Minor Quibble on Deliveries
291,760 units sold appears to be off by 730 units. Per the Q4 report:
Total Deliveries 308,650
of which leased 16,160
All vehicles not leased were sold, so that means 292,490 were sold.
Reg Credits
The $15.025 B revenue excludes $315 M of regulatory credits, whereas I have kept that part in because I believe it'll be sustained around that level for a at least a couple more years. So that explains some of the difference. Overall auto revenue excluding leasing was $15.339 B in Q4, or $52.4 k per vehicle. If this was proportional to the overall sales/lease ratio, then $298M of that can be attributable to sold vehicles, which adds about $1.0k to average revenue per vehicle.
$15.339 B / 292,490 veh sold = $52.44 k rev/veh overall
Price Increase Lag
Because of the backlog being around 4 months, the prices for Q4 (Oct-Dec) were for orders from around Jun-Aug. In the time since then, prices across the whole vehicle lineup have increased by approximately 17% with the majority of these increases starting in October (ref Fig 1,
US Price Changes). Therefore, with a 4-month delay, the big increases we've had thus far will start hitting the financials in the first half of 2022. All else being equal, this alone would account for approximately (1.17) * ($51.43k rev/veh price w/o reg cred) =
$60.17k ASP.
View attachment 793472
Figure 1, US Price Changes
Source: Rob Maurer, Tesla Daily
Most vehicles sold in 2022 will be with prices set between Mar-Aug because of that 4-month delay and because deliveries growth is hyperlinear, so the majority of sales occur in the last 1/3rd of the year.
Yet prices
just keep rising, so today's prices are actually probably
less than the eventual 2022 average will be. If trends continue as they have been, but they taper off somewhat as the volume growth provides some relief, then average price across 2022 for each model will be about $2-4k higher than today's price. Let's conservatively call it $2k, so $60.17k bumps to $62.2k and if we add $1k reg credits back in, we're at revenue/vehicle of $63.2k for 2022.
This price increase projection could be too conservative because all of the following factors maybe increase the rate of demand growth vs. what we've seen since 2021.
- Other automakers appear to be collapsing, reducing the amount of substitute goods available
- Starship probably hits orbital flight this year
- Russia situation may worsen oil price fears
- Hertz rental availability is much higher than in 2021 and early 2022, resulting in more test drives
- Elon is becoming increasingly famous
- Boring Co Loops are expanding and usage of existing Vegas Loop is increasing, resulting in more test drives
- Master Plan Part Trois or any new product reveals may increase excitement and attention towards Tesla
Mix
Mix, too, is improving majorly. First, for the historical trend look at Fig 2,
Deliveries by Model. We can see that for six consecutive quarters Model 3 growth was minimal while Model Y production has been predictably exploding upward, going from being a quarter of Tesla's volume in Q4 2020 to half of volume in Q4 2021. Model 3 got a 2.5-year head start, but Model Y is overtaking it now. And this was just the trend from Fremont and Shanghai expansions in the last couple years; Berlin and Austin will accelerate the trend by producing exclusively Model Ys in 2022. So, in all I think we can expect Model Y to be 65-80% of volume in 2022, with 80% being the scenario where the Phase Three expansion at Shanghai is just for making Ys and Berlin & Austin surprise us with their ramp velocity.
Figure 2, Deliveries by Model
Source: James Stephenson, @icannot_enough
I doubt Tesla will prioritize Model 3 RWD production, so Hertz might be waiting for a while for complete fulfillment of their 100k order, unless they were pushed to the front of the queue ahead of other customers, in which case millions more renters in 2022 will be getting their first-time Tesla experience and many will then place orders, driving prices up further.
Refreshed S&X production is still ramping disproportionately faster than Model 3. I'd expect overall S&X share of volume to increase from 3.8% in Q4 2021 to around 4.5% averaged across 2022, assuming in the next couple quarters S&X production approaches the official nominal production capacity of 25k per quarter.
So, overall mix will go something like this:
View attachment 793471
Figure 3, Delivery Volume Share by Model
Source: Fig 2 and my own estimates
Considering that Model Y is priced about $7k higher than Model 3 and S&X about $65k higher, some tedious number-crunching says that this shift in mix would result in a $3.9k bonus for ASP, most of which coming from the Model Y effect. Adding this to the $63.2k previously calculated baseline revenue per vehicle from price increases then bumps the total rev/veh estimate to
$67.1k for 2022.
Miscellaneous Factors not Considered
Insurance expansion may add materially to revenue per vehicle. I don't know how to model that and it's probably $1k/car at most.
The Europe/Middle East/North Africa market is so desperate for Model Ys that the average price (BEFORE extra options) in essentially every country except Germany is like $75k USD equivalent. So any contribution from Berlin is likely to drag Model Y ASP higher even more by maybe a couple hundred bucks, but I won't count that to be conservative since it's very hard to predict the ramp in 2022.
The backlog enables Tesla to prioritize orders with higher vehicle trims or with extra upsell options for FSD/Paint/Extra Seats/Interior Color/Wheels/Tow Hitch/Premium Connectivity. And with the backlog they have, why not? A car with red paint doesn't cost $2k extra to make, nor are sport wheels $1.5k extra cost. So, I expect Tesla to prioritize these to maximize gross profit per unit. This could easily add yet another $3k to average price which I will again exclude to be conservative because I can't have high certainty Tesla will exploit this opportunity and indeed the current configurator on Tesla.com does not indicate that delivery comes sooner with extras selected.
Summary
Overall this math leads me to an estimate of
$67k for rev/veh in 2022 as a whole. There is also clearly room for this to be in the low $70s if any of the following optimistic scenarios occur:
- Berlin or Austin ramp substantially faster than Shanghai did a couple years ago
- The price increase trend does NOT taper off, as I projected to get a conservative $2k impact
- FSD take rate and price suddenly increase, as the long-heralded V11 updated and subsequent Dojo-trained versions majorly increase the desirability of the software for customers
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