What We Learned from Tesla's Q3 Earnings Call

Tesla held their Q3 2022 earnings call on Wednesday

Tesla

Tesla has grown at an incredible rate, but according to Elon Musk, we haven't seen anything yet. So the company's CEO made the earnings call a can't miss event for investors and enthusiasts. The third quarter earnings call highlighted expected growth, buybacks and resumes. After the call, Musk tweeted: I will not let you down, no matter what It takes. Here is a quick recap of what we learned from the 58-minute call.

First, there are some quick points before we get into more detailed highlights. Musk says quarter-four is shaping up to be "epic" and promises a record-breaking performance. Tesla is not "recession-proof," but is resilient. Musk does not see any reason to slow down production, as demand is still far more than supply. RoboTaxi is progressing. The program would provide autonomous vehicles as cabs, but hinges on the full self-driving program.

Tesla Will Have the Largest Market Cap

In his opening remarks to investors, Musk made an extraordinary prediction. He said that Tesla would have the largest market cap in the world, surpassing second-place Saudi Aramco and first-place Apple. Not only would his company take the lead, "In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined."

The combined market cap of those two companies is more than 4.4 trillion. Tesla is worth just over $690 billion. Musk says it won't be easy, but "It will require a lot of work, some very creative new products, manage expansion and always - luck… We have an incredible product portfolio. I think we've got the most exciting product portfolio of any company on earth, some of which you've heard about, some of which you haven't." He later added that this prediction did not include Optimus coming to market. Tesla recently updated its humanoid robot to be put to work in Tesla factories before being available to the world in 2027.

Buybacks Could Happen in 2023

The topic of buybacks regularly surfaces during these earnings calls. Musk said that it has been discussed, "extensively at the Board level. The Board generally thinks that it makes sense to do a buyback." He added that the company would be looking at doing a buyback of $5 to $10 billion, and even if 2023 is a down year, "it's likely that we'll do some meaningful buyback."

Unfortunately, the buybacks won't happen before the 1% tax on buybacks kicks in on January 1, 2023. Some speculate this is the real reason the buybacks were pushed to next year, to avoid the optics of trying to dodge a new tax.

Tesla is Becoming the Go-To for the Brightest Minds

A.I. Day 2022 was a big hit, not only for showing off Optimus and Full Self-Driving improvements but generating interest in the company. While A.I. Day is viewed by many as a way for the company to show off its latest achievements, it's a recruitment drive.

Tesla includes several staff members to discuss projects, while Musk encourages people with interest to apply. "We've seen a massive influx of world-class artificial intelligence engineers and scientists resumes. So, it generated a tremendous amount of interest from some of the best AI researchers in the world. I can't emphasize the importance of this enough because I think finally it has become clear to the smartest AI technologists in the world that Tesla is among the very best."

50 Percent Annual Growth

Tesla is going to need all the help it can get. The company is still committed to growing by 50 percent yearly in both deliveries and revenue. "We expect to sell every car that we make for as far into the future as we can see. So, the factories are running at full speed, and we're delivering every car we make and keeping operating margins strong," said Musk.

Despite the company's strong growth, he admits Tesla is still tiny in the big picture: "We are still a very small percentage of the total vehicles on the road. Of the 2 billion cars and trucks on the road, we only have about 3.5 million. So, we've got a long way to go to even reach 1% of the global fleet."

That said, there has been a monumental shift to electric vehicles in the past year, prompting Musk to say, "I think the public, at large, realizes that everyone's moving towards electric vehicles and that it's foolish to actually buy a new gasoline car at this point because the residual value of that gasoline car is going to be very low. So, I think we have to be in a very good spot."

That means there are two billion cars that could be retired in the coming years and replaced with electric vehicles. Therefore, the consumer pool will only get bigger and demand for EVs will continue to grow,

During its earnings call Tesla also discussed its upcoming Semi, which they expect to produce up to 50k units in 2024, the next Tesla model is already in the works, and the latest on its FSD Beta.

Tesla Chief Designer Says His Favorite Vehicle Is Yet to Come

The Tesla Roadster 2.0 could be Tesla's next vehicle to hit production

Tesla

Tesla's Chief Designer, Franz von Holzhausen, has designed the company's entire fleet of vehicles, but the Model S, 3, X, Y, Cybertruck and Semi are not his favorites. "My favorite one is the one that is coming.

I can't talk about (it)," von Holzhausen told CNBC. He then quickly pivoted the conversation away from that topic. Nevertheless, several rumored vehicles will be the next to carry the "T" logo. So, which one is the creative mind of Tesla referring to in his evasive answer?

Franz von Holzhausen Interview

Let's start with the suspects. A cheaper, smaller and less expensive electric vehicle has been predicted for years. More recently, there have been ideas about a van. And then there is the second generation of the highly anticipated Roadster. While von Holzhausen didn't talk about the next one, he did give some clues later in the interview. "My all-time favorite car is a '62 250 GTO (Ferrari). I mean, it is quintessential. It's an insane car. I'm also a big fan of this kind of wedge era. The early (Lamborghini) Countachs, the whole kind of flat, low sports car. Those were always the posters on my wall."

The Designer Loves Sports Cars

When a 54-year-old man reminisces about the cars featured in posters plastered on his wall when he was a kid, he is not excited about a van or a compact vehicle — no, he is excited about a sports car. The second-generation Roadster was unveiled in 2017 simultaneously with the Semi. But there hasn't been much mention of the sports car since. The company is just now delivering Semis, and Cybertrucks are expected in 2023, but the Roadster doesn't have an ETA. Or does it? The chief designer says, "… the one that is coming." So, we can only assume that the Roadster is next to hit the production line.

Tesla Roadster 2.0

A Designer Who has Changed the Industry

One of the first employees of Tesla back in 2008, von Holzhausen, recalls the early days and how things have changed. "There is a moment that I thought when I first joined Tesla that it would be great to see multiple Teslas in one drive experience around town. And now, it's hard to go anywhere without seeing a bunch of Teslas. So, it's great to see the impact that Tesla has had in people's lives but also how it's changed the industry. It really pushed this idea that an EV can be better than an internal combustion vehicle."

He also gave some insight into designing vehicles that have and continue to change the auto industry, "Tesla isn't beholden to what has been done in the past. We are always trying to push the boundaries and deliver on a promise of something fun, something enjoyable and something you would love to own and tell your friends about."

It looks like The Roadster could be the next fun, enjoyable vehicle to tell everyone about.

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Tesla's 2023 Model 3 'revamp' is for cost-cutting, not a redesign

Tesla's revamping its Model 3 vehicle

Tesla

Tesla’s gearing up for a small "revamp" of its popular Model 3 vehicle, which is set to go into production in the middle of 2023.

According to Reuters, the revamp is called “Project Highland” and aimed at lowering the production costs and increasing the Model 3’s attractiveness and not because it needs a redesign. The Model 3 was launched back in 2017, and Tesla has already sold well over 1 million of them.

According to our sources, don’t expect a design overhaul of the Model 3, though. Instead, Project Highland will focus on reducing the number of components and complexity of the Model 3’s interior.

The main goal of this Model 3 revamp is to increase manufacturing efficiencies and reduce costs. Tesla would like to get the Long Range and possibly the Performance variants of the Model 3 to qualify for the US tax incentive for 2023. Under this tax credit, manufacturers’ suggested retail price for brand-new sedans must be less than $55,000. For SUVs, trucks and vans, the maximum price is capped at $80,000.

Our previous evaluation of the vehicles that would qualify include the Model 3 RWD, Model Y Long Range (AWD), and Model Y Performance. However, this will likely change once the revamp goes into production.

Do not expect new vehicle features to be added to the Model 3, such as a rear display, air suspension, or ventilated seats. These features would raise the price of the Model 3 and create a significant overlap between the Model 3 and the refreshed Model S.

Yoke Steering Wheel

One new feature that is possible in this Model 3 revamp is the introduction of a yoke steering wheel or more likely, a wheel similar to the Tesla Semi, which has capacitive controls and no stalks. The stalks are replaced with capacitive controls on the steering wheel and touch controls on the vehicle's display. We previously reported on this rumor in August.

Redesign Rumors

A few rumors are floating around online including a redesigned front bumper and removal of door handles in exchange for touchless doors like the Cybertruck and Roadster 2.0, although our source tells us that this is cool, but not accurate.

2023 Model 3 Update

Based on recent rumors
-Bumper facelift (in line with Y/S/X)
-No door handles, wing mirrors or ultra sonics (as Cybertruck) pic.twitter.com/GQ5k64bV4O

— Alwin (@Alwinart) November 29, 2022

The revamped Model 3 is likely to remain without its ultrasonic sensors, as Tesla is beginning its transition to its own Tesla Vision. This technology uses the vehicle’s onboard cameras and vast amounts of data from the neural net to function.

Over the past few years, Tesla has made significant efficiencies in the way it builds and manufactures vehicles. Recently, the Model Y switched to a single-mold front casting. This requires 169 fewer pieces and 1,600 fewer welds. To achieve this, Tesla is using its Giga Presses at its Berlin Gigafactory.