Five takeaways from Elon Musk's conversation with analysts

Tesla Model X SUV now on target for late third quarter

Apple cars, Tesla Motors’ fledgling energy business, Model X delays --- here are five takeaways from Tesla CEO Elon Musk’s conversation with financial analysts Wednesday.

Is Apple’s interest in electric cars a threat to Tesla?

“I certainly hope Apple gets into the car business,” Musk said.

Musk has consistently advocated for other automakers and companies to enter the business, saying that will expand the market and that Tesla will out-compete them. Musk also said he wasn’t concerned about Apple stealing employees from Tesla in the competitive Silicon Valley employment environment.

“LinkedIn can produce statistics on what the relative flow of people is from one company to another. If you look at the trailing 12 months, Tesla has recruited five times as many people from Apple as Apple has recruited from Tesla,” Musk said.

When will the long-delayed Model X sport-utility vehicle go on sale?

Musk conceded problems getting the Model X completed, in part because it was a bigger design departure from the electric car company’s flagship Model S luxury sedan than anticipated.

“So the development took a lot longer and we were distracted solving all sorts of issues with the S during that time, which made it difficult for us to allocate engineering resources to the X,” Musk said.

“We'll do a lot better with the X and we're paying close attention to some of the things that are different about the X to make sure that they're not an issue, particularly the falcon wing door and the second row seats,” said Musk, who now projects the first deliveries to take place late in the third quarter.

How important are automotive environmental credits to Tesla’s business plan?

Tesla generates various types of government credits with each sale of an electric car. It sells those credits to rival automakers who are struggling to meet environmental regulations, especially in California. Tesla earned $66 million from such sales in the latest quarter and more than $500 million in recent years.

Musk says they are not a big deal.

“It sort of moves things about like 2%,” Musk said. “Not super material.”

But selling credits provides the automaker important cash, especially in the most recent quarter when unprofitable Tesla burned through $558 million. Morgan Stanley analyst Adam Jonas said the company could run out of cash if it doesn’t tap the capital markets for more money in the next nine months.

The $66 million in credit sales was 7% of Tesla’s revenue in the quarter. It was equivalent to the sale of 660 of the $100,000 Model S. Tesla has delivered about 65,000 cars during the life of the company. Its $500 million in credit sales is the equivalent to the sale of 5,000 vehicles.

How big will Tesla’s energy storage business be?

Last week the automaker introduced its Tesla Energy division, which will make batteries for residential, commercial and utility energy storage. The products leverage the technology Tesla has developed building batteries for its electric cars. There are two products, the Powerwall for home use and the larger Powerpack for businesses and utilities.

“The response has been overwhelming, OK, like crazy,” Musk said. “We've had 38,000 reservations for the Powerwall, 2,500 reservations for Powerpack..... there's no way that we could possibly satisfy this demand this year and we're basically like sold out through the middle of next year.”

When will we see the smaller, less expensive Model 3 sedan Tesla is working on?

"We are hoping to show off the Model 3 in approximately March of next year,” Musk said. “Don't hold me to that month, but that's our aspiration. And then be in production with Model 3 probably closer to the late 2017 timeframe.”

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