Elon Musk talks in detail about Tesla and Cybertruck

Elon Musk talks in detail about Tesla and Cybertruck

Tesla reported third-quarter earnings on Wednesday, Oct. 18, after the closing bell.

Tesla CEO Elon Musk addressed investors and analysts on an earnings call shortly after.

The automaker reported adjusted EPS of $0.66, missing the consensus estimate of $0.74. It also fell short of revenue forecasts, and reaffirmed its vehicle-production target of 1.8 million for full-year 2023.

The stock rose 0.5% in after-hours trading following the report, but slipped more than 3% as the call progressed. It closed 4.8% lower, at $242.68, on Wednesday. Shares have climbed more than 100% year-to-date, far outpacing the benchmark S&P 500 and the tech-heavy Nasdaq 100.

Musk says wars aren’t great for business

Tesla CFO Vaibhav Taneja warns that the wars going on “impacts sentiment.”

Musk says “buying a new car isn’t front of mind” for consumers with wars going on. The topic closed the call on Wednesday night.

Musk rails against the ‘work-from-home crowd’ .

The billionaire says people who want everyone to work from home give off “Marie Antoinette vibes.”

“I mean how detached from reality does the work-from-home crowd have to be while they take advantage of all those who cannot work from home?” he says.

Musk is mum on Tesla’s next-gen product

Asked if he could share the timing of Tesla’s next vehicle, Musk says “not at this time.”

Tesla stock dips into the red in after-hours trading as call continues

Tesla shares were trading down more than 3% around 40 minutes into the earnings call, as Musk tempers expectations on Cybertruck volume production.

It sounds like it’s gonna be a hellish 18 months for Tesla workers

“We dug our own grave with Cybertruck,” Musk says.

The Tesla CEO says the EV pickup truck will require a “staggering” amount of work to ramp up because “it’s the nature of the newness.” Though, he says the company is doing its best to simplify the vehicle.

“It will be cool, but it’s utilitarian,” he says.

Musk has previously talked about “production hell” during Tesla’s past Model 3 ramp.

Musk says Tesla is ‘certainly not being let off the hook’ on legal liability of FSD and Autopilot

“At least judging by the lawsuits,” Musk says.

The CEO was responding to a question from an investor regarding some of the legal liabilities associated with self-driving technology.

The technology, which still requires a licensed operator, has faced regulatory scrutiny in recent years.

Musk says he expects Tesla to eventually produce about a quarter million Cybertrucks a year.

Musk says he expects to ultimately reach production of about a quarter million Cybertrucks a year.

“But I don’t think we’ll reach that output next year …. probably sometime in 2025,” he says.

He also talks about the challenges of the ramp-up period.

“The ramp is going to be extremely difficult. There’s no way around that,” Musk says. “If you want to do something radical and innovative and somethings really special like the Cybertruck, it is extremely difficult because there is nothing to copy.”

“The more uncharted the territory, the less predictable the outcome,” he adds.

That’s a new voice you’re hearing as Tesla’s CFO

Vaibhav Taneja is joining the Tesla earnings call for the first time as the company’s new chief financial officer.

The EV company’s former CFO, Zachary Kirkhorn left the company earlier this year. He’d worked at Tesla for 13 years, including serving as CFO for over four years.

Taneja also holds the role of chief accounting officer and first joined the company in 2018, according to his LinkedIn profile.

Elon Musk says there will be ‘enormous challenges’ in reaching volume production with Cybertruck

Musk says he wants to “temper expectations” for the Cybertruck, predicting it will take a year to 18 months before the vehicle can become a significant cash flow contributor, he cites the difficulties of scaling production on a new vehicle, as well as selling the EV at a “price people can afford.”

The CEO says demand for the Cybertruck is high and he believes it is one of Tesla’s best products.

Analyst reaction: ‘I don’t think the price cuts are over,’ Investing.com’s Jesse Cohen says.

Jesse Cohen, a senior analyst at Investing.com, says Tesla will likely have to continue to use price cuts to combat weak demand.

“Pricing is a key factor that could help Tesla make up for a possible demand drop and boost revenue. As such, I would not be surprised if Tesla seeks further price hikes in the weeks ahead as trouble starts to brew at some of its competitors, including Lucid Motors and Rivian,” Cohen said in a note following the earnings release.

Tesla has cut its price several times over the past year and investors have grilled Elon Musk on the decision to continue to slash away at profit margins during previous earnings calls.

“The big question is if this is just a blip, or signs of a bigger shift among consumers as rising interest rates and a weaker economic backdrop discourage consumers from making big-ticket purchases,” Cohen said.

Tesla finally gives an official Cybertruck delivery date

The company announced it would have a Cybertruck delivery event on November 30 at its Texas gigafactory.

Tesla fans have been waiting for months for an update on the futuristic pickup truck, which reportedly had a reservation list of more than 1.8 million prospective buyers as of September.

The EV company has been promising the Cybertruck will hit the market for quite some time. Elon Musk unveiled the concept for the electric pickup truck about four years ago, and the project has faced a series of delays over the past two years.

Tesla stock rose nearly 2% in after-hours trading to $264.99. Expect more volatility as the company as the company’s conference call gets underway at 5:30 p.m ET.

Tesla reports profit and revenue miss.

3rd quarter results

  • Adjusted EPS: $0.66, vs $0.74 estimate (Bloomberg consensus)
  • Revenue: $23.35 billion, vs $24.06 billion estimate
  • Free cash flow: $848 million, vs $2.59 billion estimate
  • Gross margin: 17.9%, vs 18% estimate
  • Capital expenditure: $2.46 billion, +36% y/y, vs $2.03 billion estimate

Full-year 2023

  • Reaffirmed vehicle production of 1.8 million vehicles
  • Cybertruck deliveries are on track to begin later this year

RBC sees a strategic pivot for Tesla on the idea it can become auto supplier.

RBC warned investors in a recent note that Tesla could miss third-quarter analyst estimates after its planned factory upgrades impacted deliveries, which would likely send shares lower.

But any potential weakness in Tesla stock could be brief if the company offers commentary on its self-driving capabilities and/or its potential to become a supplier to automakers, akin to its recent charging network deals with a slew of companies.

“We think commentary on the call on FSD licensing or what we believe to be Tesla’s master pivot to becoming a Tier 1 supplier (charging infrastructure, batteries, power electronics, and of course autonomy) could reverse any down move in shares,” RBC said.

The bank highlighted that for Tesla to hit its 2023 delivery target of 1.8 million vehicles, it would have to deliver 476K units in the fourth-quarter, so guidance during the earnings call will be key.

RBC expects Tesla to report third-quarter revenue of $23.7 billion, auto-gross margins of 18.2%, and adjusted earnings per share of $0.75.

Goldman Sachs said in a recent note that Tesla investors are likely to shift their focus towards the potential demand impact of the expected Model 3 refresh, as well as any commentary about the launch of the Cybertruck.

“To what extent can new models help drive stronger volumes in 4Q23 and 2024? Consensus, per Visible Alpha Consensus Data, is at 499K in 4Q and 2.358 mn in 2024. We model a pick-up to 494K in 4Q and 2.275 mn in 2024,” Goldman said.

The bank also highlighted that Tesla could benefit from lower costs in 2024, but that it might pass those cost savings onto customers to help stimulate demand.

“We believe that it may further lower prices to drive volume next year and mitigate margin improvement,” the bank said.

Goldman recently reduced its full-year 2023 earnings per share estimate to $2.75 from $2.90 due to lower-than-expected revenues and profit margins.

JPMorgan sticks with bearish view ahead of Tesla report.

JPMorgan is leaning bearish on Tesla ahead of its earnings report, and recently said that its Q3 deliveries of about 435,000 vehicles is a “modest miss after the goalposts had been moved considerably.”

While consensus estimates expected Tesla to deliver about 451,000 vehicles in the quarter, prior Q3 consensus estimates were once as high as 550,000 vehicles.

“While this represents a fairly material reset of expectations, actually the decline in deliveries outlook is the least meaningful of expectation resets for Tesla this year because it has come despite large declines in average selling price which have exacerbated the impact of the volume shortfall on all other performance metrics,” JPMorgan said.

The bank expects Tesla to deliver third-quarter EPS of $0.76, well above consensus GAAP EPS estimates of $0.64 per share.

JPMorgan has leaned heavily bearish on Tesla stock, and its current price target of $135 per share represents potential downside of 46% from current levels.

Bank of America cut Q3 estimates after Tesla’s latest delivery numbers.

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