3 Most Important Takeaways From Tesla's Conference Call


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Tesla Motors' (TSLA) second quarter call was full of interesting tidbits and facts, but the most interesting one is that Elon Musk has aces up his sleeve we don't know about.

'Showing our cards'

"In the past we've shown all of our cards, so people have kind of gotten used to us showing all of our cards," Musk said on the earnings call, when asked about R&D expenses and capital expenditures. "We're not currently showing all our cards."

What that means right now is anyone's guess. It's highly unlikely that Tesla has a new car coming out between now and next year that we're not already aware of, especially since the Model X is going to start Alpha testing later this year, with Beta testing slated to begin in the first quarter of next year. UBS analyst Colin Langan took a stab at what the surprises might be. "Given the timing of Model X and 3 are known, we expect the product surprises, which has been driving higher [research and development] and [capital expenditure], may be related to stationary storage opportunities," Langan wrote in a research note.

Increase in capital expenditure

Tesla said that it plans to invest between $750 million and $950 million in 2014, a bump of $100 million from its prior guidance. In the letter to shareholders, it attributed this to "additional production capacity, continued Model X and Model S development, Gigafactory construction, and further expansion of our sales, service, and Supercharger footprints." Tesla also said it plans to "slightly accelerate our investments in production capacity and the Gigafactory."

Morgan Stanley analyst Adam Jonas, who rates shares buy with a $320 price target, wrote in a note, "The $100 million rise in [capital expenditure] target is not a big surprise given the faster than expected global rollout of Tesla's products, stores, service and charging infrastructure."

Yet it was Musk's comments that were so cryptic, almost Apple-like in their nature, and a far cry from what he's done in the past, that it definitely piqued people's interest.

Tesla (Shutterstock Photo)Tesla (Shutterstock Photo)

Parity with gas-powered cars

The other major highlights during the call were that Tesla expects a 100,000 annual delivery rate, and that Musk believes that within the next ten years, electric vehicles will reach cost parity and maybe even surpass that of an internal combustion engine.

On the 100,000 annual delivery rate, Musk expects it to be split between the Model X and the Model S, which would be around 1,000 units a week of each. Musk said, "My guess is we'll actually see slightly higher on the SUV side. I think the Model X is going to a phenomenal car."

As it relates to getting to parity with gas-powered cars, Musk said he expects they'll be able to get to a $100 per kilowatt hour in the next ten years, and would be disappointed if it took them that long. That would make electric vehicles, like the Model S which starts at around $70,000, on par with an internal combustion engine car. Not only does that benefit the company, which is hinging its hopes on the Model 3, but the planet as well.

"It's heading to a place of no contest with respect to gas," Musk said on the call. "But I mean, we're trying to make it go there as fast as possible because time is important here. You know, the sooner this can be done, the sooner we can reduce carbon output and reduce the probability of a catastrophe."

Musk never seems to fail to deliver on keeping people excited about what lies ahead for Tesla, and with comments like these, it seems as if there are many more to come.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , Technology , Earnings , Stocks
Referenced Stocks: TSLA

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Chris Ciaccia

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