An eccentric and brilliant company founder, profitably shipping 80,000 electric luxury cars per quarter while launching rockets, drilling tunnels and deploying billions in capital at a breakneck speed is going to generate a flood of news, data, rumors and misinformation.
We sort through the waves of Tesla signal in a distillation of the latest Tesla numbers, quotes, lawsuits and tweets.
Tesla's 10-Q filing arrives
Tesla filed its 10-Q on Nov. 1 and provided some details not found in its Oct. 24 earnings report. Here's what stands out.
On page 17 in the 10-Q, Tesla reveals that a single entity represents "10 percent or more" of its accounts receivable (AR) balance. Ten percent of Tesla's $1.15 billion in AR at the end of Q3 2018 would be $115 million. That's the value of more than 1,000 vehicles. What else could this be but a fleet purchase?
One Twitter user claims a manager at rental car company Enterprise confirmed the purchase of 1,000 Tesla vehicles. Enterprise already offers Tesla cars, so that's not too much of a stretch. GTM has contacted Enterprise for comment. It's notable, though, that fleet sales are not typically high-margin events.
It's also notable that Tesla is profitable, irrespective of credit accounting. On page 41 in the 10-Q, Tesla reveals, "ZEV credits sales were $52.3 million and non-ZEV regulatory credits sales were $137.2 million" in the third quarter. In its earnings report, Tesla only disclosed the $52 million in ZEV credits. That total of $189 million in regulatory credits accounts for about half of Tesla’s $312 million profit in the most recent quarter. So the company was profitable, but that appears to have been driven more by credit sales than product revenues than was initially thought.
Recode interviews Elon Musk
The usually confrontational Kara Swisher of Recode interviewed Tesla CEO Elon Musk on Halloween at Tesla's Palo Alto headquarters.
New products are "heart-stopping." Musk rattled off the company's upcoming automotive products: the Model Y — its midsize SUV, the Semi truck, the next-generation Roadster with the "fastest acceleration, fastest top speed, best handling" of any car, EV or internal combustion engine. But Musk reserved some special enthusiasm for the pickup truck, which he described as "a really futuristic-like, cyberpunk, Blade Runner pickup truck. It’s gonna be awesome; it’s gonna be amazing. This will be heart-stopping. It stops my heart."
"Full self-driving next year." Musk continues to make bold predictions on autonomous driving. He spoke of "Drive on Navigation" as "one of the first major steps toward full self-driving." And he said: "I think we’ll get to full self-driving next year." As for the competition in the self-driving arena, Musk said Waymo, formerly Google's self-driving division, presented a threat. But, he added, "I don’t think anyone is close to Tesla in terms of achieving a general solution."
"The worst year of my entire career." Ramping up the Model 3 line made this year feel "like five years of aging," said the CEO, characterizing it as "the worst year of my entire career." Musk said, "Making a car company successful is monumentally difficult." GM and Chrysler went bankrupt, while Ford and Tesla "barely" made it through the last recession, said the CEO. "There’s a good chance Ford doesn’t make it in the next recession,"he added. "It is absurd that Tesla is alive. Absurd!"
"Tesla cannot die." Things got a bit messianic as Musk intoned, "Tesla cannot die. Tesla is incredibly important for the future of sustainable transport and energy generation. The fundamental purpose, the fundamental good that Tesla provides is accelerating the advent of sustainable transport and energy production. I think it’s fair to say that Tesla has advanced sustainable energy by at least five years, conservatively, and maybe closer to 10, and then if we continue to make progress, we might advance it by 20 years."
Tunnel opening party is on Dec 10: When Musk isn't rearranging the world's transportation system or disrupting space launch economics, he's digging tunnels with the Boring Company. Musk envisions a relief from urban traffic via "massive improvements" in tunneling technology that gets the job done for $10 million per mile instead of current U.S. subway costs of $1 billion per mile. Musk notes, "We’re about to finish the first [Hawthorne] test tunnel." The opening party is Dec. 10th if you can snag an invite.
The press has to "do better." Musk reserves some animus for the press. "Take that Wall Street Journal front-page article about, 'The FBI is closing in.' That is utterly false. That’s absurd. To print such a falsehood on the front page of a major newspaper is outrageous. The answer is for the press to be honest and truthful, and research their articles and correct things properly when they are false." In response to the WSJ claim, Tesla noted that it had not received a subpoena, a request for testimony, or any other formal process from the FBI. The Verge reports that Tesla did receive a subpoena on Friday from the SEC concerning Model 3 production forecasts in 2017.
Here's a full transcript of the interview.
“Shareholders need new stewards on the board”
An important set of investors sent Tesla’s three independent directors a list of demands in a letter last week, according to reports. The signers of the letter are in charge of some of the nation's larger state and city pension funds, including California State Teachers’ Retirement System. Combined, the signers help manage about $774 billion in assets and hold an estimated $322 million in Tesla stock.
They called for timelines on the departures of board directors Antonio Gracias, Kimbal Musk and Steve Jurvetson. The investors also asked for Tesla to find directors with experience that “specifically match[es] the company’s strategy and current skill sets.” Robyn Denholm, COO of telecommunications firm Telstra, is unique among board members, having actually worked in the automotive business — at Toyota Motor Corporation Australia — earlier in her career.
Shareholders have recently voted down board governance-related requests from this and other groups.
Musk tweets of note
Panasonic is not Tesla's only source for cells at the China Gigafactory. Musk recently tweeted:
Tesla will manufacture all battery modules & packs at China Giga, as we do today in California & Nevada. Cell production will be sourced locally, most likely from several companies (incl Pana), in order to meet demand in a timely manner.
— Elon Musk (@elonmusk) November 2, 2018
In other news, Musk was, apparently, a sponge at one point.
I remember when I was a sponge. Simpler times they were.
— Elon Musk (@elonmusk) November 3, 2018
Elon calendar reminder
Musk has to be replaced as Tesla's board chair by November 13 as part of an SEC settlement for Musk's "funding secured" tweet.