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Despite Tesla's obvious challenges in ramping up its Model 3 production, CEO Elon Musk and company remained confident in the long-term growth story during the third-quarter earnings call. Musk challenged the skeptics, said Tesla could become the world's largest car company, and expressed how demand for its solar products is about to rebound.
Here's a closer look at some of Musk's latest musings.
Elon Musk trolls the skeptics
The biggest news in Tesla's third-quarter earnings release was management's reduced outlook for Model 3 production. It delayed its target for achieving a production rate of 5,000 units a week from an initial timeline of the end of the year to an updated forecast for late Q1 of next year. Musk knew this would bring out the critics, and he had a word for them in his opening remarks (by way of an S&P Global Market Intelligence transcript).
Five years ago, we had only delivered 2,500 cars. So our -- the Tesla fleet has grown by a factor of 100 in five years. ... But for the skeptics out there, I'd like to say -- ask them, which one of you predicted that Tesla would go from 2,500 units delivered to 250,000 units delivered now? I suspect the answer is zero, right? So consider your assumptions for the future on whether they're valid or perhaps pessimistic.
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Musk is still thinking big... really big
Despite running about three months behind on Tesla's initial plans for the Model 3, Musk continues to toss around optimistic statements about extraordinary growth.
Referring to Tesla's rapidly rising weekly vehicle production since the Model S launched, Musk commented, "If our growth rate continues at anything like that in the coming years, I mean, if it continues to be something like that, Tesla will be the largest car company in the world by volume as well."
Tesla's president of sales and service, Jon McNeill, added that growth has accelerated with subsequent product launches. "Model X reached Model S demand rates in half the time," McNeill said, "So at twice the rate of demand build. So not only are we growing, but we're accelerating as we grow."
Tesla said it had received record orders for the Model S and X during its third quarter. And it also said its hundreds of thousands of Model 3 reservations continued to increase.
Demand for solar should rebound
As Tesla anticipated, solar sales declined in Tesla's third quarter. The decline comes as Tesla ended SolarCity's door-to-door residential sales tactics and increasingly emphasized cash sales instead of leases. But Tesla anticipates reinvigorating its solar business going into 2018.
One of the ways Tesla wanted to sell its solar products more efficiently was by offering them in its Tesla stores, something the company has tested recently and has confirmed is a viable strategy. "As a result of these efforts, we are seeing a growing number of Tesla vehicle customers also purchasing our energy generation and storage systems," Tesla said in its third-quarter shareholder letter, "which validates our strategy to cross-sell these products."
But one analyst pressed Musk on whether the company still expects solar to rebound and become a larger portion of its business. "[W]e do expect the solar demand to rebound as we move solar sales into all of our stores, which is a much more efficient channel for demand generation," Musk responded.
Overall, the earnings call showed a management team that remains confident amid "production hell." Of course, management also reiterated the real challenges it is facing with Model 3 production bottlenecks.
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