As Tesla (NASDAQ:TSLA) CEO Elon Musk typically does during the company's quarterly earnings calls, he shared key insighta about the business this week, including some comments on more speculative subjects. Commentary ranged from an update on what level of Model S and Model X sales Musk thinks Tesla can sustain, to his thoughts about the potential for Apple (NASDAQ:AAPL) to buy Tesla.
Here's some of the most notable takeaways from Tesla's first-quarter earnings call (by way of an S&P Capital IQ transcript).
Sustaining a 100,000-unit production rate for Model S and X
In the past, Musk has indicated that he expected annual Model S and Model X deliveries to eventually hit a steady rate of about 100,000 units annually. While the company achieved this run-rate in its most recent quarter, some investors may be wondering whether the CEO still anticipates sustaining this level of production for the two pricey vehicles as its lower-cost, higher-volume Model 3 comes to market in July.
Even as Model 3's launch approaches, it looks as if Musk still expects annual demand for the two vehicles to stay at this rate:
We're going to produce 100,000 units approximately, so all that matters is there's demand. Is there going to be demand for 100,000 units? I believe there will be. And there is.
Tesla CFO Deepak Ahuja added that there is "certainly sufficient demand" for Tesla's guidance for 47,000 to 50,000 total Model S and Model X deliveries during the first half of the year.
Apple hasn't shown interest in buying Tesla
With Apple's cash hoard swelling to $257 billion in the company's most recent quarter, there's been some speculation that Tesla might be a good fit for a potential acquisition target for the tech giant. But Musk says Apple probably isn't interested anyway:
I don't think they want to have a conversation [about buying Tesla]. I don't believe -- there's not been any indication that they do. Obviously, Apple company makes some great product. And yes, I mean, I use their phone and their laptop, it's cool.
Musk added that he's unclear about what Apple wants to do "on the car front."
Model Y is still a few years away
Tesla has said that after its Model 3 production ramp-up, it plans to bring to market another SUV that's smaller than its Model X and closer in price to the $35,000 Model 3. But investors shouldn't expect the Model Y for another few years, Musk explained when he was asked about the company's goal to achieve annualized production of 1 million units annually by 2020:
I think we need to come up with the Model Y sometime in 2020 or, aspirationally, late 2019. And then I think that 1 million units is quite likely -- combined, yes. Maybe more.
Musk thinks energy-storage sales are about to jump
When asked about why Tesla's total energy-storage megawatt hours deployed declined sequentially, Musk said the pullback in the near term is normal. But he still has high hopes for energy-storage deployment growth toward the end of the year:
With respect to the battery stuff, it's a little lumpy right now, because you're at a big installation in [the] fourth quarter with Southern California Edison. And then we had a bit of a gap between the Powerwall 1 to Powerwall 2. So we should start to see that correcting in Q2 and Q3, and then particularly toward the end of this year, I would expect quite a dramatic ramp in storage deployment, like really dramatic.
While Model Y may be still too far away for investors to give it much weight, and any speculation that Apple might buy Tesla might as well be ignored, investors should certainly keep an eye on demand for the Model S and X as the Model 3 comes to market. In addition, investors should watch Tesla's energy-storage sales to see if the company's nascent energy business can deliver on Musk's bullish expectations.