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Tesla Motors Shareholder Briefing 2022
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Tesla Motors Shareholder Briefing 2022

Tesla Q1-Q4 2022 Earnings Briefing

Sources: Tesla Motors – First Quarter 2022 Shareholder Letter

Tesla Motors, Inc. – Second Quarter 2022 Shareholder Letter

Tesla Motors, Inc.– Third Quarter 2022 Shareholder Letter

Tesla Motors, Inc.– Fourth Quarter & Full Year 2022 Shareholder Letter

I. Executive Summary

Tesla experienced significant growth in production and deliveries throughout 2022, despite persistent supply chain challenges, chip shortages, and inflationary pressures. The company continued to expand its global manufacturing footprint with new Gigafactories in Texas and Berlin-Brandenburg ramping up production. Financial performance remained strong, with record net income and increasing operating margins, even as average selling prices (ASPs) showed a downward trajectory. Tesla is also heavily investing in its Energy business and advancing its Full Self-Driving (FSD) technology.

II. Key Themes & Strategic Priorities

  1. Capacity Expansion and Production Ramp-up:

  • Core to Decision-Making: "Expansion of our production capacity is core to our decision-making." (Q1 2022)

  • New Gigafactories: Deliveries from Gigafactory Texas and Gigafactory Berlin-Brandenburg began in Q1, with both factories experiencing a production ramp-up throughout 2022. Gigafactory Berlin-Brandenburg achieved over 1,000 cars produced in a single week in Q2 and over 3,000 in Q4, also achieving positive gross margin during Q2. Gigafactory Texas produced over 3,000 vehicles in a week towards the end of Q4.

  • In-house Cell Production: Significant efforts are being put into "in-house cell production, raw material procurement and supplier diversification." (Q1 2022) The Austin factory delivered its first vehicles with 4680 in-house made cells and structural battery packs in April 2022, and by Q4, enough 4680 cells were produced in-house to make over 1,000 battery packs in a single week.

  • Overall Growth Target: Tesla aims for "50% average annual growth in vehicle deliveries" over a multi-year horizon, expecting to exceed this in 2023 with "around 1.8M cars for the year." (Q2 2022, Q4 2022)

  1. Supply Chain and Cost Management:

  • Persistent Challenges: "Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. In addition to chip shortages, recent COVID-19 outbreaks have been weighing on our supply chain and factory operations." (Q1 2022)

  • Inflationary Impact: "Prices of some raw materials have increased multiple-fold in recent months. The inflationary impact on our cost structure has contributed to adjustments in our product pricing..." (Q1 2022)

  • Cost Innovation: Despite pricing adjustments, there is a "continued focus on reducing our manufacturing costs where possible." (Q1 2022) The company highlights "relentless cost control and cost innovation" as a key differentiator. (Q4 2022)

  • Structural Simplification: The Austin-made Model Y body structure uses 2 pieces of metal and >1,600 fewer welds compared to the 171 pieces of metal in the Model 3, demonstrating "Simplification of Vehicle Structure and Manufacturing." (Q1 2022)

  1. Advancement in Autonomy and Software:

  • FSD Beta Expansion: FSD Beta development continued with seven software updates in 2022 (Q1). By the end of Q2-2022, "over 100,000 Tesla drivers in North America had access to FSD Beta," expanding to "nearly all customers in the US and Canada who bought FSD (approximately 400,000)" by Q4. (Q2 2022, Q4 2022)

  • Software-Related Profits: Tesla expects "hardware-related profits to be accompanied with an acceleration of software-related profits." (Q1 2022, Q2 2022, Q4 2022)

  • Safety Improvement: Tesla vehicles using Autopilot technology demonstrated significantly fewer miles per accident compared to those not using Autopilot and the US average. (Q4 2022)

  1. Growth in Energy Business:

  • Strong Demand: "Customer interest in our storage products remains strong and well above our production rate." (Q2 2022) and "Demand for our storage products remains in excess of our ability to supply." (Q4 2022)

  • Deployment Growth: Energy storage deployments increased by "90% YoY in Q1 to 846 MWh," (Q1 2022) then decreased in Q2 "mainly due to semiconductor challenges," (Q2 2022) but recovered to a "152% YoY in Q4 to 2.5 GWh, for a total deployment of 6.5 GWh in 2022." (Q4 2022)

  • Dedicated Megapack Factories: Ramping production at dedicated Megapack factories (one mentioned in Q1, Lathrop, California specifically mentioned in Q4) to meet growing demand. (Q1 2022, Q4 2022)

  1. Financial Strength and Long-Term Vision:

  • Sufficient Liquidity: "We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses." (Q1 2022, Q2 2022, Q4 2022)

  • Affordability and Margin: Tesla's "ASPs halved between 2017 and 2022," while "operating margin consistently improved from approximately negative 14% to positive 17% in the same period." (Q4 2022) This was achieved through "introduction of lower cost models, buildout of localized, more-efficient factories, vehicle cost reduction and operating leverage." (Q4 2022)

  • Industry-Leading Margins: Tesla expects its "operating margin will remain the highest among volume OEMs." (Q4 2022)

III. Financial Performance Highlights (2022 Quarterly & Annual)

A. Q1 2022 Summary:

  • GAAP Net Income: $3.3B

  • Non-GAAP Net Income (ex-SBC): $3.7B

  • GAAP Automotive Gross Margin: 32.9%

  • Total Revenues: $18.756B (81% YoY increase)

  • Total Deliveries: 310,048 (68% YoY increase)

  • Free Cash Flow: $2.2B (660% YoY increase)

  • Cash and Cash Equivalents: Increased sequentially by $0.3B to $18.0B. Total debt (excluding vehicle and energy product financing) fell to less than $0.1B.

B. Q2 2022 Summary:

  • GAAP Net Income: $2.3B

  • Non-GAAP Net Income (ex-SBC): $2.6B

  • GAAP Automotive Gross Margin: 27.9% (a decrease from Q1, indicating increased costs or pricing adjustments)

  • Total Revenues: $16.934B (42% YoY increase, but a sequential decrease from Q1, possibly due to Shanghai factory shutdown).

  • Total Deliveries: 254,695 (27% YoY increase, but a sequential decrease from Q1 production challenges).

  • Free Cash Flow: $621M (0% YoY change, significant sequential drop from Q1).

  • Cash and Cash Equivalents: Increased to $18.324B.

C. Q4 2022 & Full Year 2022 Summary:

  • Q4 2022 GAAP Net Income: $3.687B (59% YoY increase)

  • Q4 2022 Non-GAAP Net Income (ex-SBC): $4.106B (43% YoY increase)

  • Q4 2022 GAAP Automotive Gross Margin: 25.9% (continued downward trend from Q1 peak)

  • Full Year 2022 GAAP Net Income: $12.556B (128% YoY increase from 2021)

  • Full Year 2022 Total Revenues: $81.462B (51% YoY increase from 2021)

  • Full Year 2022 Total Deliveries: 1.31 million (40% YoY increase, record high)

  • Full Year 2022 Free Cash Flow: $7.6B (from $5.015B in 2021, a 51% increase)

  • Cash, Cash Equivalents and Investments (End of Q4): $22.185B (25% YoY increase from Q4 2021).

IV. Operational Highlights

  • Production and Deliveries (Q4 2022 compared to Q4 2021):Model S/X Production: 20,613 units (57% YoY increase)

  • Model 3/Y Production: 419,088 units (43% YoY increase)

  • Total Production: 439,701 units (44% YoY increase)

  • Model S/X Deliveries: 17,147 units (46% YoY increase)

  • Model 3/Y Deliveries: 388,131 units (31% YoY increase)

  • Total Deliveries: 405,278 units (31% YoY increase)

  • Factory Performance:Fremont: Achieved a "record number of vehicles in Q2," with opportunities for further improvement. (Q2 2022)

  • Shanghai: Experienced full and partial shutdown in Q2 but ended the quarter with "record monthly production level." (Q2 2022) Remains the "main export hub" for most markets outside North America. (Q4 2022)

  • Product Development:Cybertruck: "In development" (Q1, Q2) and "Tooling" (Q4) for Austin production "subsequent to Model Y ramp." (Q1 2022) Remains "on track to begin production later this year at Gigafactory Texas." (Q4 2022)

  • Tesla Semi: "In development" (Q1, Q2) and "Pilot production commenced in Q4 with first deliveries occurring in December 2022." (Q4 2022)

  • Roadster & Robotaxi: Remain "In development." (Q1, Q2, Q4)

  • Next-Gen Vehicle Platform: "Under development, with additional details to be shared at Investor Day (March 1st 2023)." (Q4 2022)

  • Charging Infrastructure:Supercharger stations increased by 35% YoY to 4,678 by Q4 2022.

  • Supercharger connectors increased by 35% YoY to 42,419 by Q4 2022.

  • The Supercharger business is "increasingly serving both Tesla and non-Tesla customers." (Q2 2022)

V. Challenges and Outlook

  • Ongoing Supply Chain Issues: Supply chain, transportation, labor, and manufacturing challenges persisted throughout 2022, limiting full factory capacity. (Q1, Q2) Semiconductor challenges had a greater impact on the Energy business in Q2. (Q2 2022)

  • Inflationary Pressures: Increased raw material prices led to product pricing adjustments. (Q1 2022)

  • Production Ramps: The pace of production ramps in Austin and Berlin "will be influenced by the successful introduction of many new product and manufacturing technologies in new locations and ongoing supply chain related challenges. Factory ramps take time, and Gigafactory Austin and Gigafactory Berlin-Brandenburg will be no different." (Q1 2022, Q2 2022)

  • Market Share: Tesla's market share in light-duty vehicles (TTM) was approximately 1.5% in US/Canada, 1.5% in Europe, and 2.5% in China as of Q4 2022, showing growth from earlier quarters. (Q4 2022)

  • 2023 Volume Outlook: Tesla projects approximately 1.8 million vehicle deliveries for 2023, staying "ahead of the long-term 50% CAGR." (Q4 2022)

  • Financial Resilience: "In any scenario, we are prepared for short-term uncertainty, while being focused on the long-term potential of autonomy, electrification and energy solutions." (Q4 2022)

  • Profitability Outlook: Expectations for operating margin to "remain the highest among volume OEMs" and for software-related profits to accelerate. (Q4 2022)

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