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AAA study finds Americans warm to electric vehicles, but most aren’t ready to buy — at least not yet

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Americans aren't ready to buy electric vehicles and don't think their neighbors are either, according to a new study by AAA.

That said, as many as 40 million Americans say they will at least consider a battery-electric vehicle, or BEV, for their next vehicle, the automotive group found. And the public may be more interested in battery-based vehicles as a flood of new models comes to market, but only four in 10 people believe that the majority of vehicles will be electric by 2029. The majority of Americans actually expect that most new cars will be able to drive themselves within the coming decade.

“Today, more than 200,000 electric cars can be found on roads across the country as almost every manufacturer sells them,” said Greg Brannon, AAA's director of automotive engineering. “But, like other new vehicle technologies, Americans don't have the full story and that could be causing the gap between interest and action.”

Battery-based vehicles of all forms, including conventional hybrids, plug-in hybrids and BEVs, accounted for barely 5% of the American new car market last year. But plug-based models, BEVs in particular, saw sales roughly double, according to industry data. And the numbers are expected to continue growing rapidly as more long-range offerings, such as the Audi e-tron crossover, the Tesla Model Y SUV and the Porsche Taycan sports car come to market. By mid-decade, industry analysts such as LMC Automotive anticipate well over 100 options for potential buyers.

But the AAA study shows that Americans haven't been keeping up with the rapid rate of change reshaping the electric vehicle market, including the shift from first-generation models barely capable of running 100 miles on a charge to new and updated offerings that are now approaching 400 miles per charge.

“Many consumers are not sure what to expect from an electric vehicle,” a summary of the AAA report found, such as what sort of conditions typically yield the best range. As with hybrids like the Toyota Prius, electric vehicles can recapture energy lost during braking and coasting, which means they actually do better in stop-and-go traffic than on the highway – the opposite of what's true for conventional, gas-powered vehicles.

There remains plenty of confusion about what electric vehicles can and can't do, and not only in the United States. A survey of British motorists last year found 42% saying a BEV can't be driven through a car wash. It can. Some new models, like the Jaguar I-Pace, can even ford moderately deep levels of water.

The AAA study found that a growing number of Americans are at least considering BEVs and other electrified models, with millennials at the forefront. Other findings show:

Sixteen percent of those surveyed said they are likely to buy an EV next time they shop for a new vehicle.Concern about the environment is the primary motivator, cited by 74% of those surveyed; lowering vehicle operating costs is mentioned by 56% of those surveyed.There are fewer worries about the traditional obstacles to widespread adoption. The study found 11% fewer respondents pointing to a lack of places to charge up than raised that concern in a 2017 study.Significantly fewer respondents pointed to higher purchase prices and repair costs than in the 2017 AAA study.

Limited range, higher costs and the lack of a public charging infrastructure are traditionally seen as the key obstacles to mainstream adoption of battery-electric vehicles. But a number of new models now cost under $40,000. And the AAA found 44% of buyers would be willing to pay up to $4,000 more for an electric vehicle than a gas model, with 23% willing to pay even more of a premium.

A potential selling point is that the range of the second-generation models now coming to market routinely top 200 miles. Tesla is now offering an extended-range pack for its Model S sedan capable of 370 miles.

Concerns about charging nonetheless remain a major issue, with six in 10 of those surveyed raising that issue as a reason they are unlikely to buy, or are unsure about buying, a BEV. Fifty-seven percent said they think electric vehicles aren't suitable for long-distance travel.

Public charging is still limited, especially in the middle of the country, but companies including ChargePoint, EVgo and Electrify America plan to invest billions over the coming decade to fill that gap. And the latest versions of their high-speed Level 3 chargers are capable of delivering as much as 20 miles of range per minute, meaning a “fill-up” can be cut to around 10 minutes on some vehicles, roughly matching what it takes to fill a gas tank.

“These vehicles are a big part of the future of transportation since self-driving cars, when they do arrive, will likely be electric,” AAA's Brannon said. “The difference, of course, is that electric vehicles are already here (and) have become an even more viable option for many Americans.”

The first Chinese automaker sets sights on US with start-up Zotye taking on big rivals in Detroit

The Zotye Auto debut at Shanghai auto showH/O: Zotye AutoWhen Guangzhou-based GAC Group rolled out a concept vehicle at the North American International Auto Show last January it was just the latest among a procession of Chinese automakers laying out plans to enter the American car market.
To date, however, the only Chinese-made vehicles to reach U.S. shores have been imported by General Motors and Volvo. But Zotye Auto, a small, privately held carmaker from Yongkang, Zhejiang, China, is determined to be the first domestic Chinese car company to reach American shores — and in as little as 18 months from now.
With a name that few Americans will likely know how to pronounce — it's Zoh-tee, not Zot-yee — a small budget and even less brand equity than bigger Chinese brands like BYD, Geely or Great Wall, there are plenty of skeptics. Americans “have a bad perception of Chinese vehicles, overall” cautioned Augusto Amorim, a senior analyst with LMC Automotive. And Zotye is particularly unknown, he said.
But the team of industry veterans who are leading the Zotye launch effort are confident they can pull it off, including seasoned salesman Duke Hale, 69, who sold his first car as a teenager and has spent decades working with automakers as diverse as Isuzu, Lotus and Land Rover. Hale said he's confident his “seven Ps” strategy will clinch the deal.
The list includes such things as “processes,” as well as “product.” The first model expected to enter Zotye's U.S. line-up debuted barely a month ago at Auto Shanghai. The T600 is a compact crossover that will be aimed at the likes of the Toyota RAV4 and Honda CR-V. It will be followed in 2022 by the midsize T700 crossover and, about a year later, by a three-row model.
The Zotye Auto debut at Shanghai auto showH/O: Zotye AutoBut while the T600 has generated some positive press, Hale believes the brand's biggest selling point will be “price.”
“Think in terms of 20% less than the targeted competition,” notably including the likes of Hyundai, Kia and Toyota, Hale said over dinner with journalists at the Detroit Renaissance Center on Thursday night.
That's an even bigger discount than Hyundai offered buyers when it came to the U.S. market 30 years ago — and with a name that was equally baffling to American consumers. And it would come at a decidedly opportune time, industry officials like Joe Hinrichs, Ford's president of automotive operations, have openly worried about the rising cost of today's new vehicles. The average sticker price of a new car hit a record $34,000 at the beginning of the year, according to data compiled by industry research company LMC Automotive.
Industry observers note that translates into a typical monthly payment of around $550, enough to price millions of potential buyers out of the market, especially millennial and Gen-Z motorists, many already straining to pay off student loans.
Jan Thompson, a former marketing executive with Mazda and Toyota who's now handling that role for Zotye, believes the Chinese brand's primary buyers will be young shoppers who don't want to buy a used car. But with an estimated 42 million used vehicles sold in 2019, nearly three times more than new, customers could come from every market demographic, she said.
2019 Honda CRV with camper tent accessories.Adam Jeffery | CNBC “I tell my neighbors in Tennessee I'm going to sell a Chinese car and they all say they're not interested,” she said. “Then I tell them the price and they all ask where they can sign up.”
Unlike Hyundai, Kia and the many new automotive start-ups coming on the scene, Zotye won't actually run the show, if and when its cars come to the U.S. The marketing operation actually lifts a page from the strategy several Japanese automakers used in decades past when they tried to pry open the door to the U.S. market. Subaru, Mazda and even Toyota initially relied on independent American distributors — the Japanese giant still represented by one in a number of Southern states.
Hale's HAAH Automotive Holdings negotiated a deal to import and distribute Zotye's products in the U.S., a plan the Chinese carmaker was more than glad to accept, he said, considering it currently has capacity to build 1.2 million vehicles annually but only sold about 400,000 last year.
The arrangement gives HAAH plenty of flexibility and, in fact, “There are probably more brands to be announced in the future,” he said Thursday, suggesting his privately held company is negotiating with several other Chinese wannabe exporters.
Of course, the real question is whether HAAH will get past the bright idea stage. There have been plenty of attempts to set up new brands in the U.S. over the past 20 years but only Tesla has so far succeeded. Notable failures include India's Mahindra & Mahindra which even had lined up a network of dealers, early in the decade, before throwing in the towel.
The good news for HAAH and Zotye is that they claim to be generating strong interest from dealers, with several dozen now signed on representing 60 “points” in 15 states, and negotiations are well underway with about 20 others, according to sales chief Bob Pradzinski, who has spent decades working for Asian automakers including Hyundai, Mazda and Toyota.
What might surprise buyers is that despite record new vehicle prices, the typical automotive retailer loses about $331 for every car, truck or crossover they sell, according to the National Automobile Dealers Association. They have to try to make that up by pushing finance, insurance and service.
Hale and his team is trying to make it easier — more profitable — for dealers. Zotye plans to use a “no haggle/no hassle” approach to pricing, like Saturn. And dealers will be offered large geographic franchises in which they could set up multiple outlets. That could include showrooms in malls, something Tesla has done.
Hale and his team acknowledged there are plenty of potential obstacles, like meeting U.S. emissions, mileage and safety standards, for one. The trade war between the U.S. and China is also an issue, although Hale said he's confident it will be resolved well before the first Zotye is ordered in the U.S.
“They seem serious about getting into the market and are clearly trying to understand what buyers want,” said analyst Amorim. While it will likely be a challenge for any Chinese makers, especially in a market already crowded with so many brands, he believes Zotye and HAAH could “have a higher chance of being successful” if they can execute the plan Hale and his team have put together.

Designers at Ford are using virtual reality tools to work with colleagues remotely

FordEmployees at Ford have started to use a 3D virtual reality (VR) tool that enables them to work on designs with colleagues remotely in real time.
The technology has been developed by Gravity Sketch, in collaboration with Ford. It sees workers wear headsets and use controllers to “draw, rotate, expand and compress a 3D sketch.”
A feature in the system, called Co-Creation, allows designers around the world to work on and evaluate designs in real time while being in different offices. The Gravity Sketch platform negates the need for an initial 2D design process, allowing designers to work with a 3D model from the start.
In a statement earlier this week Michael Smith, design manager at Ford, said that the Co-Creation feature added “more voices to the conversation in a virtual environment, which results in more efficient design work that may help accelerate a vehicle program's development.”
Ford said that designers in five Ford studios around the world were experimenting with Gravity Sketch, looking at both “workflow feasibility” and capabilities relating to “real-time co-creation and collaboration.”
As technology develops, VR is starting to be used across a wide range of industries. In April 2019, for example, it was announced that Qatar Airways had partnered with Rolls-Royce to trial a VR training tool.
The technology, which uses HTC Vive equipment, has been designed to give engineers virtual refresher training with Rolls-Royce's biggest engine, the Trent XWB.
A few months earlier, in February, the British Army awarded a £1 million ($1.3 million) contract to a software developer to “explore how virtual reality can be integrated into soldier training.”
The Ministry of Defence said the pilot scheme would look to test a range of virtual reality applications. These include high resolution virtual reality headsets; avatars that can be customized to replicate facial features and body shapes; and technology that offers data capture and analysis to help soldiers “better understand their own performance.”

Here’s what Wall Street is saying about Lyft’s first report: ‘A good first step’ to profitability

Lyft President John Zimmer (R) and CEO Logan Green speak as Lyft lists on the Nasdaq at an IPO event in Los Angeles March 29, 2019.Mike Blake | ReutersDespite heavy bottom line losses, Wall Street analysts were largely optimistic on Wednesday about Lyft's first quarter earnings report, which was also the ridesharing company's first as a publicly-traded company.
“Overall, we view the 1Q update as positive as the company progresses towards its long-term goals,” Stifel said.
The first quarter results, as well as Lyft's 2019 earnings forecast, was “a good first step for the company to provide evidence toward that goal” of profitability, Credit Suisse said.
“Long term, we still see shared transportation as a market with a long runway for secular growth, potentially more rational industry competitive dynamics as maturity approaches & broader positive impacts on society,” UBS said.
JMP Securities urged investors to “take advantage of the recent pullback in shares,” the firm said, as Lyft has fallen more than 24% since its IPO.
Lyft shares were 3.6% lower in premarket trading from Tuesday's close of $59.34 a share. Its IPO price was $72.
Here's what every major Wall Street analyst said about Lyft's results.
UBS' Eric Sheridan – Buy rating, $82 price target “With its first earnings call/report, LYFT mgmt (in our opinion) laid out a positive LT vision for the industry, downplayed recent worries on competition and talked up the long term transportation oppty. In addition, we think a Q1 and upside forward commentary should also focus investors back on the potential upside. Long term, we still see shared transportation as a market with a long runway for secular growth, potentially more rational industry competitive dynamics as maturity approaches & broader positive impacts on society.”
Credit Suisse's Stephen Ju – Outperform rating, $95 price target “We note that as the potential for margin expansion (and particularly the long-term margin targets) has been a sticking point for LYFT shares among investors, we view the better-than-expected Adj. EBITDA margins reflected in the 1Q19 results, as well as the 2Q19 and 2019 guidance parameters as a good first step for the company to provide evidence toward that goal.”
Jefferies' Brent Thill – Buy rating, increased price target to $90 from $86 “Lyft delivered a clean ride out of the gate in its first qtr since the IPO, with a convincing beat and raise. Lyft showed: 1) strong momentum in rev & metrics; 2) significant progress in reducing losses; and 3) heading off a L-T concern with a partnership with Waymo. Valuation is attractive at 4.0x CY20 EV/S, and we expect stock to recover as Lyft executes and misconceptions clear.”
J.P. Morgan's Doug Anmuth –Overweight rating, increased price target to $86 from $82 “Overall, we believe Lyft's results & outlook were strong, & mgmt addressed a number of key points that we believe will bolster shares: 1) more details & confidence around leveraging insurance over time; 2) 2019 as the peak loss year; 3) core ridesharing losses improving; & 4) competition receding & ridesharing becoming increasing rational. Our 2019 & 2020 revenue estimates are increasing 3-4% & our EBITDA losses also improve notably. We continue to believe there is strong secular growth in TaaS, that Lyft's singular focus on transportation & emphasis on product innovation will driver further share gains, & that ridesharing will become profitable as the industry becomes more rational over time.”
Piper Jaffray's Michael Olson – Overweight rating, $78 price target “The company indicated that, while it continues to spend aggressively on various initiatives, the competitive pressure on rider incentives for core ridesharing has receded to some degree, which is a sign of a rational duopoly between Lyft and Uber for the time being.We believe Lyft will be both a catalyst and beneficiary of the growth of ridesharing and autonomous tech over the next 10+ years. LYFT may not be the right fit for all investors, given the company's current materially unprofitable state, but for those with a long-term view, and patience, we recommend owning shares at these levels.”
Raymond James' Justin Patterson – Outperform rating, $85 price target “We leave the quarter feeling incrementally better about Lyft's ability to win driver and customer loyalty via product innovation and service, and sustain >50% contribution profit growth into 2020E … the peak loss year is less steep than envisioned. Lyft will still generate EBITDA losses in excess of $1B this year…but that is an improvement from $1.3B previously. The incremental margin improvements demonstrated in 1Q suggest that Lyft can reduce cash burn as it exits 2019.”
Stifel's Scott Devitt – Buy rating, increased price target to $70 from $68 “The company's FY:19 revenue guide was set ~3% above our prior expectation at the midpoint. Adj. EBITDA margin for the full year is expected to be -35.4% at the midpoint, approximately 700bps better than our prior expectation. Management noted it is seeing a reduction in rider incentives across the industry and believes overall the current competitive market is rationalizing. Overall, we view the 1Q update as positive as the company progresses towards its long-term goals. We are raising our target price to $70 as a result of higher estimates.”
Canaccord Genuity's Michael Graham – Buy rating, $75 price target “Lyft delivered a textbook first public quarter, with modest upside on all key metrics, and solid guidance relative to consensus both for Q2 and 2019. Management sees the competitive landscape in key US cities becoming increasingly rational, which should be a positive signal for investors worried about the potential for near-term pressure from driver incentives and pricing. Lyft is now contribution-margin positive in nearly every market, and the core ridesharing business is showing enough operating leverage to offset even more of the 2019 investment in bikes and scooters. We continue to see Lyft offering the hallmarks of an attractive growth equity investment, including a large addressable market with an attractive duopoly structure, a strong value proposition that should get better with scale, and a business model that holds solid room for upside.”
JMP Securities' Ronald Josey – Market outperform rating, $78 price target “While acknowledging the concerns around competition, investments, and greater losses in 2019, given strong top-line growth, contribution margin expansion to ~50% in 1Q19 from 35% in 1Q18, Sales and Marketing leverage, and improving losses, we would take advantage of the recent pullback in shares; since Lyft's day 1 closing price post its IPO, shares are down 24% compared to +1.8% for the S&P 500. Importantly, with ~30-40% share of the domestic ridesharing market, a market we believe accounts for ~1% of miles driven, we believe Lyft is at scale and that its TAM could ultimately be significantly larger than the $1.2 trillion annual personal transportation market / TAAS market.
KeyBanc's Andy Hargreaves – Sector weight rating, no price target “Lyft reported solid 1Q results with better than expected rider and revenue growth. We believe Lyft is performing well and retains a strong top-line growth outlook. However, the ride-sharing market appears to be slowing and the degree of longterm profitability remains uncertain, preventing a more positive outlook on the shares.”
Atlantic Equities' James Cordwell – Underweight rating, increased price target to $52 from $50 “Q1 revenue and adjusted EBITDA were ahead and, encouragingly, management commented that promotional intensity had eased, aiding profitability. However, Q2 and FY19 revenue guidance imply a steep deceleration, and while not completely unexpected, could bring to the fore concerns regarding how much growth remains in the US ridehailing market under the current operating model … we remain Underweight given the slowing growth profile and our view that Lyft has insufficient scale to ultimately deliver attractive returns.”
Guggenheim's Jake Fuller – Neutral rating, no price target “The key debate into the release of LYFT's first quarterly results as a public company has been whether it could both sustain rapid growth in Active Riders and do so while showing improvement in unit economics. Growth in Active Riders was modestly ahead of consensus and we saw a sequential step-up in revenue/rider and contribution margin. After seeing Uber's preliminary 1Q results, we worried over the potential for mounting competition to undermine those metrics. While detail in the release and accompanying slide pack was sparse, the lack of obvious competitive pressure is encouraging.”

Lyft riders in Phoenix will soon be able to hail Waymo driverless cars

John Krafcik, chief executive officer of Waymo Inc.David Paul Morris | Bloomberg | Getty ImagesAlphabet's Waymo unit said on Tuesday that its self-driving vehicles will be available in the Phoenix area for users of ride-hailing service Lyft.
“As a first step, we'll deploy 10 Waymo vehicles on Lyft over the next few months,” Waymo CEO John Krafcik wrote in a post on Medium. “Once Waymo vehicles are on the platform, Lyft users in the area will have the option to select a Waymo directly from the Lyft app for eligible rides.”
Waymo attained regulatory approval and began to operate its driverless cars in Phoenix last year with human supervisors on board in a program it called Waymo One.
Truly driverless vehicles do not yet exist. However, ride-sharing businesses are eager for the advent of Level 4 autonomous vehicles, which would be able to operate in typical driving conditions without human supervision. These “robotaxis” could help ride-sharing businesses like Lyft and Uber skirt costs and liabilities associated with the human drivers on their platforms.
The Waymo-Lyft announcement follows promises made by Tesla CEO Elon Musk in recent weeks that his electric car company should have 1 million vehicles capable of functioning as robotaxis on the road next year, and that owners of the cars should be able to generate tens of thousands of dollars from them annually.
When Tesla began to discuss its ambitions in self-driving technology in 2016, Musk said they would conduct a hands-free trip across the US by late 2017. They have yet to complete that mission. And Tesla has not yet announced any regulatory approvals to operate a driverless transportation network.
Uber previously paused its self-driving vehicle programs in San Francisco, Pittsburgh, Phoenix and Toronto after a woman was hit and killed by an Uber self-driving car while was walking across the street one night in Tempe, Arizona, outside of Phoenix.
WATCH: Morgan Stanley upgrades Alphabet on Waymo hopes
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Rebel Tesla rebuilder with a popular YouTube channel is now opening a shop to fix cars Tesla can’t

Rich Benoit has been enchanted with Tesla electric vehicles since the company first rolled out its flagship sedan, the Model S. The IT manager turned his curiosity into YouTube fame in 2016, cranking out videos about the cars, including how to buy, fix and mine wrecked Teslas for spare parts.
“The reason I started my YouTube channel was to kind of demystify Teslas in general. So I purchased a Tesla Model S a few years ago, and I started taking it apart to see if I could put it back together,” Benoit said. Today, his channel “Rich Rebuilds ” is approaching 500,000 subscribers. The most popular episode, “Can you drown a Tesla motor?” has garnered 2.3 million views in less than a year.
Dubbing him “Dr. Frankenstein of Teslas,” his followers frequently send payments to support his video blogging habit, as well as random items for his cars, home and garage.
He's received custom car parts like lug nuts, door handles, mats, as well as air fresheners, cleaning products and more. Someone sent him a life-sized poster of Elon Musk. Someone had pizza delivered to his house, which Benoit liked. On the weirder side of viral video stardom, a fan sent Benoit a puppy preserved in formaldehyde in a jar.
Over the years, Benoit said, followers increasingly reached out asking where to get a good deal on a spare part, or offering to pay him to fix their cars when Tesla service centers couldn't or wouldn't do so.
Dain Evans | CNBCIn the winter of 2018, Benoit partnered with a former parts manager for Tesla, Chris Salvo, to open up their own repair shop. Salvo is also the founder of EV Tuning, an online store that sells parts and accessories to electric vehicle owners.
While they have both been holding down day jobs, this spring they broke ground on their Electrified Garage in Seabrook, New Hampshire.
“I was never thinking of opening my own shop,” Benoit said. “But I'd been denied so many times by Tesla that I really started thinking there's got to be a bigger picture here, another player who can help others and get parts as well. Now there's a place where people can go for third-party EV repair.”
Their typical customers own Model S cars out of warranty, or Model 3's with after-market parts that have negated their warranties so they can't get Tesla do work for them, according to Benoit and Salvo.
Chris Salvo and Rich Benoit are the founders of the Electrified Garage.Magdalena Petrova | CNBCTesla CEO Elon Musk has long promised to ramp up the company's service in North America.
In July 2018, he tweeted, “Tesla body shops are ramping up fast. Aiming to go from 30+ days using external body repair shops to same day body repair with prestocked parts at Tesla service centers.”
But Tesla is currently in a belt-tightening phase, recovering from mass layoffs and still under pressure to cut costs. So it's not clear when the company can make good on Musk's promises. This week, the CEO told Tesla service skeptics on Twitter, “we're ramping up service centers & Tesla mobile service worldwide.”
Until more service centers open, or Tesla adds capacity and technicians, including “Rangers” – who drive to the customers' door to fix their cars – upstarts like the Electrified Garage are ready to repair, modify or rebuild.

GM Cruise autonomous vehicle unit valued at $19 billion with latest $1.15 billion funding round

A woman gets in a self-driving Chevy Bolt EV car during a media event by Cruise, GM’s autonomous car unit, in San Francisco, California, November 28, 2017.Elijah Nouvelage | ReutersGeneral Motor's self-driving car division Cruise said Tuesday it received a $1.15 billion investment, raising the unit's value to $19 billion.
The money comes from existing investors GM, SoftBank Vision Fund and Honda as well as funds and accounts advised by T. Rowe Price Associates and other institutional investors. GM said the boost brings investments in Cruise over the past year to $7.25 billion, including money funneled in from the parent company.
“Developing and deploying self-driving vehicles at massive scale is the engineering challenge of our generation,” said Cruise CEO Dan Ammann. “Having deep resources to draw on as we pursue our mission is a critical competitive advantage.”
Cruise raised $2.25 billion from Japanese tech firm investment firm SoftBank and $2.75 billion from Honda last year. The company also announced expansion plans to Seattle in November, and said it will hire up to 200 engineers there by the end of 2019.
The $19 billion valuation comprises over one-third of GM's market value of roughly $54 billion. GM stock is up 25 percent this year, and company shares were up over 1% in morning trading Tuesday.

Elon Musk to investors: Self-driving will make Tesla a $500 billion company

Elon Musk, chief executive officer of Tesla Inc., smiles while speaking to members of the media outside federal court in New York, U.S., on Thursday, April 4, 2019.Natan Dvir | Bloomberg | Getty ImagesCitigroup and Goldman Sachs, who are underwriting Tesla's latest effort to raise $2 billion in new funds, held a “broad investor call” on Thursday, where CEO Elon Musk and CFO Zach Kirkhorn answered brokers' questions about their plans for the electric vehicle maker.
According to two invitees who attended the call, CEO Elon Musk talked up Tesla's self-driving strategy right off the bat, expanding what he and other execs said at a recent event for investors that the company dubbed “Autonomy Day. ”
Musk confidently told investors on the call that autonomous driving will transform Tesla into a company with a $500 billion market cap, these people said. Its current market cap stands around $42 billion. He also said that existing Teslas will increase in value as self-driving capabilities are added via software, and will be worth up to $250,000 within three years.
The call came as the company is looking to raise $650 million in equity and $1.35 billion in convertible bonds. Filings indicate that Tesla plans to use the capital for general corporate purposes. On the call, Musk said Tesla would be able to fund its business needs through cash flow, but that it was wise to have a buffer in case of a recession or weak global auto demand.
Kirkhorn reminded investors on the call that nothing has changed in Tesla's outlook for Q2. The company still expects to deliver 90,000 to 100,000 vehicles in the second quarter, and 360,000 to 400,000 vehicles total this year.
On an unadjusted basis, Tesla lost $702.1 million, or $4.10 a share, during the first quarter of 2019. The company's shares rose more than 4% on Thursday following the announcement of the new funding solicitation, but remain down more than 25% year to date.
It's all about driverless nowAccording to the two investors who heard the call, Musk described Tesla's existing electric vehicle, solar, and energy storage business lines as a backstop of value to Tesla's business in a new driverless era.
He said that even though Tesla drivers need to keep hands on the wheel today, that will become less necessary over time. Musk said that competitors such as GM's Cruise and Alphabet's Waymo can't catch up because Tesla has a fleet of connected cars on the road today, and a proprietary chip.
The hundreds of thousands of Teslas already on the road constantly slurp up data and send it back to Tesla's servers, which helps the company improve and advance its Autopilot and Full Self-Driving systems. Meanwhile, the company's self-driving computers, which it started working on about three years ago, are exclusive to Tesla and allegedly use less power in the vehicle than offerings from competitors like Nvidia.
Musk reiterated that because Teslas can be upgraded “over-the-air” with new software-enabled features and functionality, they will appreciate in value, unlike nearly every other car on the market. A Tesla will be worth $150,000 to $250,000 in 3 years, he claimed. He also said that a full self-driving upgrade will increase the value of any Tesla by a half order of magnitude, or five times.
Tesla expects to have 1 million vehicles on the road next year that are able to function as “robo-taxis,” Musk said, reiterating statements made at Autonomy Day and on the company's Q1 earnings call. Each car should be able to do 100 hours of work a week for its owner, making money as a robo-taxi he told investors.
Some investors and analysts have expressed skepticism about the robo-taxi plan and Tesla's self-driving strategy in general.
For instance, in a note to investors after Autonomy Day, Cowen analyst Jeffrey Osborne wrote: “We see a significant amount of technology and execution risk in the shift in strategy from competing in just electrification to Tesla also beating Nvidia in hardware, Google in software, and building a better ride-hailing service than current ride hailing leaders. ”
He added in the note, “The Tesla Network robotaxi plans seemed half baked, with the company appearing to either not have answers to or not even considered pretty basic question on the pricing, insurance liability, or regulatory and legal requirements.”
Zachary Kirkhorn, CFO, TeslaSource: TeslaOn Thursday's investor call, according to the people who heard it, Musk and other Tesla execs declined to give details when it came to more pragmatic issues like where the company's order book stands today, what they are doing to ameliorate problems with Tesla service and repairs, how much income Tesla expects to generate from regulatory credits for the rest of this year, and who will supply battery cells to Tesla in Asia as it begins manufacturing Model 3s in Shanghai.
One person asked what Tesla could do to improve its gross margins from the approximately 20% reported in the first quarter of 2019. The company previously promised it could achieve 25% margins.
Musk told investors Tesla would try to improve efficiency in its supply chain, but would feel good about 20% gross margins moving forward.
But he also tried to drive the conversation back to autonomy, calling it the fundamental driver of value for Tesla, and urged investors to stop nit-picking over vehicle margins.
WATCH: We went inside Tesla's first Gigafactory
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Here’s the email Tesla sent employees telling them to stop leaking info

Tesla CEO Elon Musk arrives at federal court, April 4, 2019 in New York City. A federal judge will hear oral arguments this afternoon in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) that seeks to hold Musk in contempt for violating a settlement deal.Drew Angerer | Getty ImagesTesla's security team sent a warning to employees this week to stop leaking company information.
The email, which was shared with CNBC and verified with multiple current employees who requested anonymity, warned that outsiders who “will do anything to see us fail” are “targeting” employees for information via social networks and other methods.
It reminded employees that they signed confidentiality agreements, and warned them, “Tesla will take action against those who improperly leak proprietary business information or violate the non-disclosure obligations to which we all agreed. This includes termination of employment, claims for damages, and even criminal charges.”
The email was in part directed at leaks to the media, noting, “In January an employee was identified for sharing confidential business information on Twitter, including production numbers, with journalists.”
It also said somebody was recently fired for posting the phone number to an internal meeting on social media.
Tesla and CEO Elon Musk have a love-hate relationship with the media, as well as social networks including Twitter, which Musk uses obsessively, and Facebook, which he disdains.
In the past two weeks alone, reporters have broken unfavorable news about Tesla, including:
Its failure to secure an exemption on tariffs for its made-in-China components that go into its Model 3 electric sedans.A resurgence of production glitches affecting employees at its car plant in Fremont.Its strained relationship with battery cell suppliers and Gigafactory partner Panasonic.Extremely long waits for Tesla service and repairs.Tesla's beef with a vocal critic aligned with short sellers on Twitter.These stories can overshadow some of the company's recent accomplishments including:
Seeing enough interest in its attempt to raise new capital to raise its target from $2 billion to $2.7 billion, overnight.The opening of new service centers and authorized body shops, in places like Pearl, Mississippi; Des Moines and Memphis.Progress on automated manufacturing and the solar roof at its Sparks, Nevada, battery plant.CEO Elon Musk's promises that Tesla will grow into a driverless car company worth $500 billion.So it's not surprising that Tesla's security team chose this week to send around a warning to employees telling them, in so many words, that loose lips sink ships.
Here's the full e-mail:
Subj. Please Read – Confidentiality Reminder
If you read the news, you know that there is an intense amount of public interest in anything related to Tesla. As a result of our success, we will continue to see an interest from people who will do anything to see us fail. This includes people who are actively seeking proprietary information for their own gain, targeting Tesla employees through personal networks or on social networks like LinkedIn, Facebook or Twitter. These solicitations are not only potentially damaging to our company, they can also be illegal, putting you and your colleagues/friends at risk for termination or even the possibility of criminal charges.
As an employee and a shareholder, each of us has a responsibility to safeguard all information and technology we use and generate every day.
When anyone joins Tesla, they agree they “will hold in strictest confidence and will not disclose, use, lecture upon or publish” any of Tesla's confidential and proprietary information. Tesla will take action against those who improperly leak proprietary business information or violate the non-disclosure obligations to which we all agreed. This includes termination of employment, claims for damages, and even criminal charges. If you would like another copy of your Confidentiality Agreement, please send an email to your HR partner or email [HR email address redacted].
If you receive a solicitation for information via social media do not respond and please forward it directly to [Security email address redacted].
The security team will determine whether any additional action is necessary.
We recognize that not everyone who leaks information may be doing so intentionally or with an intent to harm the company. To that point, we ask that you assume what you are working on is sensitive, and do not share details of your work with friends, family, or people outside the organization.
Contact [Security email address redacted] if you think you or your team may benefit from training or a more complete understanding of how to protect our intellectual property and confidential business information.
If you're unsure about what constitutes unacceptable behavior, illegal disclosures or theft of intellectual property, here are some recent examples to illustrate inappropriate conduct and the potential consequences:
* This month, an employee posted the dial-in information of an internal meeting on social media. This employee was identified and terminated the following day.
* A felony charge was filed last month against a former employee who exfiltrated confidential business information from the Tesla domain to his personal account and threatened to disclose confidential company information.
* A former employee uploaded Tesla intellectual property to a personal iCloud account and left the company for a competitor. Tesla filed a lawsuit and is suing him for stealing trade secrets.
* Tesla filed a lawsuit against former employees and a competitor for stealing proprietary information and trade secrets to help the competitor leapfrog past years of work needed to develop and run its own warehousing, logistics, and inventory control operations.
* In January an employee was identified for sharing confidential business information on Twitter, including production numbers, with journalists. The employee was terminated for violating their NDA and Tesla's Communications policy.
It's every employee's responsibility to honor and sustain our culture of progress and sharing, while still abiding by company policy. To do otherwise would be a disservice to your colleagues, our mission, and the hard work you do every day. Thank you for doing your part to advance Tesla's mission by raising awareness and protecting your valuable work.
WATCH: Elon Musk is interested in buying $25 million Tesla stock
VIDEO1:0401:04Elon Musk is interested in buying $25 million in Tesla stock

Fiat Chrysler shares jump after mixed first-quarter earnings

Fiat Chrysler Automobiles assembly workers build 2019 Ram pickup trucks at the FCA Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.Rebecca Cook | ReutersShares of Fiat Chrysler seesawed Friday after the company reported disappointing first-quarter earnings but said it's still on track to meet its 2019 profit target.
U.S. shares of the Italian and American company dropped as much as 2.8% before surging 6% in intraday trading.
The automaker said slowing sales in North America and Europe drove profit south. However, it said, sales of new U.S. pickup trucks, including the Jeep Gladiator and Ram models, would help lift its 2019 profit target of more than 6.7 billion euros ($7.5 billion).
Sales of its popular line of Ram trucks jumped 22% year over year as overall U.S. sales fell 3.1% during the first three months of the year.
Fiat Chrysler also reported that its first-quarter net profit fell 47% from the same time period a year prior, dropping to 508 million euros ($568 million) from 951 million euros ($1.06 billion) during the same quarter last year.
In addition, earnings per share failed to meet Wall Street's expectations, coming in at 40 cents (0.36 euros) compared with analysts' estimates of 52 cents (0.47 euros).
Fiat Chrysler's stock has climbed 10.17% so far this year. In the past 12 months, the stock has declined 29.17%.