Shortly after market close today, electric-car maker Tesla Motors (NASDAQ:TSLA) will report fourth-quarter results and its outlook for 2015. While there will undoubtedly be plenty of new fodder for those following the company in Tesla's fourth-quarter letter to shareholders, the company's earnings call following the report will likely be just as important. During Tesla's earnings calls, CEO Elon Musk usually spends over an hour in a question-and-answer session with analysts -- far longer than most publicly traded companies participate in Q&A each quarter. Expect to uncover a few worthy nuggets during the long conversation.
Model X production ramp, charging economics, and more -- here are three topics Musk will likely be asked to discuss during the earnings call.
Is the Model 3 on schedule?
Anyone following Tesla for a few years is familiar with its repeated delays for the launch of its crossover vehicle, the Model X. The company initially said it would begin production in 2013 and the first deliveries to customers would go out in early 2014. But after multiple delays, customers and investors are now looking at a launch time frame of Q3 2015.
It's not surprising, therefore, that investors face Tesla's estimated launch timing of 2016-2017 for its lower-cost Model 3 with skepticism. Can Musk & Co. truly deliver? Analysts will likely look for an update on Model 3 development during today's call.
Where is gross profit margin headed?
With Musk saying in a Detroit interview in January that Tesla's gross profit margin for Q4 will be in the mid-to-high 20-to-30-percentage-point range, the company's profit margin is impressive for a car company its size -- even after considering Tesla's high average selling price that pushes past six figures.
But what can investors expect from Tesla's gross profit margin from here? While the company will likely provide a gross profit margin projection in its 2015 outlook, expect analysts to drill the CEO for more color on what will be the key drivers behind gross profit margin going forward. Furthermore, as the Model 3 gets closer to launch, analysts are going to want to know how Tesla thinks of gross profit margin with a lower-cost car.
How does Tesla think about Supercharging economics?
As Tesla continues to rapidly expand its Supercharger network and as its Model S fleet continues to grow, it would be helpful to know how Tesla management feels about the long-term economics of its Supercharger network.
Today, Tesla has promised free Supercharging for the majority of Model S owners for life. Supercharging comes free with purchases of Model S vehicles configured with 85 kWh batteries. For the minority of Model S owners who have a 60 kWh battery, there's the option to purchase Supercharging for $2,000 during configuration or $2,500 after delivery. Even if the $2,000 Supercharger fee 60 kWh owners pay is "priced in" to the 85 kWh prices, it's not clear whether or not Tesla breaks even on this business.
Over the long haul, does Tesla plan to operate its Supercharger business at a slight loss, or at breakeven? Or is the goal to eventually operate its Supercharger segment at a profit?
Tesla has already promised customers to operate its service segment at zero profit while also aiming to provide better service to its customers than dealers for internal-combustion-engine vehicles. Can Tesla afford to operate another segment at zero profit as a lower-priced Model 3 is introduced into its lineup?
For a more in-depth look at the key items to watch when Tesla reports earnings today, check out this earnings preview.