Tesla earnings: It’s all about China and the gigafactory

Tesla Motors reports its 2Q earnings Thursday after the market close. In May, Tesla said it expected to deliver roughly 7,500 cars in 2Q; most analysts expect it to meet or slightly beat guidance.

There are two big questions for Thursday’s call with CEO Elon Musk: China and the Gigafactory. Alan Ohnsman at Bloomberg has a good preview. On Thursday morning, Tesla confirmed that it has signed an agreement with Panasonic to cooperate on the gigafactory, but there aren’t many specifics in terms of how much money Panasonic is putting into the deal.

If you’ve never listened to a Tesla earnings call, you really should dial in. The questions from analysts are not nearly as interesting as the way that Musk carefully answers them. It’s all about listening for what he does or does not say about the future.

1. Hey Elon, thanks for taking my call. I know Tesla doesn’t break out exact market percentages, but can you give us some color on demand and sales in China, and also Hong Kong while you’re at it? What kind of volume assumptions from China are baked into the 35K guidance for the year?

2. Hey Elon, are there likely to be any partners besides Panasonic in the gigafactory?

There’s been mounting speculation in recent days about where Tesla will locate the gigafactory. Some of the best on-the-ground sleuthing has been reported by Bob Tregilus, a Nevada resident and electric vehicle enthusiast who talked to local construction workers and took photos at “Project Tiger,” a construction site in the Reno area that some think could be, or was, the gigafactory site.

But Tesla has five states competing in the bake-off and has said it could break ground on more than one site simultaneously. This thing could be in Reno, or not. The truth is that no one really knows except for Tesla, and many of the stories about where the gigafactory will be are pure speculation.

Where the gigafactory will be is not as important as when it will be operational, because it’s key to Tesla’s entire strategy: Drive down battery costs and unveil the mass market Gen 3.

From Tesla’s press release:

“According to the agreement, Tesla will prepare, provide and manage the land, buildings and utilities. Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval. A network of supplier partners is planned to produce the required precursor materials. Tesla will take the cells and other components to assemble battery modules and packs. To meet the projected demand for cells, Tesla will continue to purchase battery cells produced in Panasonic’s factories in Japan. Tesla and Panasonic will continue to discuss the details of implementation including sales, operations and investment.”


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