Tesla’s Musk vs. GM’s Barra: Two auto CEOs, two very different conference calls
Whether he’s fighting with journalists on Twitter (TWTR), making announcements with double-entendres, or talking about robots killing us all, Tesla’s CEO Elon Musk is known for saying a lot of bold things.
He didn’t disappoint during Tesla’s (TSLA) quarterly conference call late Wednesday, telling listeners that Tesla’s market cap will match that of Apple (AAPL) in 10 years, and that his company will spend “staggering” amounts of money on CapEx.
Quarterly earnings calls are usually dull, non-events. They’re especially uninteresting for automotive companies. To show how lively Tesla’s call was last night, here’s a comparison of what Musk said on his call with what General Motors (GM) CEO Mary Barra told investors in her company’s earnings conference call last week. It’s a battle for the ages: the disrupter vs. the giant. It’s Silicon Valley vs. Detroit.
On problems in China
Musk actually was pretty critical of his staff here, something you don’t usually see.
Unfortunately, this sounds brain-dead, but our sales team was telling people that it was difficult to charge in China, even though this is not true. That is pretty silly.
I put the guy who was in charge of the Supercharger roll out in China, who was doing an awesome job, an engineer, basically, he’s no sales person, in charge of China to make sure that charging is super easy and excellent.
Barra, meanwhile, said this:
In China, we had another solid quarter, contributing to record full year equity income as our sales continued to outpace the market.
So while Musk throws his staff under the bus, Barra quietly toots her company’s horn. We’re off to a good start.
On accounting practices
Musk used this subject to take a shot at some of his critics, defending Tesla’s use of non-standard accounting practices.
So we will probably keep even though it makes our financials look worse than they really are. It’s important because we do get some criticism about GAAP versus non-GAAP, as though when we do non-GAAP, we’re actually trying to people into thinking something is better than it is. But actually that’s not true. The way the accounting rules currently work don’t give a correct picture and we’re trying to give a more correct picture of non-GAAP, not a less correct picture.
Barra didn’t even get into this topic. GM’s CFO Chuck Stevens mentioned the automaker’s non-GAAP results, but didn’t get into any sort of detail about why these were superior.
This is one of the comments from Musk that’s getting the most ink, because he seemed a little bit crazy:
We are going to spend staggering amounts of money on CapEx, for good reasons and with a great ROI.
Barra was much more staid (are you catching on to a theme here?)
We believe there is opportunity in segments we’re not in around the globe that we’ll generate the right return and can enhance our brands and enhance our market position. So looking at those three buckets and again it’s an area, I ran in the company at one point in my career, there is an intense focus on that and we’ll seize every opportunity.
On upcoming new models
Again, Musk got all “contentious” — his word, not ours.
With respect to Model III, we definitely — we don’t want the delays that affected the X to affect the Model III. We are really — we are being quite contentious about this. There are things that we could do with the Model III platform that are really adventurous, but with schedule at risk. So what we’re going to do is we’re going to have something that is going to be an amazing car but it won’t be the most adventurous version of the Model III to begin with, but we will have then have the more different version of the Model III on the Model III platform following the initial version, so that we can stay on track for Model III.
Barra? She said GM has an “aggressive launch cadence of new cars and crossovers in 2016.”
On where the company will be in 10 years
Here’s where Musk predicted that Tesla could be as big as Apple in 10 years.
If you take this year’s revenue, around $6 billion or thereabouts, and if we are able to maintain a 30% growth rate for 10 years, add to your 10% profitability number, and have a 20 P/E, our market cap would basically be the same as Apple’s is today. That’s going to require a bit of — on the order of $700 billion — obviously, getting there will require some significant CapEx, but I am hopeful that we can do this without any significant dilution to the Company, maybe minor dilution but nothing serious.
As for Mary Barra, we couldn’t find a quote to match up with this one. It’s just never going to happen.
(You can listen to the full Tesla conference call here.)