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Tesla Earnings Call: Lithium-Ion Cell 'Giga-Plant' Needed For Future Production

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Tesla Model S

Tesla Model S

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Tesla held its third-quarter earnings call yesterday evening, and CEO Elon Musk stayed pretty much on message.

He reiterated that Tesla Motors [NSDQ:TSLA] continues to produce its Model S electric luxury sedan, at a current rate of 550 cars per week, and that it is working steadily to reduce the labor and parts costs of doing so.

Musk answered questions from auto-industry analysts for roughly an hour after the release of the company's Q3 earnings letter.

We'll leave the dissection of Tesla's financial results to them, but here are a few points we took away from the call and the letter combined:

  • A total of 5,500 Model S cars were sold during the quarter, including more than 1,000 delivered in Europe
  • Tesla expects to sell roughly 21,500 cars during 2013, a slight increase of 500 from its previous projection, which would put fourth-quarter global sales at "slightly under 6,000" cars
  • The company did not discuss its plans for production volume during 2014
  • Its R+D spending will rise in the current quarter, as it increases the pace of development on its Model X crossover utility vehicle
  • Production of the Model X is still planned to start at the very end of next year, with volume sales coming in the second quarter of 2015
  • U.S. demand for the Model S is growing, with an increase in reservations last quarter--though the company did not specify any numbers
  • The company is constrained by production limits, including its supply of lithium-ion cells, not by limits on demand
  • As Tesla expands its European sales beyond Norway into Germany, the Netherlands, and other countries--including the U.K.--it will have to "starve" some markets of increased sales, Musk said
  • Interest in the Model S in China is high, Musk said, though the company won't begin delivering cars there until next February
  • At the end of the quarter, Tesla had installed 31 Supercharger quick-charging stations in the U.S. and another six in Norway
  • Panasonic is already capable of supplying Tesla with enough lithium-ion cells for planned 2014 production, and the two companies worked closely on the recent deal to supply 1.8 billion cells over four years
  • To buy enough lithium-ion cells to supply planned production of Model S and Model X by 2015, and its third-generation car in 2017, the company will need a "giga-plant" to make those cells that could make as many cells as all of today's global production
  • Tesla isn't quite ready to make an announcement on that plant
  • But such a facility would probably be located in the U.S.--though the company is looking outside the country too--and would likely be built in conjunction with battery partners
  • Revenue from selling zero-emission vehicle credits to other automakers fell substantially in the third quarter--from $51 million in Q2 to $10 million this past quarter--as Musk and CFO Deepak Ahuja had previously predicted

Tesla's stock price fell in after-hours trading following the release of the earnings letter and the subsequent call.

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