Todd Burch
14-Year Member
All the data we have points to record Q1 deliveries, does it not? Does anyone see anything that contradicts this?
Earlier in the quarter Troy was talking about weak demand in Europe AND China, yet neither seems to be playing out.
Europe is clearly pointing to record *deliveries*. This is based on registration data, which means delivered vehicles. Berlin is already at 5k/week. Those cars are going somewhere other than the bottom of the ocean…
We know for a fact from the CPCA numbers that China registrations are a record as well (with almost a week to go in the quarter when the numbers came out), and this is for deliveries as well.
And I suspect that because of the IRA Tesla would be attempting to maximize US deliveries too. We’ve seen no significant 3/Y incentives, and relatively small incentives for X and S which are a small percentage of revenue and sales anyway. I tend to think some of that is to clear out old HW3 inventory as HW4 deliveries start taking the lead.
If I had to guess I’d anticipate slight weakness for S/X sales but strong 3/Y sales in the US so the slight S/X weakness won’t be material. Semi probably still at a handful a week as they work out some bugs and await the production line in Nevada.
All-in-all, good results for what is a seasonally weak quarter in the face of high and rising interest rates, where more expensive cars like S/X traditionally wouldn’t be doing as well.
Compare to Lucid, whose factory flyovers (with many cars parked and not delivering) and the announcement of an 18% employee layoff seem to indicate almost a delivery pause in Q1. With interest rates where they are, many less people can afford or are willing to buy an expensive vehicle in the 6-figure range.
I also think Q1 will be the start of a breakout for Tesla Energy. With Lathrop ramping Megapack this quarter, we’ll see GM’s continue to improve there. Q1 will show a steep uptick, and Q2 will start having real meaningful revenue and profit contribution as Lathrop is closer to being fully-utilized.
Factoring in IRA benefits to Tesla, I think GMs will surprise to the upside.
While ASPs will be significantly lower than 2022 in Q1, offsetting that you’ve got IRA benefits, lower COGS, improved efficiencies as Berlin/Austin continue to ramp, general ongoing cost cutting, lower logistics costs (wave flattening and less shipping from Shanghai to Europe), cheaper shipping rates, and TE ramp. FSD take rate will start increasing from here on out as capabilities improve, and that is high margin.
There’s lots of talk among analysts and critics of the reduced Tesla prices but many people seem to have forgotten about the other things. Remember, the IRA gives direct benefits to Tesla for qualifying cars and storage packs. It’s not just a tax credit for the buyer.
Also consider that I think we are approaching peak interest rates. I think the Fed may hold rates where they’re at, or worst-case increase another quarter point. Then we’ll start seeing rates gradually come back down, which will contribute positively to both demand and ASPs. This will in turn result in improved stock performance (TSLA and other stocks), which will spur ASPs and sales as well.
So my gut feel is that we are through the worst of the economic downturn already, and things start gradually looking up thru the rest of the year and into 2024.
As long as the Fed doesn’t keep jacking up rates. (Puts on puppy-dog face and turns toward Darth Powell).
Earlier in the quarter Troy was talking about weak demand in Europe AND China, yet neither seems to be playing out.
Europe is clearly pointing to record *deliveries*. This is based on registration data, which means delivered vehicles. Berlin is already at 5k/week. Those cars are going somewhere other than the bottom of the ocean…
We know for a fact from the CPCA numbers that China registrations are a record as well (with almost a week to go in the quarter when the numbers came out), and this is for deliveries as well.
And I suspect that because of the IRA Tesla would be attempting to maximize US deliveries too. We’ve seen no significant 3/Y incentives, and relatively small incentives for X and S which are a small percentage of revenue and sales anyway. I tend to think some of that is to clear out old HW3 inventory as HW4 deliveries start taking the lead.
If I had to guess I’d anticipate slight weakness for S/X sales but strong 3/Y sales in the US so the slight S/X weakness won’t be material. Semi probably still at a handful a week as they work out some bugs and await the production line in Nevada.
All-in-all, good results for what is a seasonally weak quarter in the face of high and rising interest rates, where more expensive cars like S/X traditionally wouldn’t be doing as well.
Compare to Lucid, whose factory flyovers (with many cars parked and not delivering) and the announcement of an 18% employee layoff seem to indicate almost a delivery pause in Q1. With interest rates where they are, many less people can afford or are willing to buy an expensive vehicle in the 6-figure range.
I also think Q1 will be the start of a breakout for Tesla Energy. With Lathrop ramping Megapack this quarter, we’ll see GM’s continue to improve there. Q1 will show a steep uptick, and Q2 will start having real meaningful revenue and profit contribution as Lathrop is closer to being fully-utilized.
Factoring in IRA benefits to Tesla, I think GMs will surprise to the upside.
While ASPs will be significantly lower than 2022 in Q1, offsetting that you’ve got IRA benefits, lower COGS, improved efficiencies as Berlin/Austin continue to ramp, general ongoing cost cutting, lower logistics costs (wave flattening and less shipping from Shanghai to Europe), cheaper shipping rates, and TE ramp. FSD take rate will start increasing from here on out as capabilities improve, and that is high margin.
There’s lots of talk among analysts and critics of the reduced Tesla prices but many people seem to have forgotten about the other things. Remember, the IRA gives direct benefits to Tesla for qualifying cars and storage packs. It’s not just a tax credit for the buyer.
Also consider that I think we are approaching peak interest rates. I think the Fed may hold rates where they’re at, or worst-case increase another quarter point. Then we’ll start seeing rates gradually come back down, which will contribute positively to both demand and ASPs. This will in turn result in improved stock performance (TSLA and other stocks), which will spur ASPs and sales as well.
So my gut feel is that we are through the worst of the economic downturn already, and things start gradually looking up thru the rest of the year and into 2024.
As long as the Fed doesn’t keep jacking up rates. (Puts on puppy-dog face and turns toward Darth Powell).
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