Tesla's investors are lining up for the earnings call
Tesla's fourth-quarter earnings call occurs on January 25th after the market closes. Of course, every earnings call for this company draws much attention, but this one may set a new bar. Tesla ended 2022 with a 70 percent drop in stock price and investors looking for answers.
The top voted question with just under 4,000 votes, which also represents 2.5 million shares, is: After recent price cuts, analysts released expectations that Tesla automotive gross margin excluding leases and reg credits will drop below 20% and average selling price around $47k across all models. Where do you see average selling price and gross margins after the price cuts?
Another question is about the Solar Roof product, its struggles to gain traction, and what changes can be expected in future versions to increase scale. Investors also want to know about the progress of the 4680 battery ramp, the current roadblocks, and when the company expects to scale to 10,000 vehicles a week.
Additionally, investors are curious about the production status of the Cybertruck, the margins for the stationary energy storage business, and the future forecast for Tesla's energy products. They also want to know about the possible brand damage caused by Elon Musk's political tweets and how it will be mitigated.
However, Tesla has no marketing budget, has not spent a dime on commercials or ads and got rid of the entire communications team years ago. Musk used the same promotion he did with PayPal, paying users to refer. But the referral program was stopped in most regions, and several people are still owed a Roadster.
That was a different time. Legacy automakers are no longer snickering at the tiny Silicon Valley start-up. Instead, they are doing everything they can to catch up to Tesla, including millions of dollars in advertising. Tesla reported a significant boost in sales the day after the 2022 Super Bowl when the competition spent millions on advertising their electric vehicles. But that was when those companies' EV programs were barely off the ground, and Tesla had inventory to move.
Now Tesla must promote things the average consumer doesn't know about, like safety, technology and performance. As Musk himself said, people don't know, so it's his job to tell them.
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Tesla is cutting edge, even bleeding edge technology, but sometimes returning to the classics can help too. There is no doubt Elon Musk and likely several Tesla fans watched David Hasselhoff play Michael Knight in Knight Rider in the 1980s.
At that time, the Knight Industries Two Thousand (KITT) Pontiac Firebird Trans Am was the most advanced vehicle on the planet. The artificially intelligent car could do just about anything, drive by itself, take commands and go really, really fast. Those things all sound familiar. Lots of KITT's features are in Teslas, but there was one item that needed some work — Sentry Mode.
Tesla's Sentry Mode Improvements in 2022
Tesla continually tweaked and added more features to Sentry Mode in 2022. With the 2022 holiday update Tesla added the ability to view the vehicle's cabin camera directly from the app when Sentry Mode or Dog Mode are engaged.
In the prior update, Tesla added the ability to turn off camera-based detection, resulting in fewer Sentry Mode alerts in crowded areas. In some regions, Tesla also added the capability to adjust the length of each Sentry Mode clip.
In addition to these enhancements, Tesla now lets you use Sentry Mode and Dog Mode at the same time, as well as being able to disable Sentry Mode sounds.
Sentry Mode to Calm Down
KITT's advantage was that no one knew it was this technologically advanced car hiding a lot of tricks under the hood. KITT was super stealthy, except for the red light on the front of the shiny black front end, slowly pulsing from side to side.
Sentry Mode is a modern-day KITT, but instead of playing it cool like the Trans Am, Tesla's Sentry Mode freaks out, blinding everyone in sight. Every Tesla owner has returned to their car with a Sentry Mode notification. A lot of the time, it is some poor unsuspecting person walking to their car, and suddenly they are blinded by thousands of lumens.
Lights will Pulsate in Update 2023.2
Another Sentry Mode improvement is about to be introduced in update 2023.2. When Sentry Mode is enabled, the system will no longer blind passers-by with its bright headlights. Instead of full-on panic mode, it will now emit a gradual pulse of the headlights, ramping them up and down as a sort of warning. Hopefully, this stealthy, calm way of handling the problem will result in fewer surprised people being forced into the spotlight. It will also help when viewing Sentry Mode clips by not washing out the surroundings due to the bright flashes.
Tesla's fourth quarter and 2022 earnings call with investors was mostly good news unless you were planning to drive a Cybertruck soon. While company executives eagerly jumped on every question asked by investors, there was a noticeable pause when a point-blank question was asked about Cybertruck's mid-year production date.
Elon Musk responded "um, we do expect production to start, I don't know, maybe sometime this summer. But I always like to try to downplay the start of production because the start of production is always very slow. It increases exponentially, but it's always very slow at first. So I wouldn't put too much thought in start of production."
Volume Production Next Year
If the millions of people with Cybertruck reservations were in attendance, you might have felt the air leave the room. The previous belief was mass production would start by the end of 2023. There may be some stainless-steel beauties on the road by then, but only a few. "It's kind of when does volume production actually happen, and that's next year," said Musk.
Perhaps sensing some disappointed buyers, Lars Moravy, Tesla's Vice President of Vehicle Engineering added, "(I'd) like just to emphasize on that, we've started installation of all the production equipment here in Giga Texas, castings, general assembly, body shops. We built all our beta vehicles, some more coming still in the next month, but as you said, the ramp will really come 2024."
The Cybertruck Will be Elon's Next Car
Cybertruck was originally announced in 2019 at the memorable event that included the unbreakable armor glass smashing. Musk was wearing the smashed glass Cybertruck t-shirt while taking questions from investors. While the wait continues, he is adamant that it will be worth it, "So it's an incredible product. I can't wait to drive it personally. It will be the car that I drive every day… it's just one of those products that only comes along once in a while, and it's really special."
The original release deadline was set for 2021. However, the production date has been delayed due to unforeseen circumstances, like a global pandemic. Nevertheless, it is a positive sign that beta vehicles have been produced. Images of what appears to be a Cybertruck were leaked a few months ago.
Recently, chief designer Franz von Holzhausen did confirm that the Cybertruck was ready for production, but it's a work in progress. Every Tesla beta product gets thoroughly examined and meticulously reviewed before the next step. But at least it's a step in the right direction.
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