Tesla (NASDAQ:TSLA) crushed it in Q4. Investors cheered the company's better-than-expected adjusted earnings per share, $1 billion of free cash flow, and announcement that the Model Y is already in production. Shares surged on the news, climbing 10% on the day following the earnings release.
As investors look over the quarter's results, there are some notable takeaways from the electric-car maker's earnings call as well. During the call, management discussed demand for its recently unveiled Cybertruck, expectations for the Model Y's production ramp, how the coronavirus could impact Tesla, and more.
Here's a look at some key things management said during the call.
Tesla is seeing strong demand for its Cybertruck
It was clear within a few days of the unveiling of Tesla's first electric truck that there was a robust market for the vehicle. The automaker racked up 200,000 reservations for the truck within about three days of its unveiling.
But how has demand for the vehicle played out since then? While we don't have any precise figures on Cybertruck reservations since then, there's enough interest in the truck to have management upbeat about the vehicle's prospects.
"I have never seen actually such a level of demand as this -- we've never seen anything like it basically," said CEO Elon Musk during Tesla's fourth-quarter earnings call. "I think ... we'll sell as many as we can make, it's going to be pretty nuts."
But investors will have to wait a while to see how sales of the truck actually fare. The automaker doesn't plan to bring it to market until late 2021.
Tesla's business has become self-funding
While Tesla has been emphasizing for several quarters in a row now that it believes its business has grown to the point of being self-funding, there's still speculation on the Street that the automaker might raise capital. But Musk insisted that Tesla has more than enough capital to fund its investments.
"[W]e're spending money ... efficiently and we're not artificially limiting our progress. And then, despite all that, we are still generating positive cash," Musk said. "So, in light of that, it doesn't make sense to raise money because we expect to generate cash despite this growth level."
Expectations for Model Y
Tesla surprised investors in its fourth-quarter update when it said it had already started production of its Model Y and that the deliveries of the vehicle would begin by the end of March.
Management provided further context on its expectations for the crossover utility vehicle during the earnings call.
"On Model Y, we expect first deliveries and limited quantities later this quarter and will ramp over subsequent quarters," explained Tesla CFO Zachary Kirkhorn. Further, Kirkhorn importantly noted that Tesla is "forecasting higher gross margins on Model Y compared to the Model 3."
How the coronavirus could impact Tesla
Of course, Tesla also commented on the impact of the current coronavirus outbreak on its business, just as every company with operations or meaningful sales in China seems to be doing this earnings season.
The CFO noted that Tesla is currently expecting a one- to one-and-a-half-week delay in the production ramp of its Model 3s at its Shanghai factory "due to a government-required factory shutdown." But Kirkhorn didn't seem worried about how this would affect Tesla. "This may slightly impact profitability for the quarter, but is limited as the profit contribution from Model 3 Shanghai remains in the early stages," said Kirkhorn.
Further, management said it is monitoring the situation to see if it could impact its supply chain for cars built in California. "So far we're not aware of anything material, but it's important to caveat that this is an evolving story," the CFO explained. "However, we have more than sufficient cash to continue our expansion plans, while further strengthening the balance sheet."