rally the troops —
CEO addresses investors as many become more bearish on the business.
Tesla held a shareholder meeting in Mountain View, Calif., on Tuesday afternoon, and CEO Elon Musk addressed the audience on a number of issues facing the company before taking questions from shareholders.
Tesla had a complicated first half of the year. It achieved significant Model 3 delivery, but reportedly sluggish demand for the Model S and X has dragged the company down. Some analysts have turned bearish on Tesla after Musk promised profitable quarters going forward in Q4 2018 but then missed profitability badly in Q1 2019.
But Musk defended his company’s health in his initial statement to the audience. He told shareholders “I want to be clear that there is not a demand problem… Sales have far exceeded production, and production has been pretty good. We have a decent shot at a record quarter… if not, it’s going to be very close.” Musk added that 90 percent of orders are coming from non-reservation customers.
Although Musk touted his company as a leader in revenue among American automakers, he stepped back from his claims of quarter-on-quarter profitability. At one point, he told a shareholder “profitability is always challenging when you’re a fast-growing company… Last year, we doubled our fleet… it’s hard to be profitable for that level of growth.”
Musk then added, “I think we can be cash-flow positive despite having a very fast growth rate.” The CEO also moved on to his outlook for Tesla’s product line, stating that “it won’t be long before we have a 400-mile-range car.”
The most important things for shareholders to be looking out for, according to the executive? Battery availability and the Full Self Driving timeline.
Full Self Driving
On the Full Self Driving front, Tesla is working in a self-made headwind after the company promised that early customers would receive advanced access to software that would make the feature available. Meanwhile, Consumer Reports called the latest version of Autopilot “less competent than a human.”
This evening, Musk didn’t make any specific promises about the timeline for Full Self Driving. But he reiterated that the feature “should be able to go from your garage to your parking space at work” without assistance. Later in the evening, Musk told a shareholder that Tesla is working on “road edge” and “curb” software to help the car handle temporary driving outside of traditional lanes more easily.
At the moment, Musk said, his prototype Full Self Driving feature “can take me from my house to the office.” But he added that “there are interventions at times—it doesn’t perfectly deal with every intersection or every turn.”
Musk also admitted some challenges with perfecting the “summon” feature that he had promoted months ago. He said that summon “had to be reasonably fast” to navigate parking lots, or it would be more convenient to simply walk to your car. Navigating parking lots at speed autonomously, however, is difficult.
On battery availability, Musk said that the Gigafactory had 35 gigawatt-hours (GWh) of capacity potential at this point, although that “potential” number is smaller than what’s currently being realized.
Musk said that a primary constraint for Tesla at the moment was availability of batteries. At one point, he commented, “we might get into the mining business, I don’t know—we’ll do whatever we have to make sure we can scale at the fastest rate possible.”
New cars, new roofs
Tesla is also ramping up to deliver a Model Y vehicle in the next few years, which will be a midsize sedan. Musk said he expects demand for that vehicle to be greater than the S, the X, and the 3 combined.
“We expect to hit volume production towards the end of next year,” the CEO projected, adding, “internally, we’re shooting for sooner than that.” Unlike in the months leading up to the production of the Model 3, Musk was hesitant to be too aggressive publicly this evening.
Musk added that Tesla hopes to announce a pickup truck sometime this summer.
Tesla’s executives also spoke about the company’s solar-roof project, which tends to be a footnote to the company’s more popular vehicle business. Musk said the solar roof was currently on version 3, and he reiterated several times that the “Accelerated Life Testing” that roofing products require were giving Tesla some trouble in terms of designing a product that would last 30 years, is easy to install, and is low-cost.