3 New, Must-Read Quotes From Tesla, Inc.'s Elon Musk

The Model 3 interior, including its 15-inch center touchscreen

Tesla 's (NASDAQ: TSLA) second-quarter update sent shares soaring higher on Thursday. Investors seemed to like the company's better-than-expected financial results, as well as management's reassurance that Tesla is on schedule with its Model 3 production ramp. But some of the most interesting updates came shortly after Tesla posted its second-quarter shareholder letter, when Tesla CEO Elon Musk shared further perspective during the company'searnings call

Here are the most insightful quotes from theearnings call(via a Reuters transcript ).

The Model 3 interior, including its 15-inch center touchscreen

Model 3. Image source: Tesla.

Getting to 10,000 units per week

In the near term, Musk has referred to Tesla's challenges of ramping up production of its important Model 3 as " production hell ." The challenges associated with producing initial Model 3 production are evident by Tesla's low forecasts for the vehicle's production during 2017. In Tesla's third quarter, management only expects to produce just over 1,500 Model 3s. Further, it's not until the end of 2017 that Tesla expects to achieve a production run rate of 5,000 Model 3s per week.

But Musk is extremely confident that this "production hell" is only temporary. "So -- but what people should absolutely have zero concern about, zero, is that Tesla will achieve a 10,000-unit production week by the end of next year," Musk said.

Bringing the Model Y to market sooner

After Tesla's Model 3, the company's next planned mass-market vehicle is its Model Y, or a more compact and more affordable SUV than its Model X. But before Tesla's second-quarterearnings call there was good reason to worry about Tesla's ability to bring the vehicle to market; Musk had previously said that the Model Y would be built on an entirely new vehicle platform -- separate from the Model 3. Such a feat could bring along with it unexpected detours and delays.

Fortunately, Musk has changed his tone about the vehicle. "[U]pon the counsel of my executive team, ... who reeled me back from the Cliffs of Insanity, ... the Model Y will, in fact, be using a substantial carryover from Model 3 in order to bring it to market faster," Musk said.

Musk went on to thank his executive team from stopping him "from being a fool."

The Model Y is particularly important, Musk explained, because the market for SUVs is now larger than the market for cars.

So much for cannibalization...

One of the concerns about Model 3 was that it would cannibalize sales of Tesla's Model S and Model X. After all, the Model S and X's starting prices are about double the Model 3's starting prices. But -- at least for now -- it seems like Tesla has appropriately positioned its Model S and Model X as differentiated, premium products.

Tesla store with a white Model X and red Model S.

Model X and Model S in a Tesla store. Image source: Author.

Musk explained:

Meanwhile, Tesla says the customer response to Model 3 has been "overwhelming." Musk noted that the company has about 455,000 net reservations, and since the Model 3's first deliveries and final unveiling on July 28, Tesla has averaged over 1,800 net reservations per day, Tesla said.

Going forward, Tesla investors should continue to keep an eye on all three of these narratives. The Model 3 and Model Y both represent Tesla's next major growth initiatives. Meanwhile, Tesla's pricier Model S and X will remain important -- especially in the near term as the company looks for gross profits from these vehicle sales to help contribute to cash flow.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy .

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

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

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