Thread by @sokane1

Welcome back, my friends, to the show that never ends.

AKA Tesla is about to drop its Q2 2019 financial results. We already know the company set a record for production and deliveries. Now it’s time to see how close it got to digging out of the red.

“About to” is a relative term there — the market closed 45 minutes ago and we still don’t have the company’s shareholder letter. Last quarter it took until after 5PM ET before that dropped.

Also, Elon Musk’s call with analysts isn’t scheduled start until 6:30PM ET, so settle in

NEW: Tesla lost $408 million in the 2nd quarter of 2019 despite record deliveries. Company generated $6.3 billion in revenue

NEW: Thanks to the raise earlier this year, Tesla says it has $5 billion in cash, the “highest level in Tesla’s history.”

Here’s my first cut at the story: theverge.com/2019/7/24/2070…

Of note: Tesla sold $111 million in regulatory credits. The company also says going forward it will combine vehicle and non-vehicle regulatory credits into "a single line item.”

Despite the loss, this could be a good sign: Tesla’s operating expenses for the quarter "remained relatively flat at $1.1 billion in Q2 in spite of 50% quarter-over-quarter growth in vehicle deliveries and the inclusion of $117 million in restructuring and other charges.”

NEW: 4,322 customers took Tesla up on leading the Model 3, which launched this quarter.

(Of note, customers don’t have a chance to buy the Model 3 at the end of the lease.)

Also as if there was any doubt about this now, Tesla confirms that Model Y will be built at the Fremont factory. "Preparations for Model Y production in Fremont began in Q2."

"We are making progress on our next major update: Enhanced Summon, which is currently in our early access program. We are making progress towards stopping at stop signs and traffic lights.”

Musk had said Enhanced Summon was “almost ready” in May.

Tesla “aim[s] to produce 10,000 total vehicles of all models per week by the end of 2019.” Company is sticking to its 360k-400k delivery guidance for the year.

Leasing*

https://twitter.com/sokane1/status/1154138440667193344

Tesla insurance, meanwhile, isn’t mentioned anywhere in the shareholder letter.

Something I hope gets asked on the call:
Tesla says it’s focused on improving cust. service & says revenue from service biz is growing. But "total service-related cost continues to decline compared to a year ago, in spite of almost doubling the size of our customer” fleet.

So the Q then is, how is it improving customer service when it’s spending less and less on customer service?

Despite the loss, Tesla says this: "We believe our business has grown to the point of being self-funding. "

Is the webcast really choppy for anyone else?

Sorry folks, webcast won’t load in any browser for me, even after a restart.

And it finally started working. CFO Zach Kirkhorn talking. "I think it's important to remember the Tesla is on the long term journey, and it's difficult to see the full picture looking quarter to quarter. "

Kirkhorn: "we've demonstrated our ability to generate significant organic demand as nearly all orders generated in Q2 were non-reservation holders, and thus far in Q3 or order casing is ahead of where we were at this point in Q2."

"With continued focus on execution and cost Management, the next 12 to 18 months should be most exciting,” because of Model Y / China & Europe Gigafactories "and maybe a few other things along the way. "

WOW TESLA CTO JB STRAUBEL “transitioning to a senior advisor role”, Musk says. Drew Baglino, VP of tech, taking over his duties.

STRAUBEL: “I'm not disappearing, and I just wanted to make sure that people understand that this was not some, you know, lack of confidence in the company or the team or anything like that.”

This is the second C-suite exec to announce a role change on an earnings call in the last 6 months. CFO Deepak Ahuja announced retirement in January.

Onto Q&A. First q is about supply/demand.

Musk: “We have to make make the cars are affordable.”

Q: What is in store for the battery investment day

Musk: "comprehensive review of cell chemistry, module and pack architecture, and a manufacturing plan”

Probably happening Feb/March 2020. “Show & tell,” he says

Sorry, had to write about JB for a minute. Back now and Musk says “we almost need a Master Plan Part 3” to explain how Tesla is going to go from a company that creates "10s of gigawatt hours per year to multiple terawatt hours per year.”

Q about Model S and Model X demand/saturation of the market

Musk: “there's probably a bit too much focus on S&X.” Instead, "the story of Tesla in the future is Model 3 and Model Y.”

Q about retail

Musk: "word of mouth for Tesla is incredibly good, so once there is a nucleus of customers in a particular area that they love the cars, and they talk to their friends about it, then that's really what drives sales.”

In March I wrote about how the Model Y will be the first real test of that thesis: theverge.com/2019/3/14/1826…

Musk on how to make service centers better: make them more like stores, aka stash parts in service centers, not just warehouses.

"It's like a supermarket, like, you know, you always know where like the cocoa puffs are.”

And Q&A is done — call clocks in at just over an hour. No mention of… a lot of things.

Meanwhile here’s an official SpaceX live stream for the first hop test of Star Hopper, an early prototype of its super duper heavy Mars rocket

Looks like they’ve held the countdown at 2 minutes

Nevermind we’re back! 1 minute

Some sort of abort. Countdown hit 0 and some engines appeared to fire but now hop, just a lot of vented / burned fuel.

*no hop