I am sure you have all seen Tesla's earnings by now, and alright, first off, not what we
were hoping for or expecting.
Or at least for most people.
I must say I did a great job predicting the revenue though, I was 0.8% off the actual
figure.
I think this was due to all the research I did with the pricing and factoring in the
exchange rate, it was quite intensive.
So I pretty much guessed the correct ASP.
I even guessed the regulatory credits about right.
MARGINS But I admit my margins were way off, it would
seem that Tesla are experiencing a bit more inflation than I assumed since Q1, but I think
it sounds like there is still a large cost associated with running Texas and Berlin,
and they are bringing down the average margins.
Possibly the exchange rates too, maybe some components are being purchased in US dollars,
although Tesla tend to source everything locally, so I wouldn't have thought that would have
been so major.
Tesla say that the exchange rate cost $250 million, but I believe that might be on the
sales, not the costs.
The other costs increases they say are higher raw material and commodity costs and logistics.
Then they also say that ramping the new factories is costing a lot.
Aside from the factories, I actually have another theory as to why margins are down.
I remember we had a similar experience when they were doing the line upgrades with the
Model S. Well if you recall we just had some major line upgrades in Shanghai for the Y
and 3, I actually included this cost in restructuring in OPEX, but I think it actually might have
been added into cost of goods sold, which I am pretty sure did occur in Fremont with
the Model S. Including the downtime, this would have affected margins, and these were
presumably large line upgrades and there were two of them.
So hopefully that actually is where this margin has gone.
Although Tesla don't mention anything about this.
OTHER Aside from that, all my estimates were actually
spot on, I got energy and services pretty much correct, and same with OPEX.
So I am pretty happy with my estimates.
But like I said at the time, I could only guess as to the margins of the new facilities
too.
They are a wild card for now.
I wouldn't worry too much for now, when they are ramped up, they will actually increase
margins rather than lowering them.
INFO It sounds like they are doing more to improve
production in Fremont, demand is just getting so high in North America, especially relative
to the supply they have, so I am sure they are doing everything they can, and we did
hear they intended on expanding.
They say that the total number of 4680 cells produced increased 3 times in Q3.
And the semi truck is scheduled to start delivery in December.
This was said in the same paragraph, so possibly they may mean the Semi truck will use 4680
cells.
What I thought was interesting though, was the fact it says "We plan to introduce front
castings and structural battery packs at Gigafactory Berlin-Bandenburg before the end of this year."
In other words in the next couple of months Tesla will be manufacturing 4680 vehicles
in Giga Berlin, this sounds very promising.
Any potential on 4680 production is what matters the most.
Tesla still say they expect to increase manufacturing at 50% annual growth in vehicle deliveries,
which we should expect really, as they are likely to be at an annual run rate of 2 million
by the end of this year.
And 50% increase next year is only about 2.1 million.
So hopefully higher than that if 4680s ramp.
But they say this is dependent on the supply chain still.
They say we should expect innovations to keep reducing production cost, and accompanied
software to increase profits, presumably like FSD, but possibly also software locked 4680
Model Ys.
And Tesla are making progress on the industrialization of the Cybertruck.
SUMMARY All in all, I guess I was a little disappointed
about margins, but it's early yet, there are still too many moving parts, and in retrospect
perhaps I was overly hopeful.
But I guess we will discover more on the earnings call.