Tesla Earnings Call Transcript Q1 2014 – Complete Conference Call

Rod A. Lache – Deutsche Bank Securities: Okay. And just last one on…on China. When you do actually expand to domestic production, do…do those requirements amm…you know, for fifty-fifty J…J…JV partners, do…do they apply to you, or are there any exceptions amm…for new energy vehicles, or do you…do you actually have any thoughts on that at this point?

Jeffrey B. Straubel: I think it’s too…too early to make a prediction on that front. Amm, yeah, yeah, so I think we…we can’t say for sure aaa…what…what…how things will look at…at that time. I…I can’t say that we’re…we’re…we’re postponing any serious partnership discussions with…with the big companies in China, because still…we’re still really a two-year stage. Amm, so we are not…we are not…we are not trying to sort of aaa…run this to ground, because we’ve got sort of really basic priorities of getting service and super-charging rolled out in China. And, oh yeah, we just don’t have anything to say on that front yet.

Rod A. Lache – Deutsche Bank Securities: Okay, great, thank you.

Operator: Our next question comes from Ben Kallo with Robert W. Baird. Your line is open.

Ben J. Kallo – Robert W. Baird: All right. Thanks for taking my question. Amm, back to the…the battery factory, can you talk about aaa…the costs associated with ru…running two…two sites in parallel, maybe three, amm…and…and any optionality you have there? Aaa, and then adding aaa…maybe two more on top of it, aaa…one is, aaa…how much work have you done as far as business development with stationary stores to get comfortable with that…that angle there, and then as far as additional investors, should we wait to see them after Panasonic comes to the table? I’ll stop there. Thanks guys.

Jeffrey B. Straubel: Well, aaa…aaa…there is I mean…your…your first question was amm…aaa…fundamentally are we spending too much money by working on three sites together. And I think as Elon has said a few times, for us, it’s really critical that we have the first gigafactory ready on time aaa…to supply the sales for Gen three. And that delay, every one month delay at that point is far more expensive for us than the incremental costs that we may incur up front to kick off two sites at one-time.

Ben J. Kallo – Robert W. Baird: Absolutelly.

Elon Musk: Yeah. May…maybe, I can speak to the…the stationary business aaa…development part of the question. You know, we…we have done a…a huge amount of effort there, a…a…work there, and we’ve talked to most major utilities and amm…energy service companies at this point. You know, it’s still early days in that…that effort, and I think maybe the thing to focus on is, you know, our long-term optimism, you know, looking at the…the price, amm…versus cost of what we, you know, expect we could do. And, you know, the…the demand for – the long-term demand for stationary energy storage is…is quite extraordinary. Aaa, when you look at the size of the grid and what needs to be done with renewable energy and, you know, buffering the variability of that. So, you know, I think that’s really, you know, where we keep our focus is…is on, you know, the long-term economics that…that could be enabled once the gigafactory is online.

Jeffrey B. Straubel: Yeah. Is that [unclear]? I would not try to build demand for stationary storage, because we have cell constrains, so kind of expense of…of vehicles. Amm, so what we’re doing right now is more on the aaa…engineering side figuring out what would be a really cool stationary storage pack that, you know, that could be produced at volume and that could be combined, aaa…so you could stack the whole bunch of them if you wanted.

Amm, I think particularly for like the…the home solution, I mean sort of thing, we have in mind is, something that looks a bit like the battery pack from the Model S, there’s something really flat aaa…just maybe takes…it’s sort of coming, you know, five inches off the wall, like wall mounted in, you know, a nice, you know in a beautiful cover, amm…integrated bidirectional inverter amm…and just a plug in play. Amm, that’s something we have in mind aaa…for the…the stationary storage pack on the residential front, which could conceivably you could stack a bunch of them and have it looks commercially as well. Amm, you know, but…but play, I mean I want to talk about that in detail end of the year, early next year, or something like that.

Elon Musk: Yeah, and I think the third part of your question was about amm…you know, other…other participants in the gigafactory and, you know, we…we are talking aaa…to various different people in parallel. I…I think that is important to understand, you know, that there’s a lot of aspects of this that the Panasonic [unclear] doesn’t do. So it’s not necessarily a competition, but it’s amm…you know…a…you know, complementary, you know different pieces of the production operation. So, you know, those discussions are underway, but it’s premature to talk about any specific.

Ben J. Kallo – Robert W. Baird: Great, thank you guys very much.

Operator: Next question comes from Craig Irwin with Wedbush Securities. Your line is open.

Craig E. Irwin – Wedbush Securities: Good evening. Thank you for taking my question. So Elon, when…when you look at the Chinese market, everybody knows that this is the…the largest luxury automotive market in the world. Amm, but it’s…it’s not a market that amm…that we have as much visibility as we might like. How do you quantify the total opportunity for sales for Tesla, and what have you seen since you launched in China that surprised you, or maybe that aaa…you didn’t expect? And how is this shaping the…the plans for your store – your store map over there, and the amm…obvious aaa…service centers and…and…and other investments?

Elon Musk: Well, I…I don’t think, I think probably, most of as much as I do about the demand for our cars in…in China. So as far as it’s an incredible crystal ball amm…as you mentioned, China is the biggest market for cars in the world, and actually the biggest market for…for premium sedans aaa…in the world. So to the degree that our sales track that of other manufacturers presumably China would over time become the biggest market for Tesla.

Amm, I mean that’s…that’s probably the best guess that anyone could make at this point, or in…in…in the short-term is that we really don’t have a…a…a demand issue in China like we’ve got a lot of…a lot of demand. Amm, and so our focus then obviously is, just to make sure that demand of service and we’ll try to roll out service centers and superchargers as fast as we can. Amm, and my instructions to the China team are to spend money as…as fast as they can spend it without wasting it. That’s what is happening.

Craig E. Irwin – Wedbush Securities: Amm, yeah. Makes sense.

Jeffrey B. Straubel: Thanks, Craig. [unclear]. Let’s make this the last question, please.

Operator: Our last question comes from Colin Langdon with Colin Langan with UBS. Your line is open.