Musk’s Quarter-End Email
Electrek is reporting on a leaked email from Elon Musk to all Tesla employees on Monday afternoon as Tesla approaches the end of their second quarter on June 30th.
“For many reasons, a great deal of Tesla execution worldwide is packed into the final week of the quarter. It is very important that we go all out through end of June 30 to ensure a good outcome. Wouldnʼt bring this up if not very important.
Thanks Elon [sic]” – Elon Musk
The more bullish faction of Tesla observers seem to believe Musk’s email points to efforts to post a positive GAAP profit in Q2, the last remaining hurdle to Tesla’s eligibility for inclusion in the S&P 500. However, Musk has recently expressed his belief that TSLA’s stock price is “too high”, so investor excitement over potential share price upside as a result of S&P 500 inclusion is likely not all that important to Musk. If Tesla does not meet the requirements with their second quarter results, they are likely to qualify after Q3. Nevertheless, GAAP profitability in a quarter containing a global pandemic and lengthy factory downtime would be a significant and highly-motivating achievement to pursue regardless of the S&P 500 implications.
Before assuming Musk’s email is bullish, it’s also important to consider previously leaked quarter-end emails. In Q1 of 2019, a leaked Musk email discussing quarter-end execution preceded tough delivery and production numbers, poor earnings, and a significant decline in TSLA’s share price.
“For the last ten days of the quarter, please consider your primary priority to be helping with vehicle deliveries. This applies to everyone. As challenges go, this is a good one to have, as we’ve built the cars and people have bought the cars, so we just need to get the cars to their new owners!” – Elon Musk, Q1-2019
Though Tesla did face unprecedented delivery challenges with the international rollout of the Model 3 that quarter, deliveries were not the only pain point at the time. Tesla’s production in Q1 of 2019 was down roughly 9,400 vehicles compared to the prior quarter. Historically, Tesla’s production has grown quarter-over-quarter with the previous largest quarter-over-quarter production decline being just ~1,600 vehicles back in Q3 of 2014.
That’s not to say the email is necessarily a bearish signal. Leaked Musk emails have preceded plenty of strong quarterly results. Both points of view are important to consider for TSLA investors or, more precisely, traders.
Firmware 2020.24.6 Rollout
Tesla firmware version 2020.24.6 has begun rolling out as an over-the-air update. With the update, Tesla’s “Traffic Light and Stop Sign Control” functionality no longer requires driver confirmation to continue straight through intersections with a green light, as long as there is the presence of a lead vehicle.
Teslascope has shared the full release notes which include “Traffic Light and Stop Sign Control” for Australia, New Zealand and Canada. Additionally, some variants of Model S/X vehicles will have their maximum charging rate increased to 225 kW.
Significant updates to camera functionality are included in this update as well. Drivers can now view the side repeater cameras on screen in addition to the rear-view camera for added scope of visibility. Interestingly, Tesla has also finally enabled some functionality from the interior cabin camera on Model 3 and Model Y vehicles.
“Help Tesla continue to develop safer vehicles by sharing camera data from your vehicle. This update will allow you to enable the built-in cabin camera above the rearview mirror. If enabled, Tesla will automatically capture images and a short video clip just prior to a collision or safety event to help engineers develop safety features and enhancements in the future. As usual, you can adjust your data sharing preferences by tapping Controls > Safety & Security > DATA SHARING > Allow Cabin Camera Analytics. Note: Cabin camera images and video clips will not be associated with your VIN to protect your privacy. – Tesla
The primary purpose of this camera is to allow monitoring for a future Tesla Network robotaxi scenario, but Tesla has decided to put the camera to use in the meantime to help improve the safety of their vehicles.
Progress on Texas Gigafactory Proposal
Travis County held a hearing today with Tesla representatives, local officials, and the general public to discuss Tesla’s factory and tax break proposal. Tesla explained their request for property tax relief was due to Texas including equipment in their property tax calculations. As a vehicle manufacturer, Tesla’s equipment is some of the most expensive in the world, and Tesla feels the taxes on that equipment would be prohibitive to operating successfully in the Texas location. Tesla pointed more significant incentive offers from other states, but expressed their interest in Travis County for three main reasons.
- Tesla believes its need for diversity in people and type of production workers and engineers can be met suitably by Austin.
- Tesla will be replacing an old mining operation located along the Colorado river which will provide lots of opportunity for improved recreation and beauty.
- Tesla has had conversations with the Del Valle school district which have led them to believe strongly that a partnership will be beneficial both to the district’s students and to Tesla.
As should be expected, public feedback was mixed with varying levels of enthusiasm. Another hearing is scheduled for next week and will be followed by further deliberation.
Writing assistance by Pranshu Agarwal