Tesla CEO and co-founder Elon Musk has launched another extraordinary attack against what he describes as “fascist” stay-at-home orders, but says the pioneering electric vehicle and battery storage company is best placed to emerge from the Covid-19 pandemic and is “pedal to the metal” in expansion mode.
Tesla on Thursday announced a small profit of just $US16 million ($A24.5 million) for the first quarter – surprising analysts because it well ahead of market expectations and it the first time the company has delivered a profit for the first three months of a calendar year, usually a seasonally weak period.
Investors responded by pushing the stock up nearly nine per cent in the “after-market” to $US870 a share, valuing the company at a phenomenal $US165 billion ($A250 billion).
Tesla remains not far short of its record highs, while rivals like GM and Ford have seen their stock nearly halve in recent weeks, amid multi-billion dollar losses and warnings of worse to come. Tesla is now valued three times more than the combined stocks of GM and Ford, despite its relatively small production levels. Investors are clearly betting on an electric future, even as oil prices tumble.
The Tesla result was boosted by the performance of the new Model Y electric SUV “cross-over”, which Musk said had become the first of its electric range to deliver a positive margin in its first quarter of sales, largely because so many of its components are common to the successful Model 3.
Musk says that the Model Y is still on track to become the company’s biggest selling car, and he insisted that while rivals were being forced to delay the launch of their new EV models, and were being hit by manufacturing closures, and huge losses, Tesla was still in full expansion mode.
“Many other companies are cutting back on investments,” Musk told an online analysts and shareholder call on Thursday morning (Australian time). “We are doing the opposite …. we are pedal to the mettle on new products and expanding the company.”
He hinted that a new gigafactory – in the US – would be announced in the next few months and by next year, when the new German factory was expected to be operating, it would be a truly “global manufacturer” across the US, Europe and China with production capacity of more than one million units a year, not to mention battery storage and solar tile products.
Even in the event of a “force majeure”, Musk said that the company should be able to deliver compound growth of 50 per cent over the medium term. “I’d be surprised if it was less than 40 per cent, short of World War three,” he said.
Compound growth of around 50 per cent would translate into spectacular production numbers – more than four million vehicles in 2025, and 20 million by 2030.
“We came to the conclusion that the right choice is to continue to expand rapidly, continue to invest in the future, and in new technologies, even though it is risky. Our key investors support that as well,” Musk said.
But Tesla is also being affected by Covid-19 lockdowns, and has been forced to stop manufacturing at its Fremont factory in California, where it makes all its Model S and Y vehicles, the bulk of Model 3, and the new Model Y.
Musk questioned the decision to force people to stay at home during the pandemic, echoing controversial comments he had previously made on Twitter. “This is fascist, this is not democratic. This is not freedom,” he said.
“There is outrage. It will cause great harm not just to Tesla but to all companies. Tesla will weather the storm … but for others everything that people have worked for for their whole lives will be destroyed.”
Away from Covid-19, Musk says Tesla has a strong story to tell. The Model Y looks like being a roaring success, and he believes that Tesla is stealing a long march over its rivals in the development of robo-taxis, and autonomous driving, and is now thinking about offering Full Self Driving as an subscription rather than just the upfront cost of $US7,000.
It’s also working on the Cybertruck, the Tesla Semi, the new Roadster, and its Tesla solar roof, despite that being derailed by Covid-19 pandemic that has prevented installations and regulatory approvals.
Musk also hailed the company’s contact-free purchase and delivery, noting that a Tesla can be order online in less than 5 minutes, and then delivered to home with all the paperwork. He contrasted the traditional means of buying new cars as “akin to getting root canal therapy” at the dentist.
Battery storage is also looking strong, with demand far exceeding supply, and its new Tesla “megapack” – some 15 times the storage capacity of the previous Powerpack, is creating strong interest.
And Musk conceded that tesla is even thinking of entering the utility business by building its own big batteries, rather than just being a supplier to others. The upcoming “battery day” is expected to deliver some major announcements on strategy and performance.
“Our over-arching goal is to accelerate the advent of sustainable energy,” Musk said. “The three elements of that is sustainable power generation, the ability to store that power , and electric transportation.
“Clearly there is an uncertain future ahead … a bit of a bumpy road … but the long term prospects are very good.”
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