10 Questions For Elon Musk On Tesla's 3Q Conference Call

| About: Tesla Motors (TSLA)

Summary

Tesla is scheduled to report Q3 on November 1. I have listed the top 10 questions that analysts should ask the CEO and management.

Given the astounding Model 3 miss for 3Q, management cannot be allowed to get away with unsubstantiated happy-talk for 4Q Model 3 deliveries.

For starters, Tesla must disclose how many Model 3 units it completed and delivered in the month of October.

Tesla also should allow for independent and experienced assembly line inspectors to verify the state of the Model 3 production line and speed.

Tesla should address questions/rumors about Model 3 welding, Model 3 water leaks, and other rumored product and production issues, among other things.

1. How many Model 3 units have you produced and delivered in 4Q thus far? No, we're not going to be satisfied with an unwillingness to answer. Analysts and shareholders were arguably misled on the last quarterly conference call, when no indication was given about an imminent giant miss, when it must have been known to management that the 3Q miss would be close to 80%. You know how many Model 3 cars were produced and delivered by October 31, so the investment community really deserves to know this time.

2. Does the guidance of 20,000 Model 3 cars in December remain valid? That's what Elon tweeted in July. It has not been rescinded to date. Does the guidance of 500,000 Model 3 cars in 2018 also remain valid?

3. There have been questions about the readiness of your Model 3 assembly line, whether it is operating as an assembly line should, with one car being made every minute or two. Why don't you resolve this by allowing a group of experienced and independent inspectors to verify this by walking the line and examining the Model 3 build processes and line speed?

4. The October 16 article in The Automotive News (Why is Tesla struggling with the Model 3?) analyzed your October 8 Tweet and Instagram videos, showing a Model 3 body being welded together. The analysis in the article read "resistance welding should make a little smoke, but when you see stuff popping out like that, that's called expulsion," automotive manufacturing consultant Michael Tracy of Agile Group in Howell, Mich., said of the first video. "It's symptomatic of weld spots getting too hot because they're poorly planned, or in this case, the metal not being pulled all the way together."

Do you have a problem with welding the Model 3 body? If so, how long will it take to fix? One month? Two months? Three months? Six months? More? Are the issues with the Model 3 being water-tight? If so, how long will that take to fix?

5. How many net Model 3 deposits at quarter-end? How many now, one month later? How many have requested refunds but not yet received those refunds?

6. You keep track of, and report the number of, hats sold for your tunnel company (Boring Co) - Elon Musk on Twitter - with some frequency. Can we assume that it would be more important and material to report the number of Model 3 reservations on a frequent basis, like you did almost every day during the first month after the initial Model 3 unveil in the Spring of 2016? If not, why?

7. Does Elon's October 2016 guidance of Autopilot 2.0 being capable of Level 5 autonomy (fully driverless on all roads) remain valid? Do you have to swap out the car's computing module in order to fulfill this goal? Can Level 5 autonomy be achieved with less than five LIDARs, which other automakers claim?

In your correspondence with your vendor Nvidia (NVDA), did anyone at Nvidia ever express any concern to any Tesla (TSLA) executive about the Level 5 autonomous driving capability of the silicon that was in the Tesla cars produced starting around October 2016? If so when and to whom?

If you cannot deliver on Level 5 autonomy for the Tesla cars delivered since October 2016, do you view your liability as limited to the cost of the Autopilot feature, or the value of the entire car? Even people who didn't pay for Autopilot up-front, bought the car with the option to pay for this Autopilot feature as a subsequent software update. Do you view it as a risk to having to buy back every Tesla sold since October 2016 at full price?

8. If you were to decide to bring a truck to market, in which factory would it be made? How soon could such a factory be ready? Would it need to be built from scratch? What would be the weekly production capacity of such a factory?

9. Are you getting paid for your solar panel and battery installations in Puerto Rico? If so, by whom and when?

10. What do you think would be the impact on Tesla's Model 3 deposits and sales if the US Congress passed a new tax bill capping the $7,500 Federal tax credit for electric cars, or otherwise phasing out earlier than the current law?

Disclosure: I am/we are short TSLA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author was short TSLA and long NVDA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

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