Tesla’s Q2 2018 financial results and earnings call were not only a pleasant surprise because of the encouraging figures in the company’s Update Letter. Contrary to what critics of the company have predicted in the weeks leading up to the Q2 2018 earnings call, the Elon Musk that showed up on Wednesday was not the same person that attended Q1’s now infamous Q&A session.
To say that Elon Musk has courted controversy over the past few months is an understatement. During the company’s Q1 earnings call, Musk lost patience and cut off analysts from Bernstein and RBC Capital Markets, dubbing their questions as “dry,” “boring” and “boneheaded.” The ensuing fallout from Musk’s dismissal of the analysts’ inquiries was significant, with Tesla’s stock taking a steep nosedive. Musk’s actions online became subject to criticism as well, particularly after he was involved in the rescue attempt of a soccer team stranded in a flooded cave network in Thailand. Facing criticism from internet trolls and a rude comment from a cave explorer, Musk snapped back with a retort that was equally uncalled-for. Just like his actions during Tesla’s Q1 earnings call, his Twitter reaction then was negatively reflected in Tesla’s stock.
Elon Musk is at his best when he is calm and calculating and at his worst when he is combative and emotional. While his actions over the past few months on Twitter suggested that he would attend Wednesday’s Q&A session as the latter, his behavior during the Q2 earnings call itself was clearly the former. Musk was restrained, readily admitting his mistakes and directly apologizing for his behavior.
“Yeah, I’d like to apologize for being impolite on the prior call. Obviously, I think there’s no excuse for bad manners, and I was kind of violating my own rule in that regard. I have some excuse; there are reasons for it. I’ve gotten no sleep, and I’ve been working 100, 120-hour weeks, but nonetheless, there’s still no excuse. My apologies for not being polite on the prior call.”
Tesla seemingly made it a point to address questions asked by Toni Sacconaghi from Bernstein and Joseph Spak of RBC Capital Markets, the two analysts who were on the receiving end of Musk’s frustration in the first-quarter earnings call. Musk was polite, humble even, at one point reiterating a direct apology to the RBC Capital Markets analyst.
“I would like to apologize for being impolite on the last call with you. It was not right. I hope you accept my apology,” Musk said.
Apart from Musk’s apology for his errors, Tesla’s Q2 2018 earnings call also featured the CEO sharing the spotlight with members of Tesla’s executive and Autopilot team. As questions were asked, they were addressed by individuals whose expertise corresponded directly to the inquiries. This was quite a departure from Musk’s behavior in Q1’s Q&A session, when he dominated much of the discussion. Targets and timelines mentioned during the call were also realistic, a departure from Musk’s usual bold promises and claims. When Musk was asked about Tesla’s coast-to-coast Autonomous drive, for example, the CEO admitted that the company is currently focusing its attention on releasing Software V9, which would introduce the company’s first Full Self-Driving features.
A look at Tesla’s Q2 2018 Update Letter shows that the electric car and energy company is growing at a rapid rate — and it’s just getting started. With the Model 3 sustaining a 5,000 per week production rate for several weeks in July, Tesla is now looking to raise the electric car’s manufacturing to even greater heights. Tesla plans to ramp the production of the vehicle to 7,000 per week, and steadily improve it from there until it reaches 10,000 Model 3 per week. Overall, Tesla’s potential is vast, but as the company matures into a full-fledged carmaker, Elon Musk must also mature to become a more well-rounded leader.
In an interview with Bloomberg Businessweek last month, Elon Musk promised that he would do better when it comes to responding to the company’s critics and trolls on Twitter. While Musk’s recent tweets — two of which involved a snarky message to Tesla bear Montana Skeptic and hedge fund owner David Einhorn — still showed his tendency to poke fun at his detractors, his actions in the Q2 2018 earnings call shows that he is willing to take a step towards change.
Ultimately, the stock market appears to have appreciated Musk’s change of pace. Tesla stock (NASDAQ:TSLA) popped after hours, at one point rising as high as 10%. As of Thursday’s pre-market, the company’s shares were up 8.06%, trading at $325.10.
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