These comments were given during the teleconference call which was held with a South African entrepreneur. His ‘bonehead’ comment was in response to a question from money management firm who asked about the profitability of the upcoming Tesla 3. Musk answered, “Excuse me. Next. Boring, bonehead questions are not cool. Next?” Joseph Spark was the analyst from RBC Capital Markets who was questioning about Model 3. It was reported that Musk paused for at least 15 seconds before saying, “These questions are so dry. They’re killing me.”
The floor was then given to Galileo Russell for questioning who asked many questions to Musk and other senior executives of Tesla. According to transcription of the conference call, Musk said, “It’s really incredibly irresponsible of any journalists with integrity to write an article that would lead people to believe that autonomy is less safe. Because people might actually turn it off, and then die. So, anyway, I’m very upset by this.” Musk was very blunt with Robert W Braid & Co analyst Ben Kallo, towards the end of the call. He also encouraged to give more information on the Model 3 so that the stock value can be boosted.
In response to another one of his question Musk said, “I think that if people are concerned about volatility, they should definitely not buy our stock. I’m not here to convince you to buy our stock. Do not buy it if volatility is scary. There you go.” The financial impact due to Musk’s attitude is very evident. Tesla also posted its biggest loss in the quarter which has the least reaction from markets. A record loss of $709.6 million per share was recorded in the first quarter which ended on March 31. Excluding the items, Tesla had a loss of $3.35 per share. The analysts expected a total loss of $3.58 per share. The company told that they ended the quarter with $3.2 billion in cash after spending $655.7 million in quarterly capital expenses.
Musk acknowledged the error which was encountered in over-automating the Model 3 which resulted in production delays. The Model Y is one of the many projects of Tesla which will launch a Tesla Semi and a Roadster. While answering the questions, Musk said that Model Y production is not expected to start in the coming years. He also said that the car will not be produced in Tesla’s main factory in Fermont, California. He said, “We will not be starting production of the Model Y at the end of next year. It’s probably closer to 24 months from now, 2020… We could not fit the Model Y production at Fremont. We’re jammed to the gills here. One thing I know for sure is it’s not here.” Musk said that the firm is standing by its production targets for the Model. The company also plans to downplay increased wariness over the finances. They said that it is expected to achieve a net profit in both the third and fourth quarters.
In the last few months, the Model 3 was caught up in what Musk called as ‘production hell’. There were so many delays that the firm was forced to rearrange its initial goals. The company also warned that it will shut down the production for 10 days in the second quarter of 2018. The company released a statement saying, “We have largely overcome this bottleneck.” Tesla said that it will produce 2270 Model 3s each week in the last week of April. However, Tesla only produced 2425 Model 3s in the fourth quarter of 2017. Inveseting.com analyst Clement Thibault said that the reduction was noteworthy, “but in the long run given challenges that lay ahead of Tesla, I don’t think it is going to make or break the company. Tesla is definitely not in a minimizing cost stage.”
Analysts were not expecting so much spending and predicted hundreds of millions of dollars less in the cash burn. Tesla did not include the cash flow calculations which was included in the previous quarters.