Tesla, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to Tesla's Q4 2019 Financial Results and Q&A Webcast. At this time, all participants are on a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Mr. Martin Vieca, Senior Director of Investor Relations. Please go ahead, sir.

Thank you, Sherry, and good afternoon, everyone. And welcome to Tesla's fourth quarter 2019 Q&A webcast. I'm joined today by Elon Musk, Zachary Kirkhorn, and a number of other executives. Our Q4 results were announced at about 1 p.m. Pacific time in the update deck we published at the same link as this webcast. During the 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'd like to join the question queue. But before we jump into Q&A, Elon has some opening remarks. Elon?

Thanks, Martin. So Q4 was another strong quarter for the company. Deliveries reached over 112,000 vehicles in a single quarter. It's hard to think of a similar product with such strong demand that it can generate more than $20 billion in revenue with zero advertising spend. We do say that from time to time, and I think it's often overlooked, but to have... The highest demand electric vehicle in the world with no advertising spent is, I think, quite remarkable and speaks to the nature of the product and the fact that the product itself is compelling enough to generate that demand without a bunch of advertising. At our Fremont factory, we were producing at a rate roughly the same as the Numi factory did in its record year of 2006. And obviously, we expect to exceed that significantly this year. This rate of production was achieved before we even started to produce the Model Y out of Fremont. So there's a lot of potential to go beyond that number. For the Shanghai factory, I'd like to say congratulations again to the team in Shanghai on launching Model 3 last quarter and achieving the first deliveries earlier this year. I'm really excited and optimistic about the potential for the Shanghai factory. I think it's going to be an incredible asset to the company. And we also broke ground on the Model Y factory in Shanghai. So a lot of good progress there. Regarding Model Y, it was only 10 months ago that we revealed a Model Y prototype. And now in January this year, we started producing Model Y in limited volumes already. This is thanks to a great effort of our engineering team. And we managed to achieve by far the highest energy efficiency of any electric SUV ever produced. at 4.1 miles per kilowatt hour, which means Model Y four-wheel drive got an EPA rating of 315 miles. This improvement is reflected on the configurator as of today. This is above what we previously stated by a pretty significant margin. And just with great acceleration, top speed, it's really just incredible specs all around. For the Cybertruck, a few months ago we revealed the Cybertruck that went viral. And we tried to build a product that is superior in every way without any preconceptions of how such a product should look. So it's really just from the standpoint of what's the most badass, futuristic, armored personnel carrier that kicks the ass of any pickup truck, basically. That's the goal. We wanted it to look like something that just came out of a sci-fi movie set from the future. The demand has been incredible. We've never seen actually such a level of demand at this. We've never seen anything like it, basically. I think we will make about as many as we can sell for many years. We'll sell as many as we can make. It's going to be Pretty nuts. And I think actually the product is better than people realize even. They don't even have enough information to realize just the awesomeness of it. It's just great. And then stepping back in 2018, from a financial standpoint, free cash flow was break even. But in 2019, we managed to generate more than a billion dollars free cash flow while building a factory in Shanghai in record time and while building parts of Model Y in production. So I think for us to have this level of free cash flow while making massive investments in capacity, while developing new products, while improving the core engineering is a testament to the, I think, incredible performance of the Tesla team. And I'm just so proud to work with such a great team. I'd like to thank the whole Tesla team for their ongoing work on cost control is what has allowed us to get to these compelling financial numbers while at the same time growing the company at an incredible pace. In conclusion, when I think of what we have in front of us the next couple of years, we've got Model Y, we've got Giga Berlin, Tesla Semi, solar glass roof, Cybertruck, some very exciting improvements in back battery technology, full self-driving, got the next-gen Roadster, and probably a bunch of other products we'll come up with, too. It's hard to think of another company that has a more exciting product and technology roadmap. So, super fired up about where Tesla will be in the next 10 years. If you look back 10 years from today to 2010, we will produce approximately 1,000 times more cars in 2020 than we produced in 2010. And we have also solar glass and solar retrofit and Powerwall, Powerpack, all those other things, too. So where will we be in 10 years? Very exciting to consider the prospect.