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For 3 consecutive quarters, Tesla has had positive margins for both Energy and Services.
The Services margin of 5.6% grew over Q2. This is good news as used car prices have been coming down.
It likely means that the Service centers and the Insurance business are improving margins.
As a reminder, the Services segment include vehicle service center billings (non-warranty), sales of used vehicles, retail merchandise and vehicle insurance revenue.

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I like the suggestion but ...

.... including paint shop ? which AFAIK is a constraint

where are the planning / building control applications - I thought that the paint shop issue required a lot of chewing over ?

There is no need to replace the current paint shop for something like Highland. The Model Y is cast in Fremont, and uses the same paint shop.
 
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Tesla has never stated it plans for 50% YoY growth. They have stated, since 2020, they plan for 50% CAGR growth (Compounded Annual Growth Rate). That means an average over time, not a singular number per year.

2021 was an 87% growth. 2022 was a 40% growth. They are guiding for 2023 to be a 37% growth. The average of those three years combined is 54% (still over 50%).
It's the media's fault this has to be revisited routinely. I just heard them poke at this as missing 50% on some news click today. Any explanation looks like Finance speak and blows right by many people. It really is as simple as you put $100 into TSLA back in 2015, don't touch it, and presto! voila! perfectamente!
 
Tesla Net Interest Income (Expense) ballooned to $124m in Q4; the benefits of paying down debt and taking excess cash and investing in Gov't & Corp short term bonds.
In Q4 2022:
+ $157m Interest Income
- $ 33m Interest Expense
= $124m Net Interest Inc/Exp

With $157m in interest income in one quarter, I expect to see Tesla earn over $800m in interest income for 2023.

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There is no need to replace the current paint shop for something like Highland. The Model Y is cast in Fremont, and uses the same paint shop.
But is not the existing Fremont paint shop a volume constraint ? So if they are to move to cast so as to increase line throughput, then do not they get throttled by the paint shop ? Or am I misremembering.

(Quite apart from all the feedback over the years that the existing paintshop is a reason why Fremont paint is not as good as the other locations. But that California regulations are such that it is nigh-on impossible to make changes as the existing paintshop is in some way grandfathered. Or have I picked up the wrong end of the stick ? )
 
Is it lowball though? I remember when people were posting very long theses about tesla sand bagging 2021 and expecting a 80%+ increase, gigs Berlin and Austin finishing 6 months earlier than sandbagged timelines and pumping cars to the moon.

But yah, people have such selective memories here and move from one moon 🌙 dream to another.
Yes, 1.8M is definitely a lowball, unless Tesla anticipates an extended multi-month production outage at Fremont or Shanghai. This is simple arithmetic. They almost certainly exceeded this run rate slightly in Q4. Predicting more than 1.8M produced in 2023 is equal to predicting nonzero growth. Not exactly a bold, optimistic projection.

Do you really think Tesla will average 450k cars per quarter in 2023 after making 440k last quarter despite Shanghai shut down for over a week?

Maybe Tesla is planning for some huge force majuere hindering production as well as some huge line retooling as bkp has suggested. That’s the only way 1.8M could be plausible.
I have a THEORY for the sandbagging 1.8m production number for 2023.

Please note, this is just my reading of the tea-leaves, but it fits the limited and available data we have.

In a nutshell - Project Highland for the Model 3.

Why? Tesla is going to take one or more lines in Fremont offline and completely retool them, including for casting. This is a major rework, which will cause months of lost production from each line that goes offline for the rework to a casted production line. Each line will also be slow to spool back up.

In the end, this will result in a lower cost Model 3, with higher customer demand, and higher overall production capacity.


The loss in 3 production will be offset by increased ramps from Austin and Berlin on the Y.
 
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The 50% yoy growth with the red and blue lines shows deliveries and the 1.8 million number mentioned. What if the plan for 2023 is to make Robotaxi devices and not sell them to customers but keep them for the future fleet therefor not delivered? /tinfoil hat
my guess is that they would be still deemed as sold, but to Tesla itself rather than an external purchaser.

Likely there would be a new separate business unit within the accounts that will show this cost, and to which other costs and rental revenues would then be attributed.
 
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Highland.png


Project Highland theory

Maybe it's not the Model 3 structure, but HOW the structure is built. If you look at the above photo from the Earnings Report, it looks very different from the ones we've seen in the past. It looks like everything is being welded in one place, vs. running down a line with welds added at each step/location. Thoughts?
 
But is not the existing Fremont paint shop a volume constraint ? So if they are to move to cast so as to increase line throughput, then do not they get throttled by the paint shop ? Or am I misremembering.
Moving to cast is more about saving money on labor and part costs, and increasing quality, than it is about increasing line throughput.

I don't think we really know what the capacity of the paint shop is, or if we are currently at it. (Especially since Tesla has said that they can increase production volume at Fremont, so that likely isn't a concern.)
 
Wind on Mars. There's plenty of volume but the dust could be a maintenance nightmare.

A little off-topic, but wind power using a device like this might address the maintenance issue, both on Earth and on Mars.
And, it wiggles. :)



Wie-effizient-ist-Windkraft-ohne-Rotoren_-P.M.-Wissen-12-August-2022_6.jpg
 
But is not the existing Fremont paint shop a volume constraint ? So if they are to move to cast so as to increase line throughput, then do not they get throttled by the paint shop ? Or am I misremembering.

(Quite apart from all the feedback over the years that the existing paintshop is a reason why Fremont paint is not as good as the other locations. But that California regulations are such that it is nigh-on impossible to make changes as the existing paintshop is in some way grandfathered. Or have I picked up the wrong end of the stick ? )

No, the existing paint shop is not a volume constraint. It's just not every efficient in terms of amount of paint used per car, and Tesla can't change that without a gigantic rework (@unk45 was deep in this field).
 
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Project Highland theory

Maybe it's not the Model 3 structure, but HOW the structure is built. If you look at the above photo from the Earnings Report, it looks very different from the ones we've seen in the past. It looks like everything is being welded in one place, vs. running down a line with welds added at each step/location. Thoughts?

I thought this photo in the report looked different than usual too. Love seeing it from a manufacturing engineer point of view, but I don't recall seeing so MANY robots of varying tasks together like this before. Not this clustered at least.
 
I have a THEORY for the sandbagging 1.8m production number for 2023.

Please note, this is just my reading of the tea-leaves, but it fits the limited and available data we have.

In a nutshell - Project Highland for the Model 3.

Why? Tesla is going to take one or more lines in Fremont offline and completely retool them, including for casting. This is a major rework, which will cause months of lost production from each line that goes offline for the rework to a casted production line. Each line will also be slow to spool back up.

In the end, this will result in a lower cost Model 3, with higher customer demand, and higher overall production capacity.

The loss in 3 production will be offset by increased ramps from Austin and Berlin on the Y.

Good point. Btw, my theory on the rumors: we have both a lower cost model 2, and a model 3 refresh. They could be the same car. The price difference between the 3 and Y was always small. My guess is that they are going to essentially replace the 3 with a smaller, cheaper vehicle.
 
I don't think SpaceX or Tesla will ever make wind turbines for Earth or Mars but someone will make them for Mars

There's only 1% of the air density vs Earth. Solar insolation is 40% vs. Earth. Solar wins hands down on energy/unit mass. When you're paying $100K/kg for cargo delivered to the surface of Mars, that matters. (btw, NASA pays more like $2.8M/kg)
 
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Good point. Btw, my theory on the rumors: we have both a lower cost model 2, and a model 3 refresh. They could be the same car. The price difference between the 3 and Y was always small. My guess is that they are going to essentially replace the 3 with a smaller, cheaper vehicle.

I doubt they'll discontinue or replace the M3. My feeling is the M2 platform will be a very basic and very cheap small vehicle, probably a coupe or hatchback, smaller in size than the M3 using materials of much lower cost. I believe there is room in the market for both designs, and since the M3 is already established and in production I think they'd want to keep that revenue source going.

We'll likely know the answer by the end of this year!
 
I'm a little surprised at wall street's unsubdued reaction to the earnings call. Personally i heard as many questions as answers. I thought it was a decidedly mixed bag. I'm an optimist so i'll start with the cons, and end on a positive note with the pros:

Cons:
  • Cybertruck volume production in 2024 at the earliest (and I think that's optimistic based on its radical design and where they are in the process).
  • 4680 volume production is still not close.
  • Margins will probably tighten further.
  • Sales in China do not appear to be growing quarter over quarter.
  • Next-gen FSD will not be retrofittable to existing cars (so much for the whole "Teslas will become appreciating assets" line)
  • Primary focus seems to be on maintaining the short-term margin and cash numbers rather than R&D (and to a lesser extent, service). I would prefer Tesla were less worried about Wall Street's reactions quarter to quarter, and made fewer choices based on ruthless cost cutting and more choices based on providing a superior product to the market.
  • Solar? Do we still do that? Looking at P&L it looks like Solar makes up less than 1% of profit and is low margin at best, and its growth is anemic. Hard to glean specifics since it's lumped in with Energy Storage on several charts, which is doing much better.

Pros:
  • Immediate bottom line still extraordinarily healthy in terms of free cash flow, cash on hand, and margins relative to the industry.
  • Model 3 and Model Y are crushing it everywhere around the world.
  • Solid if conservative guidance of 1.8 million units (which Elon immediately and stupidly torpedoed by resetting expectations to 2 million -- there was no benefit in doing so ... sorry i know this is supposed to be the positive portion of the post)
  • Energy storage revenue is growing at a very healthy rate, even faster than Auto, and looks like it will continue to do so.

So like I said, kind of a mixed bag. Obviously I'm happy that Wall Street is happy, but I definitely have my own set of serious risks and questions in my personal valuation of the company that I would love to see addressed somehow. I know we're all banking on future product reveal events to clear some of these up. We shall see.
I agree with you on most points, and again I'm disappointed with the shallow questions from the analysts. They could've clarified so many suspicions.

I think solar is a lost cause at this point. I've heard not such good reviews of Tesla's solar products; I suspect Tesla is going to let this business go.

I share your concern over lack of R&D. Tesla should be spending money on building a car at a price point that appeals to the average consumer. There is probably enough demand for the current lineup for a couple of years, but if Tesla wants to make EVs as widely available as possible, they need to build a cheap car. Otherwise, sales in China will be hitting a slump. But maybe Tesla is already working on this and wants to maximize profit in order to invest more into charging infrastructure, which has been growing rapidly.

I don't think margins will tighten further. I see a further price reduction unlikely, since at these price points their competitors are already losing money on each vehicle sold. The exception is the China market of course, but I don't think Tesla is trying to compete with the cheaper products at this point.

Overall, I think Tesla's focus is growth and risk control. As long as the Supercharger network and the cash balance keep growing, they'll be able to weather any storm and keep on trucking on their path to worldwide EV adoption.
 
A little off-topic, but wind power using a device like this might address the maintenance issue, both on Earth and on Mars.
And, it wiggles. :)



Wie-effizient-ist-Windkraft-ohne-Rotoren_-P.M.-Wissen-12-August-2022_6.jpg

The atmosphere on Mars is way too thin for wind power to be practical.