Tesla unworried by GM's cheap batteries, will constrain Autopilot use

And Other Interesting Tidbits From Its Earnings Call

Tesla Motors executives seem pretty confident about the future. That was the tenor of the call with financial analysts that followed the release of its 2015 3Q results and shareholder letter. They appeared quite sure about any number of things: their ability to ramp up Model X production, the huge market for energy storage products, and their efforts to minimize the costs of batteries.

Regarding that last point, for instance, mention was made by Patrick Archambault of Goldman Sachs about GM's recent claim of acquiring LG battery cells at a mere $145 per kWh, and their expectations of a drop to $100 by 2021. By most accounts, those would seem to be very competitive figures, but when asked whether they were worried about the threat of these cells being the same cost as theirs in a year or two, CTO JB Straubel and CEO Elon Musk were almost dismissive.

Straubel acknowledged reading about it, and cited some apparent confusion between cell price and pack costs he saw in the report, but wasn't terribly concerned. He is, he said, quite comfortable with Tesla's battery tech and its "cost road map in the future." Musk chimed in as well, adding that they are "constantly agonizing about cell cost and pack cost", and that he didn't think "anyone is on a path to be even close to us." He finished with this classic bit of panache, "If they are, I will be the first to congratulate them."

One thing Musk isn't quite so confident about is human nature. While discussing Tesla's Autopilot system, and saying how he was aware of many accidents it had prevented, and none that it had caused, he took pains to bring up that there had been some "fairly crazy videos on YouTube" involving Autopilot that were "not good." No doubt he was thinking of one bit of footage in particular, in which a Model S was filmed with the "driver" actually riding in the back seat. (We have that embedded below for your viewing pleasure.)

To prevent further shenanigans of this sort from occurring in the future, Musk let it be known that Tesla would be adding some additional constraints that would limit when and how Autopilot could be used. We assume that it might now disallow usage when the driver's seat is unoccupied and perhaps above a certain speed.

The earnings call usually lasts about an hour and there are always a number of small tidbits to be gleaned from the back and forth with analysts and company execs. Here are the other points we found most interesting. Enjoy.
  • Signature series Model X reservations are converting to firm orders at a higher rate than had the Model S, and Tesla expects to be producing a few hundred a week by the end of the year. Q1 should see a build rate of 1,600 to 1,800 crossover-shaped units.
  • Tesla Energy stationary storage products are sold out through 2016 and into 2017, even if a small portion of the existing orders are valid. The company is confident it will exceed its 15 percent profit margin, especially once production ramps up.
  • Adam Jonas of Morgan Stanley asked the same question as last quarter, though perhaps more bluntly, about whether Tesla would supply vehicle fleets to ride-sharing companies, or if will offer its own service in the future. Musk refused to answer, saying he didn't want to make product announcements and that their strategy in this area wasn't "fully baked."
  • It was reiterated that Autopilot was a beta release. It is improving with each passing week and that learning should even accelerate. Musk said it should feel quite refined within a few months.
  • Its Tesla Michigan tool and die facility was quite a bargain and they expect it will help them produce more parts in-house, allowing them to be less reliant on external suppliers.
  • Asked whether Tesla will sell mapping information gleaned from its Tesla Autopilot fleet, Musk demurred, saying he didn't want to make any product announcements. read into that what you will.
  • Speaking about the future of autonmous cars with Andrea James of Dougherty and Company, Musk said he thinks it will be unusal to see a car without autonomous capability in 15 or 20 years – sooner for Tesla – remarking, rather amusingly, that having a non-autonomous car will be" like owning a horse." Continuing, "You're really owning it for sentimental reasons."

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