Elon Musk: 'People Don't Understand How Hard it Is to Manufacture Something'
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After Tesla reported earnings on Wednesday, beating Wall Street expectations with a modest $0.02 profit, CEO Elon Musk took questions from analysts.
In the wake of a debate about whether Tesla will be able to meet 2014 sales targets, Musk was clearly irritated.
Tesla reported on Wednesday that it will sell a total of 33,000 Model S sedans, its only vehicle, versus an earlier expectation of 35,000.
Analysts and media outlets have begun to address a possible decline in demand for the Model S.
Musk tried to further clarify a point that he made on Tesla's second quarter earnings call, when he insisted that Tesla doesn't have a demand problem.
"It's not a question of demand," he said. "Demand is not our issue, production is our issue. We have more demand than we can address and levers we can pull to increase demand, and we’re not doing it."
Musk's point was that if Tesla engaged in conventional advertising strategies — the company currently does almost no advertising — it could increase demand, but its more pressing issue now is being able to simply built its cars, and build them well.
"It's worth saying that making one of something is quite easy," Musk said. "Making lots of something consistently that's going to last a long time is extremely hard. In fact, it is way harder to make the machine that makes the machine that it is to make the machine in the first place."
Musk is also ticked off that the battery industry doesn't hold itself to a high standard of truthfulness (Tesla is preparing to construct a massive $5-billion battery factory in Nevada).
"The battery industry has to have more B.S. in it than any industry I’ve ever seen," he said. "We're not worried about blindsided on a technology."
Musk is usually very forthcoming about Tesla's business on earnings calls, and Wednesday's call was no exception, but throughout he seemed annoyed and at times confrontational that the market and the media have fixated on speculation that Tesla is running out of customers.
Again and again, he insisted that Tesla could stoke demand if it wanted to — but isn't. His testiness clearly stemmed from the same group of analysts he told this to last quarter revisiting the issue again.
From his perspective, the bottom line is that Tesla has people lining up to buy its existing cars and expects to have people lining up to buy its new cars and is far more worried about being able to build the vehicles and properly support them than it is about seeing demand drop off.
He also anticipated production growth rates of 50% from 2014 to 2015 and admitted that Tesla could "do better" on being less perfectionistic with future cars.