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Alexander Hassenstein
Tesla
reported third-quarter earnings Wednesday evening. Numbers were better than expected. That’s the fifth consecutive quarterly “beat” for the electric vehicle pioneer. Management hosted a conference call shortly after the earnings release and CEO Elon Musk said several things which should be of interest to investors.
Here are five noteworthy items from the call, along with a little context:
1. Self Driving
Musk believes in self-driving tech and believes Tesla’s technology will be ready sooner than most industry pundits believe is possible. “Regarding the Full Self-Driving beta release,” commented Musk. He was talking about the early full version of its full self-driving software just rolled out. Full self-driving has the potential to enable new businesses, such as fleets of robotaxis. “And in terms of [automotive] margins, all of these [profit] margins are going to look pretty comically small when you factor in autonomy,” added Musk later in the call.
2. Robo-Taxis
Musk also said a little more about what a robotaxi business would look like. Musk sees Tesla’s earning money for owners in a variety of ways. “You’ve got the car you [can] share with friends and family. You can add or remove it from the [taxi] network. You can have it be entirely in the network. I mean, if you’re an
Uber
or
Lyft
driver, you could be managing a fleet of 10 cars. This sort of seems like a shepherd tending the flock type of thing.”
3. Startups
A Tesla robotaxi business is, essentially a new business within Tesla. Musk actually views Tesla as a series of startups under one roof. “There’s probably in excess of a dozen startups effectively in Tesla,” said Musk. He listed cars, autonomous driving, enterprise software, solar roofs, car sales and distribution, insurance as well as others. He has high hopes Tesla’s insurance operations can generate value in the future.
4. Manufacturing Excellence
He doesn’t see spinning off any businesses. One common thread through is manufacturing excellence. Musk is very focused on engineering excellence that focus manifests itself in a few ways. “Tesla is absolutely vertically integrated compared to other auto companies or basically any company,” said Musk. “We have a massive amount of internal manufacturing technology that we built ourselves …It’s like, OK, what are the things we want to make, design a machine that will make that thing, then we make the machine…It [is] quite difficult to copy.”
5. EV Future
The topic of 20 million Tesla’s by 2030 was raised as well. Musk wouldn’t be pinned down on interim goals, but believes the 20 million goal is appropriate. “I’m not saying for sure we’ll hit 20 million vehicles. But it does seem like a good goal to have because that would mean that we’re replacing 1% of the global fleet per year,” says Musk. “It’s difficult to say that [we are] really changing the world if we’re not switching out 1% of the global fossil-fuel vehicles.”
Tesla stock is up about 3.3% in after-hours trading. Investors can expect volatility in Thursday trading—after Wall Street analysts publish research notes parsing the quarterly data, as well as Musk’s statements. Shares have moved, up or down, by about 10%, on average, the day after the past five earnings reports.
As of Wednesday’s $422.64 closing price, shares have gained about 405% in 2020, far better than comparable returns of the
S&P 500
and
Dow Jones Industrial Average.
Write to Al Root at [email protected]
