With Tesla (NASDAQ:TSLA) stock surging about 10% higher on Wednesday, following the electric-car maker's 2018 annual shareholder meeting, the event undoubtedly included some insightful information. First, Tesla investors easily fended off a proposal to split founder CEO Elon Musk's chairman and CEO roles. The proposal aimed to strip Musk of his chairman position and to instead appoint an independent director as chairman. But other interesting items surfaced during the event, too.
Here are three of the most insightful quotes from the conference call (via an S&P Global Market Intelligence transcript).
1. The $35,000 Model 3 is coming later this year
One of the key selling points for Tesla's newest vehicle -- the Model 3 -- is its $35,000 starting price. At about half of the starting price of its pricier Model S and Model X, this competitive pricing is undoubtedly what helped Tesla garner hundreds of thousands of deposit-backed reservations for the vehicle.
But there's a problem. The $35,000 base version of the Model 3 isn't available yet. For now, Tesla is only selling the long-range version of the car, which has a starting price of $44,000 (upgrading to the long-range battery costs $9,000). The unavailability of the standard-battery version of Model 3 is likely a key reason behind a reportedly low rate of Model 3 reservations converting to orders.
Fortunately, Musk asserted the $35,000 version of Model 3 is on the way:
So yes, there will be -- we will definitely offer a $35,000 version of the Model 3. And I think probably at the end of this year is when we should be able to make the smaller battery pack and then get into kind of volume production of 35k version in Q1 next year.
2. Getting to 5,000 Model 3s per week
There was lots of media coverage of Musk stating during the meeting that he believes it is "quite likely" Tesla will achieve its production target for Model 3 of 5,000 units per week by the end of the month. But what has been less discussed is Musk's update on what the current production constraint is and how Musk expects to get to this impressive production rate.
The chief constraint for Model 3 production, Musk said, is general assembly -- where parts are put together at the end of the production process. Tesla currently has two general assembly lines, but it's constructing a third, Musk explained. "The third line is, I think, dramatically better than lines 1 and 2."
But is Tesla dependent on the third line to be completed before the end of June to hit its target? It would help, but it may not be necessary.
And [the faster speed of the third general assembly line is] part of what gives me confidence about the 5k per week for Model 3. But currently, the biggest constraint on output is general assembly. And I think we'll probably get to 5,000 a week with the current 2 general assembly lines, but with the third one, I'm highly confident that we can exceed 5,000 units per week.
3. Autopilot is about to get much better
One of the key selling points of Tesla's vehicles is its driver-assist technology, Autopilot. Every vehicle Tesla sells is equipped with Autopilot sensors, and customers can pay extra to activate Autopilot's convenience features, such as automatic lane changes on the highway and driver-assisted steering.
One of the best value propositions of Autopilot is that it improves over time with software updates. But some customers and investors may be disappointed with the technology's progress recently. After all, eventually Tesla says its latest Autopilot sensors will be able to enable full self-driving capabilities. With this expectation, customers expect substantial improvements for Autopilot over time.
Some big improvements for Autopilot are on the way, according to Musk. "I think what you'll see is that the reliability and capability of Autopilot will increase exponentially over the next 6 to 12 months. It's really -- the improvements are very, very rapid," he noted. Further, Musk said that over the next couple of months, Tesla should roll out assisted driving that will go from highway on-ramp to highway off-ramp.
Musk's comments on the upcoming availability of the base version of the Model 3, the company's path to a higher Model 3 production rate, and expected updates to Autopilot are only some of the important narratives discussed during the annual shareholder meeting. Other important topics include Tesla's planned factory in China, the Model 3's rising market share, Tesla's forecast for achieving profitability, and more.