What We Learned from Tesla's Q3 Earnings Call

Tesla held their Q3 2022 earnings call on Wednesday

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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.

Exclusive: Tesla’s AI Assistant Now Uses Vehicle Data for Personalized Responses

Not a Tesla App

As part of Tesla’s App Update 4.42.5, which is now available on both the Android and iOS App Stores, Tesla has rolled out an improved AI Assistant.

If you’re not familiar with Tesla Assist, it’s the company’s AI-powered assistant, which can be found in the Service section of the Tesla app. The assistant was first introduced with app update 4.35.5, and it has slowly improved to help answer the most common Tesla-related questions.

At first, Tesla Assist could answer general support questions like “What is Sentry Mode?” or “Why is my range lower than expected?” It acted as a helpful starting point for answering questions, but the responses weren’t personalized for you or your vehicle. However, with this latest update, that is changing.

Personalized Support

The latest version of Tesla Assist introduces personalized responses. You can specify which vehicle or product your question relates to and ask specific questions about your vehicle. For now, the responses are limited to a few categories, like tire pressure, however, we expect the assistant to have access to more vehicle information in the future.

For now, you can ask questions such as, “What alerts were recently triggered on my vehicle?” or “Is my tire pressure low?”. We’ve also been successful in asking whether a particular accessory, such as a key fob, would work with our vehicle.

Tesla provides these answers based on information in their owner’s manuals, tutorials, and your vehicle’s details and data.

Just like before, Tesla continues to provide links to related articles, such as the Owner’s Manual or the Service Manual, depending on the context.

Not a Tesla App

Future Releases

While the assistant can’t access every detail just yet — how many miles are on my vehicle — it’s already capable of pulling a lot of service-related information. It appears Tesla may be looking to expand this to other areas, with some responses stating, “Based on your vehicle’s data…”

It’s not clear what’s powering this assistant, but it could be some version of Grok, which will soon be available inside of Tesla vehicles.

The AI-based assistant can be found in the Service section of the Tesla app or by going into the main menu and tapping the question mark in the upper-right corner. Let us know if you’ve seen any other interesting responses from Tesla Assist.

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Tesla to Build Third Megafactory in Texas With $200M Investment

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Tesla has revealed the location of its third Megafactory, following Mega Lathrop and Mega Shanghai. The new facility will be in Brookshire, Texas, covering 1.6 million square feet—twice the combined size of Mega Lathrop and Mega Shanghai.

Tesla has had a lease deal at the Empire West industrial park since at least late 2021, where a third-party company has been managing the shipment of vehicle parts from Giga Texas and Fremont factories service centers across North America.

Mega… Factory?

The name says it all. Tesla’s Gigafactories focus on vehicle production—like Giga Texas, Giga Berlin, and Giga Shanghai—while Megafactories are dedicated to Tesla’s energy products.

Tesla Energy is expanding rapidly, with executives suggesting it could soon become one of the company’s largest revenue streams as demand continues to outpace supply.

Mega Brookshire will manufacture Megapacks and Powerwalls, Tesla’s primary stationary energy products. Both use LFP batteries, meaning their production won’t impact Tesla’s vehicle output, as most of the company’s cars rely on NMC batteries.

Looking at the Numbers

Tesla plans to invest approximately $194 million in upgrades and equipment across the two buildings, with the facility projected to generate between $8 billion and $10 billion in annual revenue.

Of that investment, $44 million will go toward facility improvements, such as parking, electrical upgrades, accessibility, and structural updates. The remaining $150 million will be allocated to Tesla-sourced manufacturing equipment for product production.

Tesla will also be employing approximately 1,500 people in the local community, which will be a considerable economic boost for the local residents.

Mega Brookshire Phase 2

The Megafactory plans also include funding for a distribution facility, with Tesla set to invest $31 million in its purchase and an additional $2 million for equipment and facility upgrades. Given its proximity to Giga Texas, it’s likely that Mega Brookshire’s distribution terminal will support the Tesla Semi.

This marks Tesla’s first factory announcement since Mega Shanghai. While there were initial plans for Giga Mexico, where Tesla initially planned to build their next-gen vehicle, those plans have seemingly been shelved as Giga Texas and Fremont continue to expand.

Although an official timeline for Mega Brookshire’s launch hasn’t been shared, Mega Shanghai is set to begin production soon after breaking ground in May 2024. Based on that timeline, Mega Brookshire could be operational by mid-to-late 2026.

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