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LIVE BLOG: Tesla (TSLA) Q4 and Full Year 2020 earnings call summary

(Credit: Tesla)

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Tesla’s (NASDAQ:TSLA) fourth-quarter and full year earnings call comes on the heels of an impressive quarter that saw the electric car maker post $10.7 billion in revenue and $903 million non-GAAP net income. With these results, Tesla has now maintained its profitability for six consecutive quarters.

As revealed in the company’s Q4 FY 2020 Update Letter, Tesla currently sits on $19.4 billion in cash, thanks to a capital raise of $5 billion that further strengthened the company’s war chest. This should allow Tesla to pursue its projects in the United States and abroad, particularly in Texas and Berlin, where two Gigafactories are currently being built. Tesla has also taken the wraps off the Model S and Model X refresh, ending a long period of speculation among electric vehicle enthusiasts.

(Credit: Tesla)

The following are live updates from Tesla’s Q4 FY 2020 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. The first entry starts at the bottom of the page.

16:34 PT – And that’s it for the Q4 FY 2020 earnings call, everyone! Tons of new info have been shared over the call, and considering what was discussed, it seems like 2021 would be a pretty exciting year once more. With that said, thanks for joining us this time once more for our live blog. We’ll see you in the Q1 2021 earnings call!

16:31 PT – Gene Munster from Loup Ventures asks about the Semi and if the vehicle is the first to achieve full autonomy considering that its routes are extremely predictable. Musk responds that this will indeed be the case. No retraining would be needed to adapt FSD for the Semi, the CEO explained, though some adjustments would need to be made.

16:28 PT – Emmanuel Rosner from Deutsche Bank asks about the cost efficiencies of the 4680 battery cell, as well as the company’s affordable car. Musk notes that three or four years would be a good timeframe to reach such goals. Baird, on the other hand, asks about X (Elon Musk’s possible umbrella company). Musk notes that he expects to be with Tesla for the next years. “I expect to be CEO of Tesla for several years in the future,” Musk said, though he noted that nobody should be CEO forever. “It would be nice to have more than free time in my hands,” Musk remarked, but “the mission is not over yet and there’s still a long way to go before we can make a dent in the world’s acceleration to sustainable energy.” The same is true for solar and stationary storage. There’s still so much work to be done.

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16:23 PT – RBC Capital Markets asks about the electric van market. “Tesla is definitely going to make an electric van at one point,” Musk said, though he reiterates that the constraint lies in battery supply. He mentions the Semi, which uses a lot of cells. Musk notes that the Semi would make sense to produce once Tesla addresses its battery constraint. Simply put, when the 4680 is produced in volume, the Semi will come. Musk also talks about Tesla’s next-generation computer. He notes that Tesla’s next-gen chip would be 3x more powerful than the company’s current custom hardware, which is still not being utilized to its full potential today. “We’ve not been rushing the V2 computer. It’s coming along,” Musk said.

16:18 PT – Alex Potter from Piper Sandler asks about Tesla’s intention to increase its battery supply from its suppliers, and if suppliers need to produce 4680 cells. Musk notes that it does not. “It is not required,” Musk said, adding that even the new Model S still uses the 18650 form factor. He noted that Tesla will be retiring its old battery form factors in due time, but it’s better to have some flexibility. “Over time, it would make sense to have a consistency with battery form factor,” he adds. As for Tesla’s growth rate, Elon notes that Tesla poised to massive growth. “We do think we can maintain a growth rate of 50% for many years to come,” he said.

16:15 PT – Dan Levy from Credit Suisse asks about regulatory credits. Kirkhorn highlights that regulatory credit sales are difficult to forecast. He notes that most of Q4’ regulatory credit sales were not forecasted at all. They are simply not predictable. That being said, Tesla is not dependent on it nor does it rely on regulatory credits.

16:12 PT – Analyst questions begin. First up is from Oppenheimer asking about FSD regulations. Tesla notes that it will be all about reliability. There’s a slowdown in Europe, while China’s shown an interest in Level 4 or even Level 5 autonomy. As for the US, it will be all about how reliable autonomous software will be. As for the supply chain, Jerome Guillen notes that there are still challenges related to COVID, though work is underway to address this.

(Credit: Tesla)

16:10 PT – As for Cybertruck development and 2021 deliveries, Musk stated that Tesla is finished with the vehicle’s engineering. Tesla has the necessary designs to make the Cybertruck work. Tesla will be using 8,000-ton press for the Cybertruck, which is more formidable than the Giga Press used for the Model Y, which is a 6,000-ton press.

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16:08 PT – Elon also discusses Tesla’s China operations and its success, though he notes that FSD take rate in the country is conservative. He notes that Tesla has to work hard in ensuring that FSD and Autopilot work well in roads outside North America. As for Tesla’s long-term earnings being tied to profit per unit of battery capacity, Musk responded that this is indeed the case. EV makers can’t grow faster than their battery capacity. “Fundamentally, growth is dependent on cell production,” Musk said, noting that Tesla’s efforts to produce its own cells is to produce more batteries, not to compete with its suppliers. “Our goal with making our own cells is not to intimidate our suppliers. It is to supplement our suppliers,” Musk said.

16:04 PT – Addressing an inquiry from an institutional investor about Tesla’s possible plans to license its software like Autobidder to third party or OEMs. “We’re very open to licensing our software to other OEMs,” Musk said, adding that Tesla is in talks to license Autopilot to other companies. “We’re more than happy to license that to other car companies, and the same goes for Autobidder,” the CEO noted. He also mentions that the Supercharger Network will be fine for sharing too.

16:00 PT – Tesla service issues are addressed. Automotive Director Jerome Guillen notes that Tesla is looking to improve service amidst the company’s efforts to reduce service needs as possible. The executive noted that mobile service will play a huge part in this, with 40% of service needs in the US are now done through mobile. In terms of service appointments, Guillen notes that Tesla has 140 service centers in North America, with customers getting an appointment within 10 days. The pace of opening centers in North America is ramping, with Tesla planning on opening dozens in the first half of this year. He also explains that in terms of app vs phone support, apps are more robust. He notes that Tesla is investing everything it can on the app. “Our emphasis is on the app… It’s the way of the future,” he said.

15:57 PT – As for Tesla’s run rate for 4680 cell production, Elon Musk noted that the company is installing capacity to produce 200 GWh per year around 2022. Drew Baglino adds that with the S-curve of production, one could be off a bit, but Tesla is progressing through this S-curve as fast as possible.

15:52 PT – The second Say question from a retail investor is asked. FSD transfers. Elon notes that Tesla is not looking into this at this time. He mentions FSD’s price increases, and the fact that the market is undervaluing FSD considering its potential. He did note that Tesla will be offering subscriptions within the next month or two, which should help with pricing. As for the dry coating of the battery electrode for 4680 cells, VP of Technology Drew Baglino notes that the challenges are being addressed today. Tesla’s Roadrunner site in Fremont is getting better with its dry electrode process and its 4680 cell manufacturing. The setup for a 10 GWh annual production rate is there already. It’s only a matter of time.

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15:49 PT – The first questions from Say are asked. First up, “What is currently holding Tesla back from being the market share leader in solar?” Musk notes that Tesla does indeed plan on being the market share leader. He explains that attention is now being put on solar, which should improve its ramp. “It won’t be long before Tesla becomes the leader in solar.” Kirkhorn also highlights that having industry-leading pricing is pivotal in dominating the solar industry. This is something that Tesla is doing right now.

15:45 PT – CFO Zachary Kirkhorn takes the floor. He highlights Tesla’s strong free cash flow, which secures the company’s funds for its programs. He also mentions that Tesla relies less on debts now, especially as the company establishes its momentum with its sixth consecutive profitable quarter. He also explains automotive margins in Q4, noting that it was affected by the changes in the Model S and Model X line for the refresh, as well as the deployment of machines like the Giga Press in Fremont.

15:43 PT – Musk talks about how to justify Tesla’s high valuation. He explains that FSD will play a huge part in this. In conclusion, Musk noted that 2020 was just the beginning in terms of profitability. “It will be exciting,” he said. Provided that 2021 is relatively normal (unlike 2020), Musk is optimistic that Tesla can reach new heights. “We think 2021 will be more exciting…it’s going to be a great year for Tesla. Many new great products coming out,” he said.

15:40 PT – Musk also talks about the FSD beta rollout. “We have made massive improvements to FSD Beta,” he said. He adds that there are almost 1K people testing the software at this point. “It’s very common to have no interventions in drives to places that I’ve never been to,” Musk said, sharing some of his experiences with the FSD beta.

15:38 PT – Tesla Model S and Model X production is ongoing now. Model S Plaid will start deliveries next month. Model S Plaid will come a bit later. “It’s really a tremendous improvement over the prior version.” The Model S will be the first production car ever that will be able to go from 0-60 mph in under 2 seconds. “This is a luxury sedan that can go 0-60 in less than 2 seconds, and it will have the capability to seat seven people with its third row seats,” Musk remarked. More details to come later this week.

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15:35 PT – Elon’s opening remarks. He recaps 2020, calling it a defining year for Tesla, especially when as the company accomplishes its target of delivering and producing half a million cars. That’s despite the challenging year. Free cash flow is healthy despite spending quite a lot of money. Simply put, Tesla has enough funds for its ambitious projects. Elon notes that Model 3 and Model Y are ramping in Shanghai and Fremont, and the heat pump is also rolled out to all vehicles. He also talks about Giga Berlin, Texas, and the Roadrunner site in Fremont.

15:32 PT – And it begins! Martin Viecha Senior Director of Investor Relations takes the floor. He introduces Elon Musk and Zachary Kirkhorn and a number of Tesla executives.

(Credit: Tesla)

15:25 PT – Last few minutes guys. Here we go.

15:21 PT – Ok, guys, homestretch here. Who has bets on the earnings call starting on Elon Time? Then again, the earnings results are positive, so Tesla may be quite excited.

15:20 PT – I also just realized that the Model S and Model X refresh’s 17″ display is probably identical to the one used in the Cybertruck. Now I’m wondering if the Semi will use two of these screens. Kinda makes sense, doesn’t it?

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15:15 PT – Also noteworthy is that the Model S and Model X refresh is now taking the fight to the world’s best luxury sedans with in terms of comfort as well. As could be seen in Tesla’s online configurator, both flagship vehicles are now equipped with a 22-speaker system with new microphone setup, which paves the way for active noise canceling tech. We reported on this recently, as could be seen here.

15:00 PT – Another thing that’s particularly notable is Tesla’s subtle, continued efforts to kill the FUD against electric cars. The Model S and Model X refresh are both equipped with a heat pump, which should enable the flagship vehicles to perform five times as many high-speed quarter-mile runs as before. Repeatability? Check.

14:45 PT – Several things stick out from the Q4 FY 2020 Update Letter. I’m particularly impressed with the company’s performance in its Energy business. Tesla Energy has long been underrated, and it’s always pushed to the background by the company’s auto business. But every quarter, Tesla Energy is becoming more and more prominent. In 2020, energy battery deployment surpassed 3 GWh for the first time. That’s some serious momentum.

14:30 PT – Well, well, well, looks like I’m early this time around. Please do check back in a bit as we will be covering the entire Q&A session. There’s usually a ton of interesting tidbits of information that get shared in Tesla’s earnings calls. Some analysts’ questions are also usually unforgettable.

14:15 PT –  Good day, everyone, and welcome to another live blog of Tesla’s earnings call! While Tesla missed Wall Street’s EPS estimates, the company did post a huge profit and its war chest is very formidable now. But all the exciting financials aside, there’s very little doubt that the EV community is currently most excited about the Model S and Model X refresh. The wait for these vehicles has been significant, but boy oh boy, are they worth it. 

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Don’t hesitate to contact us for news tips. Just send a message to tips@teslarati.com to give us a heads up.

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

xAI targets $5 billion debt offering to fuel company goals

Elon Musk’s xAI is targeting a $5B debt raise, led by Morgan Stanley, to scale its artificial intelligence efforts.

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(Credit: xAI)

xAI’s $5 billion debt offering, marketed by Morgan Stanley, underscores Elon Musk’s ambitious plans to expand the artificial intelligence venture. The xAI package comprises bonds and two loans, highlighting the company’s strategic push to fuel its artificial intelligence development.

Last week, Morgan Stanley began pitching a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, one source said. A second option offers a fixed-rate loan and bonds at 12%, with terms contingent on investor appetite. This “best efforts” transaction, where the debt size hinges on demand, reflects cautious lending in an uncertain economic climate.

According to Reuters sources, Morgan Stanley will not guarantee the issue volume or commit its own capital in the xAI deal, marking a shift from past commitments. The change in approach stems from lessons learned during Musk’s 2022 X acquisition when Morgan Stanley and six other banks held $13 billion in debt for over two years.

Morgan Stanley and the six other banks backing Musk’s X acquisition could only dispose of that debt earlier this year. They capitalized on X’s improved operating performance over the previous two quarters as traffic on the platform increased engagement around the U.S. presidential elections. This time, Morgan Stanley’s prudent strategy mitigates similar risks.

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Beyond debt, xAI is in talks to raise $20 billion in equity, potentially valuing the company between $120 billion and $200 billion, sources said. In April, Musk hinted at a significant valuation adjustment for xAI, stating he was looking to put a “proper value” on xAI during an investor call.

As xAI pursues this $5 billion debt offering, its financial strategy positions it to lead the AI revolution, blending innovation with market opportunity.

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Tesla tops Cathie Wood’s stock picks, predicts $2,600 surge

Tesla’s future lies beyond cars—with robotaxis, humanoid bots & AI-driven factories. Cathie Wood predicts a 9x surge in 5 years.

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Cathie Wood shared that Tesla is her top stock pick. During Steven Bartlett’s podcast “The Diary Of A CEO,” the Ark Invest founder highlighted Tesla’s innovative edge, citing its convergence of robotics, energy storage, and AI.

“Because think about it. It is a convergence among three of our major platforms. So, robots, energy storage, AI,” Wood said of Tesla. She emphasized the company’s potential beyond its current offerings, particularly with its Optimus robots.

“And it’s not stopping with robotaxis; there’s a story beyond that with humanoid robots, and our $2,600 number has nothing for humanoid robots. We just thought it’d be an investment, period,” she added.

In June 2024, Ark Invest issued a $2,600 price target for Tesla, which Wood reaffirmed in a March Bloomberg interview, projecting the stock to reach this level within five years. She told Bartlett that Tesla’s Optimus robots would drive productivity gains and create new revenue streams.

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Elon Musk echoed Wood’s optimism in a CNBC interview last month.

“We expect to have thousands of Optimus robots working in Tesla factories by the end of this year, beginning this fall. And we expect to scale Optimus up faster than any product, I think, in history to get to millions of units per year as soon as possible,” Musk said.

Tesla’s stock has faced volatility lately, hitting a peak closing price of $479 in December after President Donald Trump’s election win. However, Musk’s involvement with the White House DOGE office triggered protests and boycotts, contributing to a stock decline of over 40% from mid-December highs by March.

The volatility in Tesla stock alarmed investors, who urged Musk to refocus on the company. In a May earnings call, Musk responded, stating he would be “scaling down his involvement with DOGE to focus on Tesla.” Through it all, Cathie Wood and Ark Invest maintained their faith in Tesla. Wood, in particular, predicted that the “brand damage” Tesla experienced earlier this year would not be long term.

Despite recent fluctuations, Wood’s confidence in Tesla underscores its potential to redefine industries through AI and robotics. As Musk shifts his focus back to Tesla, the company’s advancements in Optimus and other innovations could drive it toward Wood’s ambitious $2,600 target, positioning Tesla as a leader in the evolving tech landscape.

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Investor's Corner

Goldman Sachs reduces Tesla price target to $285

Despite Goldman Sach’s NASDAQ: TSLA price cut to $285, Tesla boasts $95.7B in revenue & nearly $1T market cap.

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(Credit: Tesla)

Goldman Sachs analysts cut Tesla’s price target to $285 from $295, maintaining a Neutral rating.

The adjustment reflects weaker sales performance across key markets, with Tesla shares trading at $284.70, down nearly 18% in the past week. The analysts pointed to declining sales data in the United States, Europe, and China as the primary driver for the revised outlook. In the U.S., Tesla’s quarter-to-date deliveries through May fell mid-teens year-over-year, according to Wards and Motor Intelligence.

In Europe, April registrations plummeted 50% year-over-year, with May showing a mid-20% decline, per industry data. Meanwhile, the China Passenger Car Association (CPCA) reported a 20% year-over-year drop in May, despite a 5.5% sequential increase from April. Consumer surveys from HundredX and Morning Consult also shaped Goldman Sachs’ lowered delivery and EPS forecasts.

Goldman Sachs now projects Tesla’s second-quarter deliveries to range between 335,000 and 395,000 vehicles, with a base case of 365,000, down from a prior estimate of 410,000 and below the Visible Alpha Consensus of 417,000. Despite these headwinds, Tesla’s financials remain strong, with $95.7 billion in trailing twelve-month revenue and a $917 billion market capitalization.

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Regionally, Tesla’s challenges are stark. In Germany, the German road traffic agency KBA reported Tesla’s May sales dropped 36.2% year-over-year, despite a 44.9% surge in overall electric vehicle registrations. Tesla’s sales fell 29% last month in Spain, according to the ANFAC industry group. These declines highlight shifting consumer preferences amid growing competition.

On a positive note, Tesla is making strategic moves. The Model 3 and Model Y are part of a Chinese government campaign to boost rural sales, potentially mitigating losses. Piper Sandler analysts reiterated an Overweight rating, emphasizing Tesla’s supply chain strategy.

Alexander Potter stated, “Thanks to vertical integration, Tesla is the only car company that is trying to source batteries, at scale, without relying on China.”

As Tesla navigates these delivery challenges, its focus on innovation and supply chain resilience could help it maintain its edge in the electric vehicle market despite short-term hurdles.

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