Here Are Tesla's Responses to Your Questions

Tesla opened the question-and-answer portion of its earnings call yesterday by answering five questions submitted by retail shareholders via Say. Here's what they had to say about everything from insurance to batteries. First, some numbers: In total, 385 questions were asked, 714 shareholders participated and voted, and together they represented $53M in shares. Here’s why that matters: $53M in shares is... a lot. But in the grand scheme of Tesla, which has a market cap of $44.7B, it might not seem like much. This is why your participation in the platform was such a big deal. For a company whose investors are 60% institutional (i.e. big banks, asset firms, pensions) to give time to everyday shareholders on an earnings call is generally not something that’s done. It also underscored that as partial owners of Tesla, retail shareholders, with any amount of stake, ask crucial questions. The company announced plans for an insurance product while answering a question from a Say user, inspiring headlines today. Below, Tesla's responses to a selection of questions. You can see everything that was asked and sort by shares represented, votes and topic here. What's going on with Tesla's acquisition of battery company Maxwell Technologies? Tesla's response: Elon Musk: Jonathan, do you want to... Jonathan Chang [General Counsel]: Yeah. Hi, it's Jonathan Chang, General Counsel here. Right now, it is going through approvals with the SEC. There is not a whole lot of things holding it back. We're on schedule, we're on track. Right now we're looking to close in mid-May. How is Tesla bringing in revenue as an energy company? Tesla's response: Elon Musk: Sure. The challenge really is battery cells scarcity. As far as the additional storage is concerned, we basically need an up-sell to support the vehicle production as well as to full power on Powerpack. Last year, in order to have enough cells for Model 3, we actually had to convert all of the lines of the Gigafactory to produce cells just for Model 3 as opposed to Powerpack. So we are essentially scrounging cells from all around the world to continue some level of production on the Powerpack. This year, we think that we will be able to allocate at least maybe 5% to 10% of cell outputs like current, J.B., like what do you guys think? J.B. Straubel [Chief Technical Officer]: Yes, between 5% and 10%, something like that. Musk: Yes. So there are far fewer cells in a Powerwall than a car, so that translates to -- it just, look, quite a decent number of our Powerwalls. And then we will continue to use cells from variety of suppliers around the world. The Powerwall and Powerpack, because they don't have to go through vehicle homologation are much more adaptable to using a variety of cells from other cell providers. So, we expect that Powerwall and Powerpack to see a very significant percentage growth this year maybe on the order of 300% or some quite high number. Sorry, sorry. Yes, 300, confirming it, 300%. So this is a very big percentage growth rate. It’s much faster than an automotive. So over time, we expect that sort of growth rate would hopefully be able to continue and then battery storage will become a bigger and bigger percentage of Tesla’s business over time. We also have – we are also finding a significant increase in retrofit solar this year, because we have finally refined the product offering to be something that’s extremely compelling and much more cost efficient to deliver and install. So, to radically streamline the process from what has been done before and we will have more to say on that possibly next week. And then the Solar Roof tile, we're on Version 3 of the design. That necessarily takes a while to scale up, because we have to be confident that the Solar Roof is going to last for -- on the order of 30 years. And because of the warranties of 20, 25 years, and so the rate at which you can iterate on Solar Roof is necessarily slowed down by the (inaudible), which you can do accelerated aging on the roof. And we want the installation process to be simple and easy. So -- which is actually the Buffalo -- Tesla Buffalo factory a few weeks ago. And I was pretty impressed with the team and we're looking forward to scaling that up significantly through the balance of this year and next. Would Tesla create an insurance product to help customers who struggle to insure autopiloted cars and help provide a better idea of their safety to regulators? Tesla's Response: Elon Musk: The answer is, yes, we are creating a Tesla insurance product and we hope to launch that in about a month. It will be much more compelling than anything else out there. (Later on in the call, insurance was brought up again by Morgan Stanley analyst Adam Jonas.) Adam Jonas: Thanks. First question, Elon, a couple of days ago, I asked you how safe is the autopilot technology and you said something like twice as safe as normal driving. But you seem to be in a really unique position to really collect exabytes of data, you could potentially be externally validated much more rigorously provided to a regulatory body or insurance institute to just show how much safer autopilot is. When could we expect to see Tesla do that, that type of validation that investors could also get a sense of? It seems really, really important for adoption. Thanks. And I have a follow-up. Musk: I think we are just going to continue to report the absolute numbers. But I think reporting the detail just gives those who are opposed to Tesla, they sort of like data mine the situation and then try to turn it positive into negative. So we are just going to keep reporting what we report. We do give some more detailed information to insurance companies and to help with rates. And, obviously, as we launch our own insurance product next month, we will certainly incorporate that information into the insurance rates. So, we essentially have a substantial price and sort of arbitrage -- or information arbitrage opportunity where we have direct knowledge of the risk profile of customers and based on the car and then if they want to buy a Tesla insurance, they would have to agree to not drive the car in a crazy way. Or they can, but then their insurance rates are higher. So, we are just going to keep reporting the numbers at a broad brush stroke level, which I think is really what matters.... What About the Tesla Semi? Tesla's Response: Jerome Guillen [President of Automotive]: This is Jerome. Next year we will start production. We are very happy with driving the trucks extensively with I think so far quite amazing success, yes. Elon Musk: The prototypes are working amazingly well. Guillen: Yes, very well. We just used them all the time. We load them to maximum weight and continue to make improvements. Musk: So, we have even used them to deliver some Model 3s. Guillen: Yes, that was fun. So, yes, we will start production next year. The location was not yet set, but it’s pretty clear that we make all the batteries and driving it in Reno. Musk [Chief Executive Officer]: Sparks, technically. Guillen: Sparks, yes. Northern Nevada. Musk: Yes, Northern Nevada. When will Tesla owners that purchased autopilot systems with full self-driving capability get the newest version of the software? Elon Musk: I think from features and functionality standpoint, I think there is no point getting the FSD upgrade if you don’t really have it in the car for probably about 2 or 3 months. That’s when we will start releasing features that are materially different from the feature set available on the Version 2 hardware. So, just no need to rush to the – get your computer replaced. It’s like 2 to 3 months before it becomes relevant and then it will obviously increase rapidly from then. One other comment I will make in case nobody asked this exclusive especially. For Model Y production, we are right now trying to decide whether Model Y vehicle production should be in California or Nevada and we expect to make a final decision on that very soon. But in the meantime, we have ordered all of the tooling and equipment required for Model Y. So, we don’t expect this in anyway to delay production of Model Y, but it’s hardly a very close call between Nevada and California as to whether we do the Model Y at Giga or at Fremont, but those are the two options and we will hopefully be able to make the decision in the next few weeks. Read all of the questions submitted for Tesla on the company's Q4 earnings call in January, and which Elon Musk answered, here.