During Conference Call ER Q4 2014 (on February 11th, 2015):
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Andrea James - Dougherty & Company LLC
Hi, thanks for taking my questions and congratulations on the rocket launch.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Thank you.
Andrea James - Dougherty & Company LLC
So just quickly can you help me get to a free cash flow for your, looks like you can do $1.5 billion in CapEx, but what’s going to be the operating cash flow to offset that?
Deepak Ahuja - Chief Financial Officer
Yes, we will have clearly significant - Deepak here, hi Andrea.
Andrea James - Dougherty & Company LLC
Hi.
Deepak Ahuja - Chief Financial Officer
We would have significant positive operating cash flow, obviously as our business, our volume gross and our gross margin continues to improve. We’ll also have some cash used on our direct leasing program. Our expectation is that we will establish shop via warehouse line for leasing cars and that will continue to grow and fund the big portion for leasing funding required. So overall, we feel pretty comfortable where we are in terms of our 2015 look from a cash flow perspective.
Andrea James - Dougherty & Company LLC
So maybe about $1 billion is that about inline cash burn?
Deepak Ahuja - Chief Financial Officer
Should be less than that.
Andrea James - Dougherty & Company LLC
Okay.
Deepak Ahuja - Chief Financial Officer
Yes, considering that we will have a lease warehouse line which continues to expand.
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I don't think that I completely understood the point about this "lease warehouse line".
Peolple in certain states of the US can already lease a Tesla Model S, either direct via Tesla Motors or not.
What is so new about this "lease warehouse line"?
Is this something that is pretty normal in the US?
---------------------------------------
Andrea James - Dougherty & Company LLC
Hi, thanks for taking my questions and congratulations on the rocket launch.
Elon Musk - Chairman, Product Architect and Chief Executive Officer
Thank you.
Andrea James - Dougherty & Company LLC
So just quickly can you help me get to a free cash flow for your, looks like you can do $1.5 billion in CapEx, but what’s going to be the operating cash flow to offset that?
Deepak Ahuja - Chief Financial Officer
Yes, we will have clearly significant - Deepak here, hi Andrea.
Andrea James - Dougherty & Company LLC
Hi.
Deepak Ahuja - Chief Financial Officer
We would have significant positive operating cash flow, obviously as our business, our volume gross and our gross margin continues to improve. We’ll also have some cash used on our direct leasing program. Our expectation is that we will establish shop via warehouse line for leasing cars and that will continue to grow and fund the big portion for leasing funding required. So overall, we feel pretty comfortable where we are in terms of our 2015 look from a cash flow perspective.
Andrea James - Dougherty & Company LLC
So maybe about $1 billion is that about inline cash burn?
Deepak Ahuja - Chief Financial Officer
Should be less than that.
Andrea James - Dougherty & Company LLC
Okay.
Deepak Ahuja - Chief Financial Officer
Yes, considering that we will have a lease warehouse line which continues to expand.
--------------------------------------------
I don't think that I completely understood the point about this "lease warehouse line".
Peolple in certain states of the US can already lease a Tesla Model S, either direct via Tesla Motors or not.
What is so new about this "lease warehouse line"?
Is this something that is pretty normal in the US?