Tesla Q4 Conference Call In Its Entirety – Video
Here it is, in video format.
The full Tesla Q4 conference call is now available for your enjoyment. It’s over an hour long, so there’s a lot to digest.
MODEL 3 PRODUCTION NOTES: New Tesla Model 3 Battery Line Could Increase Output By Factor Of 4
Time notes (via Collin Anderson):
- 1:25 elon opening thank-you’s
- 3:36 elon model 3 production
- 4:22 2018 maybe gaap profitable
- 5:51 current production run rate and challenges? battery modules still limiting factor. we got complacent with batteries. subcontracting “zones” didn’t work. Coming up with new automation systems at gigafactory. Semi-automatic line is exceeding automatic lines, while we’re re-desiging automatic line, should arrive this Q from germany. Needs to get assembled. 2-2.5k per week after that. Next constraint is material conveyance at fremont.
- 13:29 “congrats for the launch yesterday, that twin falcon landing was probably the sickest thing i’ve ever seen in my life… nutty, totally nutty” accounting question: negative working cap.
- 15:03 elon’s long-term compensation plan – not a search for a new CEO, currently, but if there’s someone spectacular, they could take over so Elon could focus on design and engineering.
- 16:14 2020 and model Y – starting investments Q3 Q4. Still targeting million units in 2020
- 18:08 Tesla Semi investment and run rate? growing 50% per year… 100,000/yr semis in 4 years. might exceed unveiled spec. long-term tesla’s competitor strength is factory, not car.
- 21:33 self-driving, is camera+radar enough? lidar can’t read signs and 400-700nm isn’t a good wave-length, can’t see through snow/dust. 4mm is better.
- 25:06 model s/x margins – 20%? manufacturing efficiencies.
- 26:53 constrained by 18650 battery cells for S/X? What about 21-70 cells?
- 29:12 coast to coast drive, when available to customers? waiting until we have the general solution without using custom code. Amazed by AI improvements. Starts not so good, then good, the holy cow it’s good.
- 31:53 manufacturing improvements? productizing giga-factory
- 34:00 when generating free cash flow? we could do it maybe Q3, but it makes sense to invest in Model Y and energy products. There’s so much potential for manufacturing improvements. “grandma with walker can beat fastest production on earth” “should be jogging speed” “should be worried about aero-drag in factory”
- 36:36 what’s in 2018 capex and what will production be? biggest is model 3, and working on the 10,000+/wk. energy storage, superchargers, stores. Model Y could be 1M/yr alone.
- 41:16 Model 3 gross margins and ramp
- 43:12 semi, super capacitors for breaking? ages ago I was going to get a PhD in capacitors, so i’m a big fan, but li-ion is so good that capacitors will not be needed. there’s a certain power to energy ratio, and once you have enough energy, you automatically have enough power. it’s actually less of an issue on the truck compared to performance vehicles. ion-migration like cars leaving a parking lot
- 46:02 manufacturing road-blocks and building machines to build machines? toyota can’t ramp up any product in 3 months. can take 6-mo to year to ramp up product. thinking of factory as product. vertically-integrated product. it’s an engineering and production product. Like Toyota Production System?…. yeah, we don’t think so. TPS is more operational and lean flows of materials and supply chain. They’re great, but we’re looking at it from a technical lens, automation, robotics. Designing a factory like it’s a car: there’s still humans involved for regular maintenance, crashes, technology upgrades etc. But you don’t actually ship tiny people in the car to make it work. There’s people around the factory, but very few people in it. Model 3 is dramatically simpler to produce. Model Y should be simple too. FOXCONN quick ramps was because of human involvement and much simpler product. Our ipad is simpler than our center screen. John McNeal heading sales and service group is departing, reporting to Elon directly.
- 51:13 shockingly want to followup on production of model 3… enough production experience? are there possibly other hurdles? can freemont handle 10,000/wk? battery most significant, then automated conveyance system. bottom level is all parts conveyance, then line is raised up above that. freemont should be able to handle 10,000/wk without major changes, though need to bring up south paint shop. relatively small capex for south paint. 20-30% more that Toyota and GM produced in the same place. Is there a limit to that plant? New facility for Model Y? For Model Y, we want to design-out all of the pain we’re currently going through. Pain level is extremely high. Many tesla people were at the factory Thanksgiving day, 7 days a week, no vacation.
- 55:27 Eventually limit might be getting materials to the factory. Hyperloop? Seriously, we are looking at building tunnels because for example, we have a bunch of trucks moving seats back and forth. Limited by how many trucks we can dock at the seat factory that’s only a mile away. Eventually 50% more than GM/Toyota got out of the plant.
- 57:22 working capital, got cash in the door. how repeatable is that?
- 58:53 model s and x demands remain high because over-the-air updates. Any level uptake? Biggest item is people upgrading to full self driving. Anything with hardware 2 capable of full self-driving. Turns out we need to swap out computer to meet regulatory standards for self-driving. Standards may requires 5x better than human. Relatively minor expense to do that. Semi-automated driving doesn’t require any hardware upgrades, so 100% margin. Percentage of people upgrading? Not many people currently, especially because full self-driving doesn’t work yet. Eventually Uber/Lyft/AirBnB shared fleet.