Tesla announces Q1 data

[Suff]

Data on the Q1 performance.

Key thing not on the presentation. Wall street expected an earnings per share of $2.2 when adjusted for one time costs. In fact it came out at $3.2. That is massive.

One of the things which struck me was the debt. They paid off $2.1bn in debt in Q1. Bringing their debt down to $88m. This is a company that just brought online two massive car factories with an expected overall capacity (when fully completed), of 5m vehicles. To put that into context, Ford has 18 manufacturing plants which assemble vehicles and produced 3.9m vehicles in 2021.

I posted the video of Sandy Munro talking about Vehicle manufacturers debt and how it was going to cripple them with the pivot to EV. This is their debt.



Note that in 2020 Tesla had $11bn in debt. Today Tesla has $18bn cash on hand and $88m of debt.

Expect to be seeing a LOT more Tesla cars on the road.

Back in 2018 I was countering a guy online who was constantly carping on about how Tesla was a fraud and would never produce more than 250k vehicles per year, would never make a profit and was going to go bust, every other quarter.

Tesla sold and delivered more vehicles than that in Q1 2022.

The very biggest take away from this is that if the incumbents don't want to lose all their business, they must transition to EV and try to head Musk off. Musk intends that Tesla will produce and sell 20m EV a year by 2030. If the major car manufacturers don't want to vanish, they need to compete in this place. Today we have around 70m-75m vehicles sold each year. This is expected to rise to circa 100m by 2030, but not guaranteed as it dropped from a 2019 peak. If it grows, great, room for Tesla. If it does not, then someone is going to take a hit.

For reference, 20m vehicles is Toyota and VW combined. The #1 and #2 vehicle manufacturers in the world.

There was some reason for scepticism at the outset. Tesla built a battery factory to build EV batteries. They did this because 500,000 EV's would take more batteries than the entire Li battery production of the world. Last year Tesla sold nearly 1m vehicles.

The upshot of all this is the Tesla mission statement. Tesla is not there to make money or profit, it is there to make the world change to battery EV. Which means, for you and me, our choice in vehicles will get less and less as everyone else in the business dumps fossil fuelled vehicles to compete with Tesla.

I listened to the investors call after I started writing this. One of the analysts had been charting the growth of cash in hand that Tesla currently has. He said that if Tesla achieves 50% exponential growth, then by 2030 Tesla would have $500bn in the bank.... Musk said "we'll find something to do with that".

On the call there were several interesting things. One is that Musk believes the Tesla bot will be bigger than vehicles and full self driving. Not bad as an offshoot of FSD tech. Tesla is offering insurance now to over 118m Americans and will soon expand beyond the US, at the same time they are expanding repair centres and are looking to have a vehicle assessed and into repair within hours of the accident. The cost of insurance is derived from the usual driver information and also their Tesla safety score created by the vehicle telemetry. So Tesla insurance repairs the vehicle with factory wholesale part costs. They are also feeding back information from the repair shops direct into the Automotive engineering design teams to make the design safer and easier to repair.

Finally the robotaxi. This is their "future vehicle". It will not have a driver, pedals or a steering wheel. It will cost less than a subsidised bus fare or subway ticket (US claim, TBD on the rest of the world). Volume production in 2024. There are several other manufacturers delivering these vehicles right now and I bet they are now working to see how they can get as much sold as possible by 2024.

Arc Invest, an extremely successful fund on Wall Street has Tesla at $4,000 by 2026. That would make Tesla a $4tn company and the most valuable company on the planet.

Watch this space.

Lest I forget, Tesla also sells solar products, home and business energy storage and business software for managing stored energy. Q1 their solar manufacturing was severely constrained by a lack of components from China.

My take is they will be broken up eventually as nobody will be able to compete with them. But not before they force the move to BEV.

[Suff]

If you don't want to view the presentation, here is a view of how they are simplifying their manufacturing to make more money and faster delivery.

They claim this one change removes 60% of the body assembly equipment. Shanghai builds a Model Y in 10 hours. VW takes 33 hours to build an ID.3.

[cromwell]

I found out that the top two selling cars in the UK are Teslas. The 3 and the Y.
They also mad 1 billion dollars more in profit last year than they had been forecast to.

[Suff]

Need to be careful of the numbers. Tesla I'd the best selling car on month in 3 as it delivers once a quarter on average.

General margin on cars for the automotive industry is 10% to 20% and 20% is very high. Tesla. Margin is 30% and growing.

Tesla also gets regulatory credits because it does not sell FF vehicles. In years past this was seen as a reason to say Tesla was not profitable, but this year Tesla managed $3.3b in profits in one quarter and regulatory credits with a on off exception doubling the amount was only $600m.

I spent years saying there is a difference between not being able to make a profit and not choosing to do so because you have better things to do with the money.

The mission statement remains unchanged, to force the entire industry to change to EV or die off from lack of FF business.

So far they are right on track.

Ark invest says that no large corporate has sustained exponential growth for a decade. Let alone 50% exponential growth.

It will be very interesting to see how it unfolds. Because right now their exponent is nearly 100%. This will fall of course but how much? That is the $64k question.