Tesla, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Tesla's Q3 2019 Financial Results and Q&A Webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. We ask that you limit yourself to one question and one follow-up question. You may do so by pressing star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker, Mr. Martin Vieca, Senior Director of Investor Relations. Please go ahead.

Thank you, Sherry, and good afternoon, everyone. Welcome to Tesla's third quarter 2019 Q&A webcast. I'm joined today by Elon Musk, Zachary Kirkhorn, and a number of other executives. Our Q3 results were announced at about 2 p.m. Pacific time. in the update deck we published at the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC. During the question and answer portion of today's call, please limit yourself to one question and one follow-up. Please press star 1 now if you would like to join the question queue. But before we jump into Q&A, Elon has some opening remarks. Elon?

Thank you. First of all, I'd like to just thank the Tesla team for an incredible job this quarter. The execution was outstanding on just about every front. So it's just an honor to work with such a great team. Q3 was obviously a very strong quarter. We had record deliveries. We were able to make great strides in controlling our costs. We shifted back to GAAP profitability while also generating strong Capri cash flow. And again, this would not be possible without each employee doing their part to reduce cost. Our operating cost is now at the lowest level since Model 3 production started. Regarding Gigafactory Shanghai, this month we started trial production at Giga Shanghai and have built four vehicles from body to paint to general assembly. This is a real factory with a tremendous amount of equipment in it. While a lot of people see the outside shell of the factory, which is enormous, and was essentially underwater in January. It was below the water table, literally. What is, I think, much more significant is that we're able to install massive stamping machines, a fully operational paint shop, and a sophisticated general assembly line in the same period of time in parallel with building to building. I'd like to thank our China team for this extraordinary achievement. I'm not aware of any factory of this magnitude in history being constructed in such a short period of time, approximately 10 months. As far as I know, this is unprecedented. And Gigafactory Shanghai will become our template for future growth. We're planning to build Model Ys in Shanghai as well, of course, and to build a Gigafactory in Europe. And we hope to announce the location of that Gigafactory. In fact, we will announce the location of that Gigafactory before the end of this year. Regarding Model Y, we're also ahead of schedule on Model Y preparations in Fremont. And we've moved the launch timeline from fall 2020 to summer 2020. There may be some room for improvement there, but we're confident about Summit 2020. I've actually recently driven the Model Y release candidate and think it's going to be an amazing product and be very well received. I think it's quite likely to, this is just my opinion, but I think it will outsell S, X, and 3 combined. Regarding version 10 and Smart Summit, Last month, we released our latest software, version 10, which includes video streaming, games, karaoke, Spotify, and a host of other new features and improvements. Most importantly, it includes the first version of Smart Summon, which has now been used a million times. So it's now over a million uses of Smart Summon. And in the next week or so, we will be releasing an improved version of Smart Summon, taking into account all the data from those million Smart Summit attempts. So this really illustrates the value of having a massive fleet because it allows us to collect these corner cases and learn from them and use fleet learning and become rapidly better just as Navigator and Autopilot did on the freeway. So we expect a number of improvements in Smart Summit in the weeks to come. And this is really just the beginning. As we collect more data and autopilot and full self-driving functionality get better. While it's going to be tight, it still does appear that we'll be at least in early access release of a feature-complete full self-driving feature this year. It's not for sure, but it appears to be on track for at least an early access release of a fully functional full self-driving by the end of this year. Lastly, we're highly focused on decisions that really make a material difference to the company, such as opening gigafactories and other continents. It's worth noting that ultimately having three gigafactories effectively will triple our output. And then when you consider increased output per gigafactory, it's going to actually more than triple our output over time. And then there are a lot of interesting things happening with respect to advanced batteries and more efficient powertrains and also driving and all that sort of stuff. But that will be something for a future time. And then one last item is that tomorrow afternoon we'll be releasing version three of the Tesla solar roof. That's the integrated solar, where the solar panels are integrated with the roof. So that's, I think this is a great product. Version one and two, we're still sort of figuring things out. Version three I think is finally ready for the big time. And so we're scaling up production of the version 3 solar tile roof at our Buffalo Gigafactory. And I think this product is going to be incredible. But we'll talk more about that on the official product launch, which will be tomorrow afternoon.