flak about his tweets, I for one, couldn't care less.

Big picture, he's the Henry Ford of this generation.

------
jzer0cool
TSLA to the moon! Or to Mars ..., Where art thou has our little Starman gone,
so afar. Prices up / Prices Down. Let it fly high to where you are. As far to
Deep Space like no man (or women) has gone before. Chasing you all the way to
the light core. TSLA will lead the way. To new advances to tech, explorations,
energy arrays, and more ... > cq cq cq cq jp-7ffecb3b54ada1e35e69814b3eaa7fd4
Open the door and light the way.

------
Steve886
Infographic: Highlights of Tesla Q1 2020 earnings report
[https://news.alphastreet.com/tesla-inc-nasdaq-
tsla-q1-2020-e...](https://news.alphastreet.com/tesla-inc-nasdaq-
tsla-q1-2020-earnings-results/)

Tesla Inc. turned to profit in the first quarter of 2020 aided by strong
revenue growth, continuing the positive trend seen in the trailing two
quarters.

------
ch1rh0
Not a big deal but FYI Tesla IT people the page title is "Q3 2019 Updated".

Edit: fixed.

------
petilon
Excerpt:

"We enabled stop sign and traffic light recognition and braking for our Early
Access Program users at the end of Q1 and to the wider public in April 2020".

That's awesome! They may very well release FSD in a year or two!

------
tempsy
I’m watching in disbelief at the stock market making a V shaped recovery.
Nasdaq is only a few percentage points off it’s all time high.

I guess don’t underestimate the American consumer even at a time of economic
uncertainty? I don’t know how else to explain record sales from Tesla,
Facebook, and Microsoft today.

~~~
Obi_Juan_Kenobi
Don't lose sight of reality; business closings left and right, layoffs, pay
cuts, etc.

Don't let the zero-hedge crowd turn you off to arguments about funny-money
from the fed. This is a fairly predictable result. Fed supplies money. Money
has to be put to use. Where is productive capital? Interest rates are itty
bitty. Stocks look high but .. what else to do? Risk buying high now or
inflation later.

But this can only remain decoupled from the economic reality for so long.

~~~
tempsy
Outside the stock price movement the earnings today were all good though.
Advertisers still seem to be spending money on ads, even into April.

------
mysterEFrank
It's nice when the good guys win.

~~~
Traster
Yeah, let me know when it happens.

------
angel_j
I dig Tesla, but I wonder if Elon's own goals would be better served if they
only produced motors and batteries and novel tech for the other car makers.

~~~
LatteLazy
The only reason anyone would buy them is because tesla forced them to take
electric seriously. And now that's why they can't, they need in-house tech or
they're just Teslas with different chassis shapes.

Its a sad paradox.

------
filleokus
What's included in the list of things Musk promised for this year? I only
remember 1 million self driving Teslas as taxis [0]. Would surprise me greatly
if anything close to that happens.

[0]: [https://www.engadget.com/2019-04-22-tesla-elon-musk-self-
dri...](https://www.engadget.com/2019-04-22-tesla-elon-musk-self-driving-robo-
taxi.html)

