Tesla Q4 Earnings Live Blog

Eric Jhonsa

After an impressive run-up over the last year, Tesla investors will be heavily anticipating the EV maker’s vehicle delivery target for 2021 after finishing last year just shy of the 500,000 mark.

According to analysts polled by FactSet, Tesla is expected to report non-GAAP EPS of $1.02 on revenues of $10.47 billion for the fourth quarter. That would represent Tesla’s first quarter with sales of more than $10 billion, and its sixth consecutive quarter of profitability.

Analysts are further expecting Tesla to report EPS of $0.80 per share for the first quarter on sales of $10.27 billion.

RealMoney's tech columnist, Eric Jhonsa, is analyzing the company's earnings report, as well as the call with analysts that's scheduled to begin at 6:30 p.m. ET.

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Eric Jhonsa
Eric Jhonsa

Editor

Thanks for joining us.

Eric Jhonsa
Eric Jhonsa

Editor

Tesla's call has ended. Shares are currently down 5.3% after hours to $817.99.

Tesla topped Q4 revenue estimates on the back of 46% Y/Y growth. EPS missed estimates amid elevated spending and short-term automotive margin pressures, while free cash flow came in at $1.87B and topped expectations.

The company didn't issue formal 2021 deliveries guidance, but said it expects to achieve 50% average annual deliveries growth over "a multi-year horizon," and that its 2021 growth could "meaningfully exceed" that rate. It also forecast Tesla Semi deliveries will start this year, and that Cybertruck volume production will start in 2022.

Eric Jhonsa
Eric Jhonsa

Editor

Last question is about why Tesla expects electric batteries to win out over hydrogen fuel cells.

Musk: I've gotten this question many times over the years. Hydrogen has very low density, even as a liquid. You need a giant fuel tank. Propane or methane would be better than hydrogen. We're very confident that doing long-range trucking with batteries is the better choice.

Eric Jhonsa
Eric Jhonsa

Editor

Question about whether the Tesla Semi will be the first Tesla vehicle to achieve full autonomy.

Musk says it's highly likely. Says some FSD software changes are needed for the Semi, but the underlying software is the same.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: I expect to be CEO of Tesla for several years. There's a lot of work that I'm super-excited to be doing. Nobody should be CEO forever. The sheer amount of work needed to be Tesla's CEO is insane. (Laughing) It would be nice to have a bit more free time on my hands. The mission isn't over yet. Tesla's goal from the beginning has been to accelerate sustainable energy. Less than 1% of the global vehicle fleet is electric, so we still have a ways to go.

Eric Jhonsa
Eric Jhonsa

Editor

Question about Tesla's battery cell cost/efficiency goals, and one about launching a cheaper Tesla.

Musk: We feel confident about achieving those goals in a 3 or 4-year timeframe. We're confident of achieving the goals we outlined during our Battery Day, though we hope to do better.

Eric Jhonsa
Eric Jhonsa

Editor

Question about Tesla's next-gen autonomous driving SoC.

Musk: The software still doesn't fully use the computing power of the first-gen Tesla self-driving computer. We expect version 2 to be about 3 times as powerful. It'll be paired with high-res cameras. It's coming along well, but our first goal is to improve the software and make all the neural nets video-based.

Eric Jhonsa
Eric Jhonsa

Editor

Question about the electric van market.

Musk: Tesla is definitely going to make an electric van at some point. It's really a matter of battery cell production. The reason the Tesla Semi hasn't launched yet is that we don't have enough cells for it. Once the 4680 cell is being produced in volume, we'll have enough.

Eric Jhonsa
Eric Jhonsa

Editor

Question about whether talent availability can hinder growth.

Musk: The challenge is the time it takes to onboard and train new hires. That said, we think we can see a 50% growth rate for many years. We think we could be "meaningfully above" 50% this year, though we don't want to commit to that right now.

Eric Jhonsa
Eric Jhonsa

Editor

Question about Musk's comments about being willing to buy more from cell suppliers. Does this require them to also manufacture the 4680 cell?

Musk: It's not required. We'll continue to use the 18650 form factor for a few years. But over time, it'll make sense to have a consistent form factor.

Eric Jhonsa
Eric Jhonsa

Editor

Question about regulatory credit expectations for 2021, and how Tesla could use the funds it raised in 2020.

Kirkhorn: Regulatory credits are always difficult for us to forecast. In the long-term, we don't expect regulatory credits to be a material part of our business. Most of our Q4 credits revenue wasn't lined up prior to the start of the quarter.

For capital plans, he says debt reduction is a focus, including the retirement of convertible debt in Q1. Also says Tesla's capital raises allow it to fully build out new Gigafactories more aggressively, as well as invest more in service center/Supercharger expansion.

Eric Jhonsa
Eric Jhonsa

Editor

Question about near-term supply chain challenges.

Guillen: Our first priority right now is to deal with COVID-related disruptions, such as for shipping. Also keeping an eye on component pricing. We're entering into long-term agreements with component suppliers.

Eric Jhonsa
Eric Jhonsa

Editor

Question about the FSD regulatory environment.

Tesla says it's working with U.S. regulators to address concerns, while there's "a general slowdown" on regulatory work in Europe. Also says China is looking to work on L4/L5 autonomy.

Eric Jhonsa
Eric Jhonsa

Editor

Question about Cybertruck development and expectations for 2021 deliveries.

Musk: We've finished all Cybertruck engineering. It needs bigger casting machines, because it's a larger vehicle. If we "get lucky," we'll be able to do a few deliveries towards the end of this year, but volume production will be in 2022.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: The fundamental limit of EV production right now is the availability of battery cells. The reason Tesla is making its own battery cells is to boost production, not to end our use of third-party suppliers. We'll take as many batteries as our suppliers can produce.

Eric Jhonsa
Eric Jhonsa

Editor

Question about competing in China.

Musk: We're the leader in the Chinese EV market. But only a small % of Chinese Tesla buyers select the FSD option. I'm confident they'll buy it as FSD continues improving in China.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: We're open to licensing our self-driving software to other companies. We're also willing to let other companies use our Supercharger network. We don't want to create walled gardens.

Eric Jhonsa
Eric Jhonsa

Editor

Question about what goals need to be reached to support autonomous ride-sharing.

Musk: We need to transfer all the neural nets in the car to video from analyzing one frame at a time. I'm confident we'll achieve full autonomy in time.

Of note: Tesla's camera-only approach to autonomy has made it an outlier among developers of self-driving systems, most of which are also using Lidar.

Eric Jhonsa
Eric Jhonsa

Editor

Question about customer service.

Automotive President Jerome Guillen: Our goal is to reduce the need for service visits, which we think we're gradually doing. 40% of service visits are now handled by the mobile service fleet, and 50% of service visits last less than 2 hours. We plan to open 46 service centers in 1H21. We're also aiming for all communications to go through the Tesla app, rather than phone calls.

Eric Jhonsa
Eric Jhonsa

Editor

Question about the 4680 production run-rate.

Musk: We're looking to produce 100GWh of battery cells overall in 2022, and reach 200GWH of annual production capacity during the year.

Eric Jhonsa
Eric Jhonsa

Editor

Question about Level 5 autonomy.

Musk: The challenge is now addressing driving edge cases and achieving 99.999% reliability. The software is improving dramatically. The shift to video is leading to major improvements in labeling objects. Our training system is analyzing vast amounts of video data.

Eric Jhonsa
Eric Jhonsa

Editor

Tesla says it'll be able to start mass-production of its 4680 battery in 2021.

Eric Jhonsa
Eric Jhonsa

Editor

Question about whether car owners could transfer their FSD licenses to newly-purchased vehicles.

Musk: We're not considering this at this time. We think we may have underestimated the long-term value of FSD. We will be offering FSD subscriptions soon.

Eric Jhonsa
Eric Jhonsa

Editor

First question: What's holding Tesla back from being the share leader in solar?

Musk: We're making great progress in solar. We had to temporarily devote the whole company to Model 3 production. But now we can focus more on solar.

Kirkhorn: We now have an industry-leading solar cost structure, which allows us to have industry-leading pricing.

Musk: Achieving better integration between the Powerwall and Tesla's solar roof is a priority for us. We expect to achieve it before year's end.

Eric Jhonsa
Eric Jhonsa

Editor

The Q&A session has begun.

Eric Jhonsa
Eric Jhonsa

Editor

Notes that (like other automakers) chip shortages could affect Tesla's near-term production.

Eric Jhonsa
Eric Jhonsa

Editor

Kirkhorn says Tesla could "materially exceed" its 50% long-term annual delivery growth target in 2021.

Eric Jhonsa
Eric Jhonsa

Editor

Says energy GM was impacted by solar roof-related costs and seasonality for its leasing business. Reiterates that Tesla expects its op. margin to keep growing long-term.

Eric Jhonsa
Eric Jhonsa

Editor

Kirkhorn: Auto GM was impacted in Q4 by investments in Tesla's Fremont plant, as well as higher logistics and labor costs due to COVID-related factors. Excluding those things, auto GM improved.

Eric Jhonsa
Eric Jhonsa

Editor

Kirkhorn: Auto GM excluding credits improved in 2020 in spite of lower ASPs and the impact of new product launches.

Eric Jhonsa
Eric Jhonsa

Editor

CFO Zach Kirkhorn is now talking.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: 2021 will be a great year for Tesla. The launch of new Gigafactories will significantly lower shipping costs and make Tesla more efficient.

Eric Jhonsa
Eric Jhonsa

Editor

Musk reiterates his claim that self-driving capabilities will significantly increase the value of Tesla cars, as well as the company's gross profit-generating potential. Of course, recent reviews of Tesla's FSD software suggest it still has a ways to go before reaching full autonomy.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: Our FSD software is improving rapidly. Often no intervention is needed on drives I take to places that I haven't previously been to.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: We'll be charging $10K more for the upgraded version of the Model S that we're launching.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: Model S Plaid will be the first production car ever to go from 0-60 in less than 2 seconds.

Eric Jhonsa
Eric Jhonsa

Editor

Musk: The Model S and X Plaid are in production now. Model S Plaid deliveries will start in February.

Eric Jhonsa
Eric Jhonsa

Editor

Musk going over Tesla's 2020 performance. Notes last year's production/deliveries growth and FCF, the Model Y launch, etc.

Eric Jhonsa
Eric Jhonsa

Editor

Elon Musk is talking.

Eric Jhonsa
Eric Jhonsa

Editor

Tesla's IR chief is going over the safe-harbor statement.

Eric Jhonsa
Eric Jhonsa

Editor

The call is starting.

Eric Jhonsa
Eric Jhonsa

Editor

Tesla's stock hasn't moved much over the last hour: Shares are currently down 3.9% AH to $830.70.

Eric Jhonsa
Eric Jhonsa

Editor

Here's the webcast link, for those interested:

Eric Jhonsa
Eric Jhonsa

Editor

Hi. I'm back to cover Tesla's Q4 call, which should get underway in a few minutes.

Eric Jhonsa
Eric Jhonsa

Editor

I'm taking a break, but will be back to cover Tesla's earnings call, which starts at 6:30PM ET.

Tesla's shares, which were up more than 650% over the prior 12 months going into earnings, are down 3.6% after hours to $832.88 after the company beat Q4 revenue estimates, missed EPS estimates and reported stronger-than-expected free cash flow. Tesla also forecast (without giving a formal guidance figure) that its deliveries would grow by more than 50% in 2021, and said that it expects to achieve 50% average annual deliveries growth "over a multi-year horizon."

Eric Jhonsa
Eric Jhonsa

Editor

Regarding the energy storage business, Tesla notes its 2020 deployment growth was largely driven by its Megapack utility-storage solution, while adding Powerwall demand continued to grow as well. The company promises "further increases in supply" over the next few months.

Eric Jhonsa
Eric Jhonsa

Editor

Though still covering just a small % of its total vehicle fleet, Tesla's leasing business continues to grow. The company had an operating vehicle lease count of 72,189 at the end of 2020, up 17% Q/Q and 44% Y/Y.

Eric Jhonsa
Eric Jhonsa

Editor

Tesla's Q4 diluted share count was 1.124B. That's up sharply from the year-ago period's 935M, thanks in part to Elon Musk's stock awards.

Based on Tesla's AH trading price of $824, the share count gives the company a $926B market cap.

Eric Jhonsa
Eric Jhonsa

Editor

With the company now building plants on 3 continents, Tesla's Q4 capex totaled $1.15B. That's up from $1.01B in Q3 and $412M a year earlier.

Eric Jhonsa
Eric Jhonsa

Editor

Though its revenue rose 72%, the energy generation/storage unit had a gross margin of negative 4.7%.

The services and other segment had a GM of negative 21.1% The segment has had negative margins for a long time, thanks in part to the cost of supporting the Supercharger network.


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