James with $32 non-GAAP EPS for 2023. Oh My!
imo, James Stephenson is one of the best (maybe the best) Tesla forecasters on social media.
He shared his Q2 numbers and in doing so, gave us a peak at his 2023 numbers. You have to add up the 2023 qtrs . . .and when you do, it's $32.
James Stephenson always aims to be conservative with his published numbers, too, so this should be viewed as a fairly pessimistic estimate.
Looking at his whole Twitter thread, he's projecting for 2023:
- $36 billion of GAAP net income
- This would be an all-time world record for highest car company profits by a large margin
- The best 12-month period Toyota (including Lexus and rest of company) has ever had was $29B earnings (source), and that was an anomalous rebound in 2021 from bad results in 2020. Normally Toyota was making about $20B per year pre-COVID.
- 2.2 million vehicles sold
- 31-32% gross margin excluding FSD, leasing, etc.
- Up only slightly from 30.6% actual in Q1 '22
- Average cost per car (excl. leasing) of $43k by Q4 '23
- Up 13% from $38k actual in Q1 '22
- $20k average gross profit per vehicle by Q4 '23
- Up $3.7k from $16.3k actual in Q1 '22
Especially, those delivery and gross margin estimates are
very conservative.
Mr. Stephenson forecasts Shanghai production of just 982k cars in 2023. As of now, Shanghai is at 864k annualized production rate based on 72k produced in June. Thus, James is projecting merely 14% growth for Shanghai between now and then, which is ludicrously low considering that they're making major upgrades soon and they have a whole Phase Three area coming online later this year that should increase production capacity around 50% once ramped up. Before the government lockdowns, Giga Shanghai historically was growing output much faster than what James is predicting, as shown below. James is predicting average monthly output in 2023 of 81k, whereas linear extrapolation of the trend resuming now after a first-half of 2022 disruption would lead to a 2023 estimate more like 120k per month or over 1.4M for the year, a 67% growth in one year. That's more like Tesla's actual ramp speed, and probably still on the low side by a bit.
If Shanghai were to sell half a million cars more than James' model shows, using his estimate of $20k profit per car means adding an extra $10B to income, for a new GAAP total of $46B.
The Berlin and Austin projections are 340k cars and 395k respectively. That's less conservative than the Shanghai number, but still very cautious. At the Giga Berlin Grunheide County Fair event in October 2021, Elon stated at 21:25 in the
video:
“We are aiming to have the [Berlin 4680] cell factory to reach volume production by the end of next year [2022] as well as to reach volume production in general for this whole factory by the end of next year. So, volume production would be in excess of 5,000 cars per week and hopefully closer to 10,000.”
So basically at the time, Elon said that Giga Berlin is targeting a 250k to 500k annualized production rate by the end of 2022. I don't recall guidance having been changed since then. If this is so, then they will produce far more than 340k in 2023, and likewise Austin would probably beat James' published estimates. If they produce 1 million combined, this adds 265k cars to the total. If we again assume $20k per car, this adds another $5.3B to net income. However, these factories should have the highest margins due to using 4680s and front castings, only making Model Y, etc, so really $23k is more reasonable if we still are sticking with James' overall gross margin estimates. So then it's an incremental $6B in earnings. Add that to the Shanghai adjustment from before and now we're at $52B total.
We need to account for tax on the incremental earnings added in this analysis, which would pull approximately $2B off the total. $50B total net income.
Higher margins would multiply this result even higher. James' model is estimating just $3.7k increase in profit per car even with all the price hikes; more Model Y, S & X in the mix; front casting; less shipping and tariff expenses; newer, more efficient factory designs; structural pack and 4680s; dilution of Fremont contributions vs Shanghai/Berlin/Austin; and less struggling with chip problems. If we model with the new total delivery estimate just shy of 3M cars and add an extra $3k to gross profit per car, that's another $9B for profit, or maybe $8B after tax. Now the adjusted GAAP income estimate is $58 billion, which would be $49 GAAP earnings per share fully diluted 1.18 billion outstanding shares projected by the end of 2023.
$49 GAAP EPS. Roughly $70 annualized for Q4 '23. All of this excluding FSD, leasing, etc. Still with upside on deliveries and margins if the ramps go well.