A Tesla earnings call is always a fun experience. More often than not, Elon lets some little tidbit slip that wasn’t part of the script, much to the delight of the audience and consternation of the company’s lawyers. We know there will be talk of deliveries and gross margins and earnings before interest and taxes. GAAP and non-GAAP figures will be thrown around and a few questions will be asked from the steely eyed financial analysts on the call.
The big question on many people’s mind is, will the price of Tesla shares rise or fall as a result? The stock is down about a third from its all-time high in January. Will Elon deliver the goods to make it go back up? For many who are not shareholders, it’s just fun and useful to see how the Tesla story is unfolding. Here are a few topics that may tell the tale.
Editor’s note: Be sure to check in later on YouTube to watch our live coverage of the conference call, which includes all sorts of goodies.
Tesla has placed a huge bet on the Chinese market for electric cars, selecting Shanghai for its first new factory. But then there seemed to have been some bumps in the road for Tesla in that country this year. Or not.
First came news that Teslas had been banned from Chinese military installations because their cameras could inadvertently capture classified information. Then there were reports that sales were down significantly, something my colleague Johnna Crider exposed as false a few days ago. Then there was a minor recall for Chinese made Teslas that was a tempest in a teapot.
“The China growth story is the top of the list for Tesla,” Dan Ives, tech analyst with Wedbush Securities, tells CNN Business. “This is their key market. We believe 40% of their sales will come from there next year. I think that’s the linchpin to the stock going up or down.”
One of the constant complaints about Tesla is that it makes more money selling zero-emission credits to other manufacturers than it does selling cars. If its net income for the second quarter exceeds those credits, that will be a significant milestone for the company. “That would throw one of the core bear arguments against the stock out the window,” Dan Ives says. The consensus estimate is that Tesla will report net income of more than $600 million. In the first quarter, it made $518 million from selling credits.
In February, Tesla said it had purchased $1.5 billion worth of Bitcoin and would allow customers to pay for their cars using the digital currency. In April, the company announced it had netted $101 million from its Bitcoin transactions. The value of digital currencies can fluctuate wildly over short periods of time, which makes professional investors nervous.
For a while, Tesla stopped accepting Bitcoin payments, saying the platform used too much electrical power from fossil fuel sources. But now Elon says Bitcoin may soon be welcome again. Once again, Ives thinks dabbling in Bitcoin is a negative sign that worries investors, much like twisting the tail of the SEC or sparking up a phattie with Joe Rogen. Expect more on this topic to surface during the Q2 earnings call.
Supply Chain Concerns
It’s common knowledge that automakers around the world are struggling to manage a shortage of computer chips, the tiny devices that manage everything from blind spot detection to stability control and adaptive cruise control systems. Tesla is no exception. In addition, demand for lithium, nickel, and other raw materials to manufacture batteries is soaring as more and more manufacturers join the EV revolution. Analysts will be looking for information about how Tesla is managing its supply chains to control costs.
Tesla is moving full speed ahead to bring its two newest factories in Germany and Austin online while expanding its production facility in Shanghai to produce the Model Y. That’s a lot for any company to manage. It says both Germany and Austin will begin producing automobiles this year before transitioning to full production early next year. Investors will be anxiously awaiting updates on both new factories during the Q2 earnings call.
In March, Elon tweeted that there would likely be an update about the Cybertruck during the Q2 earnings call, so we will be paying close attention to any news on that front. Last week we reported that Musk is unconcerned about whether his unconventional electric pickup truck will be a sales hit, saying he likes it even if no one else does. (You either love it or hate it.)
Update probably in Q2. Cybertruck will be built at Giga Texas, so focus right now is on getting that beast built.
— Elon Musk (@elonmusk) March 6, 2021
With GM, Ford, and now Dodge saying they will have electric pickup trucks of their own soon, and the Rivian R1T set to debut in a few months, it will be interesting to see whether Americans will be able to tear themselves away from the traditional looking trucks they love or whether Tesla will trim its sails to make the Cybertruck more appealing to mainstream truck buyers.
The Supercharger Network
Last week, Musk tweeted, “We’re making our Supercharger network open to other EVs later this year.” Investors will be expecting to learn more about that announcement. Morgan Stanley auto analyst Adam Jonas wrote in a research note afterward, “By 2030, we conservatively estimate Tesla supercharging revenue of $2.9 billion, a figure which does not include any revenue from non-Tesla vehicles.” How much revenue could Tesla get from drivers of non-Tesla electric cars? That’s a question that is sure to be raised.
Another recent development is an announcement from Tesla that it will soon offer its “Full Self Driving” package on a subscription basis. This could be the biggest marketing bonanza since Coca-Cola decided to sell its elixir in bottles. Decades ago, the auto industry found out that leasing could unlock a torrent of new sales. Perhaps subscription services will have a similar impact on revenue. Lots of people might subscribe to a FSD package who would otherwise balk at spending $10,000 for it up front. People will want to hear more about this.
There will also likely be requests for more info on when the FSD V9 Beta will roll out to all Americans who paid for FSD. The last we heard, the answer was ~2 weeks — but that’s been the answer for ~7 months (if not more).
With everything else going on at Tesla, it’s easy to overlook the Tesla Semi that has been gestating for a few years now. Production should be beginning soon and investors will be hungry for details.
The jury is still out on whether Tesla’s acquisition of SolarCity was a brilliant marketing move that fit perfectly with Tesla’s mission or naked nepotism designed to bail out two of Elon’s cousins (as some people suing Mr. Musk argue), but there is no question Tesla is one of the global leaders in grid-scale energy storage. Elon himself has said he expects energy storage will create as much revenue as Tesla’s car business. This whole topic is usually found somewhere toward the end of the official earnings report, but it is really the key to whether Tesla shares will become more attractive to investors in the short and medium term.
Check back later to see how many topics we guessed right about and which ones came up that we didn’t anticipate. We’re not perfect, but we’re usually pretty darn close about these things.
Tesla Model 3 prototype spotted ahead of rumored design refresh
A new Tesla Model 3 prototype with camouflage has been spotted in California ahead of a rumored refresh coming next year.
Over the last week, there have been rumors that Tesla is working on a Model 3 refresh that would come during the second half of 2023.
The project is reportedly codenamed ‘Highland’.
For a few years now, Tesla has been integrating its large casting technology into Model Y with single large casting parts replacing dozens of parts in the electric SUV.
This new technology has enabled Tesla to greatly improve manufacturing efficiency with Model Y compared to Model 3. CEO Elon Musk said that Tesla will bring the same technology to Model 3 eventually, but he couldn’t exactly say when.
The problem is that such an update to the Model 3 would temporarily slow down production and Tesla couldn’t afford that while it was still ramping up Model Y production.
However, Model Y production is now starting to exceed Model 3 production and it could be good timing for Tesla to update the Model 3 and use a design refresh to introduce the large from and rear casting.
Now a new Model 3 prototype has been spotted in Santa Cruz, California by Twitter user omg_Tesla/Rivian:
The Model 3 is equipped with manufacturer plates, which would indicate that it is owned by Tesla, and combined with the heavy camouflage in the front and back of the vehicle, it likely points to the automaker testing an updated version of the electric sedan.
However, not much can be discerned from the pictures thanks to the camouflage, which even covers large parts of the headlights.
Nonetheless, some commenters on Twitter did notice what could potentially be a camera embedded in the corner of the front right headlight:
It’s barely visible and therefore unconfirmed, but it would make sense to place a camera around that spot since Tesla’s current self-driving sensor suite has a blind spot around the bumper and it could also help with the creeping forward to see traffic before taking a turn in Full Self-Driving – something FSD Beta has issues with right now.
Tesla has always said that it would keep improving its Autopilot and Full Self-Driving hardware, but current owners who bought vehicles with the promise that self-driving will be enabled through software updates are concerned that Tesla might find that it would need a new sensor suite to achieve the promise.
What do you think about this Tesla Model 3 prototype? Is the camouflage hiding a Model 3 design refresh? A new Autopilot sensor suite? Let us know what you think in the comment section below.
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OPEC+ agrees to stick to its existing policy of reducing oil production ahead of Russia sanctions
Led by Saudi Arabia and Russia, OPEC+ agreed in early October to reduce production by 2 million barrels per day from November.
Vladimir Simicek | Afp | Getty Images
An influential alliance of oil producers on Sunday agreed to stay the course on output policy ahead of a pending ban from the European Union on Russian crude.
OPEC and non-OPEC producers, a group of 23 oil-producing nations known as OPEC+, decided to stick to its existing policy of reducing oil production by 2 million barrels per day, or about 2% of world demand, from November until the end of 2023.
Energy analysts had expected OPEC+ to consider fresh price-supporting production cuts ahead of a possible double blow to Russia’s oil revenues.
The European Union is poised to ban all imports of Russian seaborne crude from Monday, while the U.S. and other members of the G-7 will impose a price cap on the oil Russia sells to countries around the world.
The Kremlin has previously warned that any attempt to impose a price cap on Russian oil will cause more harm than good.
Oil prices have fallen to below $90 a barrel from more than $120 in early June ahead of potentially disruptive sanctions on Russian oil, weakening crude demand in China and mounting fears of a recession.
Led by Saudi Arabia and Russia, OPEC+ agreed in early October to reduce production by 2 million barrels per day from November. It came despite calls from the U.S. for the group to pump more to lower fuel prices and help the global economy.
What’s the status of California’s upcoming $10M electric bike rebate program?
California allocated $10 million for a rebate program to help make electric bikes more affordable. But hang on there; it’s not active quite yet.
The move is part of a years-long effort to help reduce the price of expensive electric bicycles for state residents. The ultimate goal is to make it easier for commuters to switch from car transportation to e-bike transportation.
It makes sense when you consider the long list of benefits. From cleaner air to reduced traffic and improved health/fitness, electric bikes solve many of the problems plaguing California (and the rest of the country).
But the path towards a statewide incentive program to reduce e-bike prices hasn’t been quick or easy.
California has earmarked over $1 billion this year as incentives for electric cars and charging infrastructure, according to Streetsblog. That’s in addition to the billions already put into electric car incentives.
Back in 2019 electric bikes finally got the attention they deserved from lawmakers when California’s S.B. 400 was passed, which included a section that permitted electric bikes to be included in future clean air vehicle incentive programs.
That paved the way for the possibility of statewide e-bike rebate programs, but it didn’t actually create any.
Last year California got one step closer to that goal when it included a $10M allocation in the state budget for an e-bike rebate program. As Assemblymember Boerner Horvath said at the time:
“Making e-bikes more affordable is one of the most effective ways to get Californians out of their cars and reduce emissions. I’m thrilled that the full funding I requested for purchase incentives, education, and training is included in the budget we approved. This program represents a priority shift in the right direction and, once implemented, will help folks from all backgrounds choose a healthier, happier way to get around.”
That was another huge step in the right direction, but it hasn’t yet resulted in an active program.
That’s expected to begin in early 2023, with a number of key guidelines for California’s first statewide e-bike voucher program already laid out.
According to the California Bicycle Association, the program will create a $750 voucher for a standard electric bicycle and a $1,500 voucher for a cargo electric bicycle. There will be additional incentives for anyone whose income is under 225% of the federal poverty level (FPL) or who lives in disadvantaged communities.
But in order to qualify for the voucher, participants’ household income must be below 400% of the FPL, which amounts to $51,000 for a single person and $106,000 for a family of four at current figures.
The program will include Class 1 electric bikes (pedal assist up to 20 mph or 32 km/h) and Class 2 electric bikes (pedal assist and/or throttle up to 20 mph or 32 km/h), but will NOT include Class 3 e-bikes (pedal assist up to 28 mph).
Qualifying bikes must also either be purchased at a local bike shop in California, or online from a company that has “a business location in California”.
The move could see California align with other states that have created or already implemented electric bicycle incentives. Vermont became the first state in the US to offer a statewide e-bike rebate program. Oregon is also working on creating an e-bike incentive program that could soon become law, as New York attempts to do the same.
Many cities such as Denver, Colorado have also implemented their own local programs, though the funding is usually much smaller than statewide programs.
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