What to Know Ahead of Tesla's Crucial Q2 Earnings Call Today

If Tesla reports a quarterly profit today, it's poised to become bigger than ever. 

Tesla

Good morning and welcome back to Speed Lines, The Drive's morning roundup of what matters in the world of cars and transportation. Today we're talking about Tesla's second-quarter earnings call, the teamup between Fiat Chrysler and Google's Waymo and a one-two punch hitting Volvo's U.S. plant. 

All Eyes On Tesla

2020 has been a stellar year for Tesla, global virus outbreak be damned. The electric automaker launched its Model Y crossover, its CEO Elon Musk is headed for a huge payday, and its surging stock price has made it not only the most valuable car company on earth and a contender for the S&P 500, but it's also opened a flood of investments into other EV companies at a time when capital is tight. (More on that later today on The Drive.) 

Tesla is now bigger, on paper, than Bank of America and American Express combined, not to mention almost any combination of legacy automakers you want to put together. So today's Q2 earnings call is obviously a very big deal. The last time we did this, Tesla turned a surprise $16 million profit for Q1 and it was the company's best one to date for both production and new car deliveries.

Of course, that was in late April, approximately 500 years ago. We'll get more clarity today on how the pandemic—including infections at its Fremont, California plant, supply chain disruptions and delivery headaches—have impacted operations and potential profits. Musk ordered that factory to reopen against the wishes of county officials, a move that put his workers at risk, and he also predicted "close to zero" coronavirus cases by the end of April. (He was, in case you are curious, wrong.) 

None of that has stemmed the growth of Tesla's stock prices, valued at about $1,500 a share as of this writing. How will it do today? Business Insider spoke to four analysts, three of whom are bullish, one of whom cites the reduction of the Model Y's price as a "red flag." Here's Deutsche Bank in the former category:

"Tesla stock has seemingly been making new all-time highs every day, supported by leaks of the strong 2Q and potential inclusion into the S&P 500 and more broadly by very positive investor sentiment toward electrification which is likely pulling in large ESG driven fund flows that have limited options in public markets," wrote Emmanuel Rosner in a July 6 note. 

Factoring better volumes, Rosner boosted his second quarter revenue forecast to $5.84 billion from $4.97 billion, "suggesting Tesla could potentially achieve GAAP profitability in the quarter which would fulfill the last criteria for inclusion into the S&P 500," he said. 

Gonna be an interesting day for sure. 

Volvo's U.S. Plant Takes A Hit

Volvo has had high hopes for its Ridgeville, South Carolina car plant, its sole manufacturing footprint in the U.S. But 2020 is a hard year for car production, period. And this plant has had two major struggles lately: delays related to the coronavirus, and weak market demand for sedans in America. 

Right now, the South Carolina plant only makes the Volvo S60 sedan, but sales of that are down 25 percent in the U.S. year-over-year, reports Automotive News. The plant won't build the XC90 crossover until sometime in 2022. And it's been shut down most of this month thanks to the virus. Basically, it's sitting there losing money, until it can get back to work building a car nobody's really buying. From that story:

The plant closed again July 3 and will reopen July 29. The current shutdown is a planned stoppage that is part of the factory's annual summer break. This, however, is the first time the plant has been closed for 26 days during the summer, the spokeswoman said, adding that the temporary shutdown was related to volume, meaning the lack of demand for the S60 that Samuelsson referenced.

Starting operations at the $1.1 billion factory in 2018 with production of a sedan instead of an SUV was a surprise to many market watchers, especially since premium rivals Audi, BMW and Mercedes-Benz all produce crossovers in North America.

“Charleston really needs an SUV, which we are planning to introduce in the second step in 2022 with the XC90,” [CEO Hakan] Samuelsson said. “Then the factory will be fully utilized.”

It's a shame. The S60 looks really sharp. But we live in a crossover world now.

Self-Driving Waymo Ram Vans 

And finally, Fiat Chrysler Automobiles (soon to be Stellantis!) announced the furtherance of a deal with Google's Waymo, one that will develop and test autonomous cargo vans. Why does this matter to you, someone who loves to drive the cars? 

Because it's another indication that the next big thing in the autonomy sector is the delivery game, especially with all of us (if we are so fortunate) staying home for the time being. See also Amazon's purchase of Zoox and its investment in EV truck startup Rivian.

Here's Tech Crunch on the FCA-Waymo deal:

The deal is the latest example of Waymo’s efforts to build out the delivery arm of its autonomous vehicle technology business. The two companies said the initial plan is to integrate Waymo’s self-driving stack — the suite of software and hardware that allows the vehicle to operate without a human behind the wheel —into FCA’s Ram ProMaster vans. These self-driving cargo vans will be used by Waymo Via, the company’s trucking and local delivery service.

I think it's fair to say we'll see a lot more deals and developments in this arena, as automakers and tech companies alike charge toward autonomy but also try and find a way to create revenue sources with it. 

On Our Radar

Ford looks to Intel's Mobileye for Bronco, F-150 collision-avoidance (The Detroit News)

Aurora expands to Texas in bid to ramp up self-driving truck efforts (Tech Crunch)

S. Korean battery rivals' U.S. legal case turns into fight for jobs (Automotive News)

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$279 a Day: Good Luck Finding a Cheap Rental Car in N.Y.C. (NY Times)

The NBA’s Disney bubble is beautiful, but the media rules are no joke (Washington Post)

Your Turn

What do you think will happen with Tesla's announcement today? Do you think it's managed to weather the pandemic better than the rest?