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BIG Surprises on Tesla Earnings Call 2018 Q4 - YouTube
Channel: Ben Sullins
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I just got off the earnings call with
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Ilan and everyone else at Tesla and
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there were some big surprises here so I
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just want to break down kind of my
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biggest takeaways from the teza earnings
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call for 2018 q for last quarter till
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the posted their biggest profit in
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history and the big question going into
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- for of 2018 was whether or not they
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could repeat that so looking at the data
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we see that net income was positive
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meaning they had two consecutive
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quarters of profitability which is
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something they had never done previously
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and this time it was down 55 percent
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from the previous quarter though to the
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tune of 139 million dollars now that may
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be down but it is still a great story
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that they were able to remain profitable
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for two quarters something they had
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never done before when you look at
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revenue revenue is still growing this
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time more modest 5.9 percent growth
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compared to the 70 percent growth that
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we saw and now this is quarter on
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quarter and the reason I look at the
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data this way is because year-on-year
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it's kind of harder to really picture it
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because they change so much and they
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grow so rapidly year on year it's really
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important I think to just look at the
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sequential nature of these numbers here
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so gross profit is down but not by much
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it's still doing really well cost of
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goods sold is going up which I don't
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like which is something that you might
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most likely related to the additional
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purchases for the model y and some of
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the other expenditures they have coming
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up sales general and administrative
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essentially the cost of making sales is
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going down which is great this is
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largely due to some of the efficiency
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changes that Tesla made in q4 and RD is
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going up which I really like because to
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me Rd says that they're kind of putting
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the pedal to the metal there and
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actually trying to innovate and continue
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to push beyond their current kind of
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technical offering so that was a very
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quick run-through of the financials and
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the thing I really wanted to talk about
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here were the big bombshells that they
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had on the call and a lot of them came
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very early on in Ilan's opening remarks
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first Elan said that a big focus the
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biggest focus for him right now is to
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focus on Tesla service on improving
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customer service in North America and
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the way they plan on doing that is by
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ramping up their mobile delivery
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offering the good thing about this is it
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doesn't take a whole lot of money you
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have cars already you load them up you
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buy the parts you hire the people unlike
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opening a new facility right opening a
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new service center or something like
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that that takes a lot of time a lot of
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research investment in the building etc
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so they can essentially ramp up customer
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service just by hiring more mobile
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technicians and for most people it's
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actually a better experience anyways
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they also said that they're going to
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preemptively call a tow truck and
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schedule a loaner vehicle if an accident
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is detected I personally would have
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loved this when my wife had a pothole
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recently and the the blew the side of
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the tire out we were stuck on the side
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of the road in the rain for quite a
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while called Tesla no answer culture
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bleh they were there in 15 minutes so it
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would have been great if something like
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that existed so hopefully that comes
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true and the other thing they talked
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about with regards to service was that
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they would now be stocking all of the
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parts all of the common parts and all
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the common colors at the different
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service centers they later in the call
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alluded to right now they have
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essentially all those parts sitting at
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the factory but they just don't
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distribute them in advance and so
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hopefully using data and kind of looking
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at predicting where the issues may be
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and when they might be they can you know
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preemptively send those out so that if
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somebody has an issue they can come in
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to the service center be squared away in
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20 to 30 minutes and beyond that on
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their way so that's all great news
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because I know myself and many other
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people have been talking a lot about
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Tesla really needing to step it up on
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the service department then just a
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couple seconds later Elon it started to
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talk about the model why something there
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were a lot of questions about I didn't
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expect to hear anything but here's what
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we got first they've completed the
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engineering and design of a meaning we
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have essentially production vehicles
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they already have the tooling going out
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is what Elon said I'm not sure
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means that they are purchased it and
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it's on its way where is it well the
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current plan as Ilan stated and as a
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previous video that I did where I was
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talking about a leaked document also
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stated it is gonna be a gigafactory one
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so the model y as currently as it stands
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is going to be produced at gigafactory
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one makes a whole lot of sense if
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something else pops up he left it open
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that they may produce it somewhere else
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but it's most likely gonna be there it
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makes a whole lot of sense and i think
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i'm really excited about that because i
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believe in addition to where it's going
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to be made
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Ilan said that it will have a 3/4 a 76%
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ish overlap with the model 3 which means
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they already know how to do it pretty
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well so that hopefully alludes to them
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being able to ramp up production on the
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model why much sooner than previously
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thought
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the next big takeaway I had was when
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Ilan answered a question from the save
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platform first off I think this is a
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really cool deal where retail investors
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that's people like you and me get to
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vote with our shares we get to log in to
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this platform verify we're a shareholder
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and essentially ask questions and then
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other people get to vote on them the
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biggest ones get answered by Ilan and
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everyone else so that's incredible to
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let the retail investors have a voice in
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a kind of very intelligent way I love
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this and I love that Tesla really took
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the step there so you know Congrats dude
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owes to you guys for being progressive
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on that now one of the questions there
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was about whether or not the Model S and
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X will get the 2170 battery cells that
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the Model 3 has so there are different
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sized cells that are very similar but
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but just different enough that they
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would have to retool some things and
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kind of refactor some things and the
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idea would be that these newer cells
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with the new chemistry are more energy
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dense they can store more energy in
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essentially the same weight which is a
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big deal when you're talking about a
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already heavy vehicle elin said no Elon
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said it is not happening they do not
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have plans of upgrading the Model S and
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Model X to the 21 70 cell structure
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which is a big deal that actually really
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took me back I did not expect to hear
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that
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then when Elon when asked about range or
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in that same question was like you know
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what
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range benefit or bump do you think we'll
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see in the s and X Elon was kind of
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quiet here listen to what he said even
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when will Tesla switch Model S and X to
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2170 battery cells what percent range
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improvement do you expect we have no
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plans to switch at the next two 2170 and
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can't comment on future product
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development okay so I don't know it
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sounds like they're doing some stuff in
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this space they're not changing the
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cells they're finding some other way to
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upgrade the s and X because you
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definitely left that open and now on the
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website the badging before the 75
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kilowatt hour versus a hundred kilowatt
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hour are completely gone and that opens
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up the door for them to innovate on this
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space without having to worry about kind
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of the marketing or branding side match
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what they're doing so I like the
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decoupling of that there and I'm hoping
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that yields us a 400 plus mile s and X
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sometimes this year about being unveiled
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now some bad news on the consumer side
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but good for the company I guess the
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balance sheet is that it doesn't appear
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that Tesla will be offering a lease for
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the model 3 anytime soon
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Deepak an Elon both talked about it
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saying yeah they do see the benefit to
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consumers but the hit that they take on
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the balance sheet just really isn't
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possible right now and not something
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that they gave a timeline or a clue as
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to if they're they'll ever do it they
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may but right now doesn't appear that
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that's on the horizon so if you've been
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holding out for that unfortunately
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doesn't look like that's gonna be coming
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anytime soon and lastly we need to wish
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a fond farewell to Deepak huija the
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chief financial officer for Tesla
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currently and previously back in the
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2008 timeframe where he really helped
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Tesla kind of get on their footing and
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kind of get things going in the early
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days and came in the last year so it's
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really helped me kind of reestablish
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their foundation financially and then
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pushed to where they've now had two
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profitable quarters in a row against
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something they've never done before so
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Thank You Deepak - you know from
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everyone that believes in this company
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in this mission you know wish you well
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in your retirement and that brings in
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someone new to
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the role of chief financial officer we
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have Zach Kirk Ron Kirkland sorry Zack I
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said that wrong who's been with Tesla
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for nine years he said and you know very
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well educated very smart guy seems like
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he will be able to take take on this
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role so good for you Zack welcome to the
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team I hope to hear from you on the
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calls in the future unfortunately what
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this means though is that the stock has
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taken a hit right now as of this
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recording it's around 4% down which is
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just what happens when a public company
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has their CFO leave because remember the
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the way the markets work it's all about
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the money and the finances and all that
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and so when you have the guy in charge
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that who's been doing great
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leave it doesn't really kind of matter
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the situation right Zack could be
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perfectly capable and I hope I'm sure he
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is and I know he's gonna do a great job
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but just the nature of it being Deepak
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leaving you know leaves investors with a
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cloud of uncertainty as maybe it should
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right because you don't know what's
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what's to come
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so we'll see on that but you know I
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thought that that would actually cause a
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problem with their 920 million dollar
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bond payment due on March 1st but they
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stated that they are able to comfortably
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settle this and move on so that's a big
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deal because that I think was looming in
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a lot of people's eyes around what's
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gonna happen with Tesla with this how
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are they gonna do that the stock would
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have to rally like extremely you know
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20-something percent and it's just not
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going to do that now especially this is
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being kind of the last major update
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before that bond payments do so we'll
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see overall I think it was a good
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quarter last quarter for Tesla q1 of
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this year earlier on Tesla or Elon
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stated you know he thinks they'll be
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profitable but is the less certain about
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it or at least that's how I perceived he
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seemed less certain than previously in
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that has to do with that bond payment
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probably as well as the the delay in
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actually getting vehicles out one thing
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that they also said on their which
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interesting they said that the factory
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right now is only making cars for China
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and for Europe and just the the
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left-hand drive that is a big deal
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because basically the challenge is Elon
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put it is just getting the cars on the
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boats like it takes a long time and then
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when you ship that thing across the
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Pacific Ocean or all the way across the
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United States
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then across the Atlantic Ocean it just
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takes time so depending on how how you
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know quickly they ramp up their that
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could affect q1 profitability I wouldn't
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be shocked if we we didn't see a profit
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in q1 but it was not much of a loss and
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so you know we'll stay tuned as always
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thank you guys for joining me let me
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know what you thought about the call
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what you thought about these
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announcement we thought about the 2018
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results I think it was a big year for
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Tesla one of the most pivotal ones as
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they said and it just sounds like it's
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gonna be a fun ride from here on out so
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I hope you'll stick with me and lastly
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don't forget when you free the data your
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mind will follow I'll see you back in
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the next one
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[Music]
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