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Tesla Q3 earnings call: Key comments from Elon Musk, other executives

Tesla (TSLA) stock on Wednesday soared over 12% during after-market hours, after the company achieved profitability during the third quarter, as promised by CEO Elon Musk.  Total revenues more-than-doubled to $6.82 billion, surpassing street estimate of $6.3 billion. Riding on higher Model 3 deliveries, Automotive revenues grew 158%.

Tesla surprised analysts, who had projected a Q3 loss of 19 cents per share, by posting an income of $2.90 per share. Here are the key comments from Tesla earnings conference call. For the full earnings call transcript, click here.

# Tesla delivered 84,000 vehicles globally in Q3 2018, which is more than what it delivered in all of 2016.

# CEO Elon Musk said, “Model 3 became the best-selling car in the US in terms of revenue and the 5th best-selling car in terms of volume.”

# Musk expects to achieve positive net income and cash flow in the coming quarters, except those in which significant repayments may be required – including Q1 2019.

# Tesla aims to bring Model 3 to Europe and China by early next year. Will start producing a significant volume for Europe in January.

# Vice President of Engineering Stuart Bowers said, “We will soon begin to rollout the team’s most advanced Autopilot feature ever, Navigate on Autopilot. We’ll use information to understand exactly where the car is on the highway system and to automatically change lanes, handle forks and take high curvature exits to follow a nav route.”

Tesla delivers 83,500 vehicles and produces 80,142 vehicles

# Tesla continues to see tight cell supply in the energy division. “We’ve started up yet another cell production line with Panasonic and through the end of the year, there’s another line coming on, and then one shortly after that. So there is a steady increase in the total supply,” CTO JB Straubel.

#  Tesla’s overall manufacturing costs dropped almost 30% sequentially in Q3 from Q2.

# Elon Musk, “We’re definitely going to do local production (Model 3) in China. It will be happening next year.”

# Will require very minimum CapEx to increase deliveries from 5,000 to 7,000 units a week at Fremont.

# Elon Musk, “The current operating plan is to pay off our debts not to refinance them.”

# CFO Deepak Ahuja, “We are reducing the raw material inventory on one hand by keeping production stable, finding efficiencies and warehouse management and the supply chain. And at the same time, reducing the time to deliver the car and convert that car into a cash.

# Excluding one-time items, Tesla’s OpEx decreased sequentially by 5% in Q3. CFO Deepak Ahuja expects OpEx to increase in the future but at a far slower rate.

Tesla soars on better-than-expected revenue and profits for Q3

# Tesla does not expect the reduction in the EV federal tax credit to materially dent its production growth. The company hopes to maintain production of a minimum of 5,000 cars a week.

Tesla shares are trading up 7.3% at 12 PM ET on Thursday.

 

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