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Tesla Q1 Earnings Call: Tidbits You May Have Missed

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Tesla Fremont factory captured via drone [Source: Stephen Powelson]

Tesla reported Q1 financials yesterday which was unusually full of several surprises and all pretty positive for Tesla bulls.

Aside from learning that Elon Musk has set up camp at the Fremont factory and has a sleeping bag near the end of the Model X production line, the Tesla CEO also revealed several unique tidbits during the Q1 conference call.

The Tesla Fleet

Elon was asked what kind of advantage is the “fleet”? He answered that: “data is everything. Teslas drive million of miles per day. We will likely need an even larger amount of data: billions of miles per day. Once high volume statistics are available, we will be able to replace humans to improve on the number of fatalities.” Interestingly Elon stated that Tesla does not have a goal to forbid manual driving, but autonomous safety should always aid in avoiding accidents. But people that like to drive manually (i.e., people like me that like to set up “launch mode” while waiting on traffic lights) should be allowed to drive as they please [I know I’ll get comments for saying this :-)].

Model 3 

A very interesting new piece of information was the July 1, 2017 deadline for suppliers of Model 3 parts. Elon said that “one always needs a deadline,  even if July 1 for SURE will not be  met, as something is always late.” The model 3 will be the first car designed to be easy to make. When asked if there is any recourse against suppliers that fail commitments Elon said that Tesla will meet with the Team of each supplier, not just the CEO. And they will get commitments from what he called the “A-Team” of each supplier.

When asked if Tesla will need more capital this year, Elon stated that he does not want to rely on Model 3 reservations for capital. So there will be a need of a combination of capital & debt.

Regarding the demographic of Model 3 reservation holders, Elon disclosed that  93% of reservation holders are new Tesla customers, while 7% are owners.  And unexpectedly the Model 3 announcement actually increased demand of Model S vehicles.

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New plant(s) and Gigafactories?

The issue of the need for additional plants for Model 3 was raised by several brokers. Elon responded that manufacturing in Europe and Asia would be more efficient, but Tesla would not raise new funds for a new factory until Fremont was at capacity, possibly at 1M vehicles / year. One big “new” unexpected item in this regard was the prediction that Tesla would deliver 1M vehicles in 2020. And also unexpected was that Elon believes this is feasible in Fremont. On the other hand Elon asked himself  “but is it wise? Probably better to localize production by continent”. Similarly Elon was asked if Tesla would need a second Gigafactory for Model 3 delivery.  He answered that Tesla can continue to expand and not steal from Tesla Energy to deliver Model 3.

Production numbers

Elon disclosed that current production is at about 2,000 vehicles / week, with 40% Model X and 60% Model S.  He admitted also that “Model X is the most difficult car to manufacture EVER.”

The new production goal in  2018 is now 500K vehicles, 2 years earlier than originally expected, due to high Model 3 demand. The “S ramp” to that number is very difficult to predict, especially the early exponential part. He then opened his  “crystal ball”:  he actually predicted “maybe 100-150K Model S & X, 300-400K Model 3. Hard to say.”

Related: Tesla 2016 Q1 Earnings

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Investor's Corner

Tesla Board Chair defends Elon Musk’s pay plan, slams proxy advisors

The letter comes ahead of Tesla’s 2025 Annual Meeting, where shareholders will vote on several key proposals.

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CeBIT Australia, CC BY 2.0 , via Wikimedia Commons

Tesla Chair Robyn Denholm has issued a strongly worded letter urging investors to reject the latest recommendations from proxy advisory firms ISS and Glass Lewis, saying their “one-size-fits-all” approach fails to recognize Tesla’s unique business model and track record. 

The letter comes ahead of Tesla’s 2025 Annual Meeting, where shareholders will vote on several key proposals including Elon Musk’s 2025 CEO Performance Award and director reelections.

Tesla slams proxy advisors’ models

Denholm criticized both firms for consistently opposing Tesla’s growth-oriented plans, noting that the company’s market capitalization has increased twentyfold since shareholders approved Musk’s 2018 performance package, which both advisors had opposed at the time. 

“Our shareholders have ignored their recommendations, and it’s a good thing they did,” she wrote. “Otherwise, you may have missed out on our market capitalization soaring 20x while the proxy advisors time and time again recommended “against” Tesla proposals designed to promote the sort of extraordinary growth we have enjoyed.”

The letter argued that Glass Lewis and ISS use robotic policies that don’t account for Tesla’s innovation-driven structure. Tesla’s leadership maintained that the 2025 CEO Performance Award will only reward Musk if he achieves extraordinary market capitalization and operational goals. The plan, Denholm stated, aligns Musk’s incentives with long-term shareholder interests.

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Tesla defends board leadership

Denholm also defended directors Ira Ehrenpreis and Kathleen Wilson-Thompson, calling them pivotal to Tesla’s governance and innovation strategy. She said both have driven Tesla’s growth and helped design compensation systems vital to competing in the AI and robotics talent race.

She warned that following ISS and Glass Lewis could turn Tesla into “just another car company,” and urged shareholders to “vote yes to robots, and reject robotic voting.” The letter also highlighted that neither ISS nor Glass Lewis owns Tesla stock, emphasizing that only shareholders “who have made an actual financial investment” should decide the company’s direction.

“If you prefer that Tesla turn into just another car company mired in the ways of the past, then you should follow ISS and Glass Lewis. If you believe that Tesla, under the visionary leadership of Elon and the oversight of a Board that includes business leaders with integrity like Ira, Kathleen and Joe, then you should vote with Tesla,” Denholm wrote.

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Tesla analyst says this common earnings narrative is losing importance

“Numbers are going down next year, but that’s ok because it’s all about autonomy.”

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(Credit: Tesla)

A Tesla (NASDAQ: TSLA) analyst is doubling down on the idea that one common earnings narrative is losing importance as the company continues to work toward new technologies and projects.

This week, Tesla will report earnings for the third quarter, and one thing people always pay attention to is deliveries. Although Tesla reveals its deliveries for the quarter well before it reports earnings, many investors will look for commentary regarding the company’s strategy for responding to the loss of the $7,500 tax credit.

Tesla has made a few moves already, including a lease deal that takes a substantial amount of money off, launching new Standard models, and cutting up to 23 percent off of lease pricing.

Tesla makes crazy move to spur short-term demand in the U.S.

However, analysts are looking at the company in a different light.

Aligning with the narrative that Tesla is not just a car company and has many different projects, Gene Munster of Deepwater Asset Management believes many investors need to look at another part of the business.

Munster said the delivery figures for Q3, which landed at 497,099, the highest in company history, were padded by customers rushing to showrooms to take advantage of the expiring tax credit.

He believes that deliveries will be more realistic in subsequent quarters, but investors should not worry because the focus on Tesla is not going to be on how many cars it hands over to customers:

“Numbers are going down next year, but that’s ok because it’s all about autonomy.”

Tesla has been working nonstop to roll out a dedicated Robotaxi platform in various cities across the United States, and has already launched in two states: Texas and California.

It has also received regulatory approvals to test driverless Robotaxis in Arizona and Nevada, while seeking permissions in Florida and other states, according to the company’s online job postings.

Munster continued:

“Most people are hyper-focused on the Robotaxi opportunity and not focused as much on FSD.”

While Robotaxi is incredibly important, Tesla’s Full Self-Driving (Supervised) suite is also extremely crucial moving forward, as it sets the stage for the company to roll out a formidable self-driving service.

Tesla rolled out its newest FSD software to more owners last night, and as it expands, the company is gaining valuable data to refine its performance.

Earnings will be reported tomorrow at market close.

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Elon Musk

Tesla CEO Elon Musk’s $1 trillion pay package hits first adversity from proxy firm

ISS said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

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Tesla CEO Elon Musk’s $1 trillion pay package, which was proposed by the company last month, has hit its first bit of adversity from proxy advisory firm Institutional Shareholder Services (ISS).

Musk has called the firm “ISIS,” a play on its name relating it to the terrorist organization, in the past.

The pay package aims to lock in Musk to the CEO role at Tesla for the next decade, as it will only be paid in full if he is able to unlock each tranche based on company growth, which will reward shareholders.

However, the sum is incredibly large and would give Musk the ability to become the first trillionaire in history, based on his holdings. This is precisely why ISS is advising shareholders to vote against the pay plan.

The group said that Musk’s pay package will lock him in, which is the goal of the Board, and it is especially important to do this because of his “track record and vision.”

However, it also said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

The release from ISS called the size of Musk’s pay package “astronomical” and said its design could continue to pay the CEO massive amounts of money for even partially achieving the goals. This could end up in potential dilution for existing investors.

If Musk were to reach all of the tranches, Tesla’s market cap could reach up to $8.5 trillion, which would make it the most valuable company in the world.

Tesla has made its own attempts to woo shareholders into voting for the pay package, which it feels is crucial not only for retaining Musk but also for continuing to create value for shareholders.

Tesla launched an ad for Elon Musk’s pay package on Paramount+

Musk has also said he would like to have more ownership control of Tesla, so he would not have as much of an issue with who he calls “activist shareholders.”

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