Tesla Q4 2022 Investment Note
The EV giant reports Q4 revenue and profit beat, focus on cost control and innovation
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Key Takeaways:
Attitude: "It was a fantastic year for Tesla, and it was our best year ever on every level." said Elon Musk. In 2022, Tesla delivered over 1.3 million cars and achieved a 17% operating margin, the highest among any volume carmaker. The company generated $12.5 billion in net income and $7.5 billion in free cash flow in 2022. The total 2022 revenue grew 51% YoY to $81.5B and net income (GAAP) more than doubled YoY to $12.6B. Q4 2022 was a record-breaking quarter for Tesla and the company achieved the highest-ever quarterly revenue, operating income and net income in history.
Guidance: For 2023, Telsa expects to remain the long-term 50% CAGR with around 1.8M cars approximately. Furthermore, the company plans to manage the business with a strong balance sheet during an uncertain 2023. While Tesla will continue to execute innovations to reduce the cost of manufacturing and operations. In the future, Tesla expects the hardware-related profits to be accompanied by an acceleration of software-related profits. Tesla continues to believe its operating margin will remain the highest among volume OEMs.
Product: Cybertruck will have Hardware 4, but it will not significantly contribute to the bottom line until 2024. Tesla has now released FSD Beta to nearly all customers in the US and Canada who bought FSD (approximately 400,000). Every customer in the areas can now access FSD Beta functionality upon purchase and start experiencing the evolution of Alpowered autonomy. Moreover, Tesla's customers can now videoconference directly on their touchscreen via Zoom, streaming video from the car's interior camera. Tesla integrated Apple Music into the media player and added a live view of the internal camera to the mobile app when Sentry Mode or Dog Mode is active.
ASPs & Cost: Tesla's average selling prices(ASPs) have generally been on a downward trend in recent years. Improving affordability is necessary to become a multi-million vehicle producer. While ASPs halved between 2017 and 2022, and the operating margin consistently improved from about negative 14% to positive 17%. The margin expansion was achieved through the buildout of localized, lower-cost models, more-efficient factories, vehicle cost reduction and operating leverage. Besides, Tesla is accelerating the cost reduction roadmap and driving towards higher production rates, while staying focused on executing against the next phase's roadmap.
Earnings Q&A
Q: How do you see the current competitive landscape changing over the next few years? Who do you see as your chief competitors five years from now?
Lars Moravy: Even though the vehicle market is shrinking, we're growing and EVs have doubled almost year over year. So whoever keeps up with the trend of EVs is going to be our competitor. The Chinese are scary that we always say that. But like many people always look at the EV market share, we always look at how much of the total vehicle space we have, and we're just going to keep growing in that space. There's a 95% market for us to get.
Elon Musk: We have a lot of respect for the car companies in China. They are the most competitive in the world and the Chinese market is the most competitive. They work the hardest and they work the smartest. That's a lot of respect for the China car companies that we're competing against. If I would have guessed, there are probably some company out of China as the most likely to be second to Tesla. Our Tesla China team is winning in China. We actually are able to attract the best talent in China.
Q: The Inflation Reduction Act has created huge tax incentives for commercial vehicles. Are there plans to accelerate commercial vehicle form factors outside the Tesla Semi to help accelerate EV adoption?
Elon Musk: I was basically saying that, yes. We always check what the limiting factor is for new vehicles. Because we've been constrained on total cell lithium-ion production output. People asked why not bring this or that other car to market. It doesn't help if you're shuffling around the batteries from one car to another.
In fact, it hurts because you add complexity but you don't add incremental volume. So it's sort of pointless, like counterproductive to add model complexity without solving the availability of lithium-ion batteries. So we want a new product introduction to match where the cells are available or that new product to use those cells without cannibalizing the cells of the other cars. That's the limiting factor if we need new models, not anything else.
Q: Is Cybertruck production still on track for midyear?
Elon Musk: We do expect production to start, maybe sometime this summer. But I always like try to downplay the start of production because the start of production is always very slow. It increases exponentially, but it's always very slow at first. So I would put less thought into the start of production. It's kind of when does volume production actually happen, and that's next year.
Lars Moravy: To emphasize that, we've started installation of all the production equipment here in Giga Texas, castings, general assembly, and body shops. We built all our beta vehicles, some more coming still in the next month, but the ramp will really come in 2024.
Q: With near-infinite global demand for energy storage, where should Tesla build the following Megapack factories? How many are needed on each continent?
Elon Musk: It's an excellent question. I think we'll provide an update about that in the future, but it is something we're thinking about very carefully. But really kind of like what is the fastest path to 1,000 gigawatt-hours a year of production. And you'll see announcements coming out later this year.
Q: How much is impacting the use rate of FSD today? Do you already see people getting excited by FSD because they see it around them in 400K cars and see the service's value?
Elon Musk: The trend is very strong toward the use of FSD. As you alluded to each incremental improvement, the enthusiasm obviously increases. I think something that still a lot of people out there don't quite appreciate is that Tesla is as much as a software company as a hardware company, but Tesla is really one of the world's leading AI companies. This is a big deal with AI on the software side and on the hardware side.
The Hardware 3 inference computer is still the most efficient in the world despite being, at this point, five years old from the design point. With Hardware 4 coming and then Hardware 5 beyond that where there are significant leaps. Besides, the Dojo computer, we expect to be using that operationally at Tesla later this year. And we're seeing a lot of world-class AI talent join the company.
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Disclaimer
This article is a script from the TSLA Q4 FY22 earnings conference call. In order to facilitate reading, we have made appropriate cuts and revisions. Comments above are made available for informational purposes only. Before investing, please consult a licensed professional. Moomoo Inc. ("moomoo") provides mobile and online technology solutions for securities trading. Moomoo is not an investment adviser or a broker-dealer and it provides neither investment or financial advice nor securities trading services. All contents such as comments and links posted or shared by users of the community are opinions of the respective authors only and do not reflect the opinions, views, or positions of moomoo, its affiliates, or any employees of moomoo or its affiliates. Please consult a qualified investment or tax advisor for your personal financial planning and tax situations. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC). In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services License (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore. In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.
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Mars Mooo : With so much good news, $Tesla (TSLA.US)$ stock price has a good chance to rally this Q1 2023, and I can feel it now. Do you feel it too?
Jason Barnes : I'm no psychic but I figure that for one reason or another that the bottom is going to fall out of Tesla within the next 10 years
FiveHundredCents :
Ray2021 : From technical point of view, hopefully $Tesla (TSLA.US)$ can fill up the gap today so that it can continue to move up smoothly.
Im K : Reading all the current good news etc earning, and future plans, I'm confident that tesla will go far up in the future!
moomooZeski : Never Ever Never bet against Mr. Musk.... Tesla TO THE MOON!! (and literally might I add)As a SpaceX rocket prepares for lift-off to colonize Mars- Insert a Tesla vehicle modified for lunar surfaces and eed dirt.
双瞳剪水的斯托达德 : Basically speaking, the price is really critical. I think there are a lot of people who want to buy a Tesla, but they can't afford it. Therefore, these price changes have really had a big impact on ordinary consumers. Sometimes, for those with a lot of money, they seem to forget the importance of low prices, and at Tesla, our goal has always been to make cars affordable for as many people as possible.
I'm so glad we were able to do this, and considering all aspects, I think it's a good thing.
We have also made very good progress in controlling costs. We saw production costs in Berlin and Austin fall as capacity increased, as was to be expected.
Ah keong : As for autopilot, up to now, we have deployed FSD beta versions for urban streets to around 400,000 customers in North America. This is a huge milestone for autonomous driving because FSD beta is the only way consumers can test the latest AI-driven autonomous driving.
Excluding highways, our total FSD mileage is currently around 100 million miles. However, the data we have released shows that the improvement in safety statistics is very obvious. If the security statistics weren't outstanding, we wouldn't be releasing a beta version of FSD.
阿姚朋友 : As for batteries, 4680 batteries reached a production rate of 1,000 vehicles per week at the end of last year. As we announced yesterday at our Nevada Gigafactory, we are increasing the production capacity of 4,680 batteries by another 100 million kilowatt-hours. Our long-term goal is to produce far more than 1 billion kilowatt-hours of batteries in-house and continue to use other battery suppliers.
To be clear, we will continue to use other battery suppliers, but for quite some time, the demand for lithium batteries will be almost limitless. We think we can scale faster by using both vendors and in-house produced batteries. And we have a great plan to make the 4680 battery cost very low and the energy density is high.
In terms of energy storage, we have also seen record growth, and growth continues to accelerate.
It's always worth remembering that the three pillars of a sustainable energy future are clearly electric vehicles and solar/wind energy. Then the third key pillar is fixed energy storage to store energy from the sun and wind, because apparently the sun doesn't shine all the time, and the wind doesn't blow all the time.
矜重的比尔 : Two comments were made on the month-on-month change in the average selling price of bicycles from the fourth quarter to the first quarter.
As a reminder, the drop in average selling prices was not as big as the drop in car configuration prices in the fourth quarter. Given the long backlog of orders in 2022, we are delivering to customers with backlog orders, and their booking prices are relatively low. However, we also used various promotions in the fourth quarter to lower the average selling price.
The second point I want to say is that as a management team, what we are most concerned about is how much our operating profit margin is. As other areas of the business became more important, particularly the energy business, which grew faster than the vehicle business. Moreover, since we pay great attention to operating leverage to improve our management efficiency, we believe that the reasonable indicator we should focus on is operating profit margin.
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