Will Musk play nice during call?
Published 12:00 am Wednesday, August 1, 2018
SAN FRANCISCO — The buzz around Tesla’s second-quarter earnings announcement on Wednesday afternoon isn’t over how many millions of dollars Tesla will have lost. It’s whether Chief Executive Elon Musk will behave during his conference call with stock analysts.
During the first-quarter earnings call in May, he cut off questions from analysts who asked about competition from Porsche, capital expenditures and demand for the Model 3. Musk deemed those inquiries “boring” and “so dry, they’re killing me.”
He turned the call over to a Tesla-invited fanboy with a YouTube channel who asked questions Musk found more pleasing.
Even some of Tesla’s ardent supporters are hoping for a professional approach Wednesday, especially after tweets from Musk accusing British diver involved in the Thailand cave rescue of pedophilia and another that pictured scantily clad singer Miley Cyrus, tongue dangling, twerking against a fellow performer’s crotch. “They grow up so quickly,” Musk commented on the image.
Those tweets have since been deleted.
“I really don’t want people talking about Elon Musk anymore. The story is the Model 3,” said Ross Gerber, chief executive of Silicon Valley investment firm Gerber Kawasaki, a Tesla investor. “The story has been horrendous for the last six months.”
Hobbled by persistent production delays on the Model 3, Tesla reported a net loss of $709 million in the first quarter. According to FactSet, analyst forecasts average out to a loss of $630 million for the second quarter ended June 30.
The Model 3 electric sedan is a “bet the company” endeavor, according to Musk. Originally billed as a $35,000 mass-market car, the Model 3 can’t be had for less than $50,000. The company promises the cheaper version is months away.
Musk set a target of 400,000 Model 3s sold in 2018, but because of manufacturing problems the company won’t come close.
Only 26,620 Model 3s were delivered in the first six months of 2018. By the end of June, the company announced it had reached a production rate of 5,000 Model 3s in a single week.
Musk now forecasts 6,000 a week by the end of August.
But Tesla has yet to show those rates are sustainable, and it faces service delays apparently caused by a widespread shortage of spare parts.
That’s why Tesla critics and Tesla supporters prefer a more informative earnings conference with tougher questions this time around.
Although Musk has talked weekly figures, he hasn’t updated the 2018 annual production rate since early 2016, when he said the company would make 500,000 cars — implying 100,000 of the luxury models S and X, and 400,000 of the Model 3.
Given numerous reports of battery failures on Tesla online forums, someone could ask what percentage of delivered Model 3s have had their drivetrains repaired or replaced.
Because of production snafus inside the factory, Tesla this year moved some Model 3 production to a high-end tent built on the parking lot.
“How is Tesla going to deal with the Fremont factory going forward; will the tent stay forever or is a building going to be built?” Gerber asked.
Gerber, who owns a Tesla, also wonders how Tesla will deal with parts and service as the number of cars on the road grows.
One owner recently told The Times he’s been making lease payments on his Tesla Model X for four months while it’s sat at a body shop waiting for a hood replacement.
Musk might be asked about photographs and drone videos posted on social media that appear to show thousands of Model 3s parked uncovered on huge lots outside Stockton, California.
Tesla’s media relations department said those are holding areas for cars on the way to new owners.
The need for new financing might come up, too. Tesla continues to burn cash, and analysts surveyed by FactSet expect its working capital to remain negative into 2019.
Musk said Tesla doesn’t need to raise new capital through debt or equity offerings this year.