Tesla Q1 Earnings: Robotaxi in 2024, Cybertruck in 2023, Record profit

By Gabe Rodriguez Morrison
Tesla continues to simplify the manufacturing process
Tesla continues to simplify the manufacturing process

Financial Results

Tesla just reported first-quarter results for 2022 and beat analysts' expectations on the top and bottom lines. Despite factory shutdowns, inflationary pressures and semiconductor chip shortages, the automaker delivered 310,000 vehicles, up 81% YoY.

Revenue also rose 81% to $18.6 billion from $10.39 billion a year ago, thanks to higher average car prices and increased vehicle sales, the company said.

For the period ending March 31, 2022, Tesla reported $3.22 earnings per share. Since posting a record profit, shares have risen as much as 6% in after-hours trading.

Tesla vehicle deliveries since 2018
Tesla vehicle deliveries since 2018

Challenges This Quarter

In its letter to investors, Tesla said supply-chain problems and raw-material prices costs have increased “multiple-fold”.

"Our own factories have been running below capacity for several quarters,” Tesla said in its shareholder deck. The company did not give detailed guidance on deliveries going forward, but said it expects 50% annual growth on a multi-year basis, and warned that supply chain constraints are likely to continue through 2022."

Tesla said that a spike in COVID-19 cases caused a temporary shutdown of the Shanghai factory and shortages in the company’s supply chain.

Tesla had its most profitable quarter
Tesla had its most profitable quarter

“Although limited production has recently restarted, we continue to monitor the situation closely,” the company said.

The ramp-up in the newer Texas and Berlin gigafactories will also depend on supply-chain obstacles, Tesla said.

“Factory ramps take time, and Gigafactory Austin and Gigafactory Berlin-Brandenburg will be no different.”

The company also stated it would release its Full-Self Driving to all U.S. customers that opted for the $12,000 package “before the end of this year.”

Energy

Tesla’s solar deployments dropped by 50% YoY to 48 MW this past quarter. The company deployed 846 MWh of battery storage systems, up 90% YoY, but down from the previous quarter. The company said declines in solar deployments were caused by supply chain constraints on certain components.

Insurance

Tesla says they are the 2nd largest insurer of Teslas in the state of Texas, and could be the largest by the end of next quarter. Tesla is now a fully integrated provider of insurance in the states (list of states) where they have released their insurance product.

Cybertruck and Robotaxi

On the earnings call, Elon confirmed Cybertruck production to begin in 2023 and a vehicle built for autonomy, without a steering wheel or pedals to be produced in 2024 which would be "a massive driver of Tesla's growth."

Elon also reiterated his stance on Tesla's optimus robot, saying that it has more potential opportunity than the car business over time.

When asked about raw materials and scaling to extreme size, Elon stated that Lithium mining is the limiting factor to production. He later said that "Tesla will likely need to help the industry on this."

When asked about the future of EV affordability, Elon stated that the robotaxi will provide the lowest cost per mile of transport ever, a 5x-10x reduction, making it accessible to everyone. Based on their projections, it appears that a robo taxi will cost less than a subsidized bus/subway ticket.

Earnings Overview

Twitter user @DBurkland put together this overview of everything that was discussed during the earnings call.

Opening remarks from Zach Kirkhorn

  • Per unit vehicle costs increased due to inflation, raw material costs, and supply chain constraints
  • Slight shift towards more profitable vehicles like the Model Y
  • Energy business continues to be impacted by macro conditions more than vehicle business (chip constraints)
  • Achieved record operating margin over 19% amidst construction of 2 new factories (Giga Berlin & Giga Texas)
  • Tesla has reduced debt (excluding product debt) to nearly 0
  • Lost 1 month of build volume lost due to COVID-related shutdowns at Giga Shanghai (will dramatically affect Q2 delivery numbers)
  • Inefficiencies of ramping process at Giga Berlin & Texas will affect bottom line
  • Tesla still believes 50% YoY growth w/ vehicle production in 2022 is still achievable

Opening remarks from Elon Musk

  • Record deliveries and production even with many headwinds
  • Even with COVID shutdowns in Giga Shanghai Elon believes they still have a shot at 60% YoY growth for 2022
  • Two new factories opened in Q1 and exponentially ramping (Giga Berlin & Giga Texas) with higher production volumes achievable by end of this year
  • Just crossed 1m units in the last year however long way to go as Tesla aspires to produce 20m units per year (only 5% towards their goal)
  • Elon never more excited for Tesla and their future then he is now
  • Robotaxi
    • Highly optimized for autonomy (no steering wheel or pedals)
    • Numerous other innovations
    • Fundamentally optimized for lowest fully considered cost per mile, accounting for everything (very powerful product)
    • Expect to reach volume production of Robotaxi in 2024
  • CyberTruck
    • On track for volume production in 2023
  • Optimus
    • Elon surprised people weren’t more excited for this but he thinks folks will fully understand its capabilities & impact will be greater than FSD or vehicle businesses
  • Energy
    • Battery & solar production will improve as supply chain issues are resolved

Q&A

FSD Development Progress

  • Elon has never seen more false dawns than with the development of FSD. Real world AI has to be solved for (nobody has solved yet) and with our roads designed for humans, NNs & cameras have to be solved in a way that is on-par with (and exceeds) the capabilities of humans. Elon still believes they will deliver on FSD in 2022. Best way to realize this is participate in FSD beta program and experience it for ourselves as they’ll be expanding the program later this year. Still targeting new FSD release cadence of every 2 weeks.

Giga Shanghai Shutdown

  • Production is coming back with a vengeance and Elon expects weekly production records to be broken as they work to catch up. Still possible to match / exceed Q1 numbers however Q3 & Q4 are expected to be record quarters in terms of production. Elon believes Tesla will easily be able to produce 1.5m vehicles this year.
  • It’s important for new factories to target limited configurations during ramp and that is why both Giga Berlin & Giga Texas are hyper-focused on producing the Model Y.
  • Ramp period (5k per week) takes typically 9-12 months from start of production however it’s possible for Tesla to ramp sooner based on their experience.

Price Increase

  • Elon says it is understandable that there are many folks questioning price increases especially amidst record profitability however the price increases are there to account for an increase in raw materials costs and potential supply chain constraints in the future (since vehicle deliveries are a year out).

State-based Dealership Laws

  • Tesla would love federal-based laws that allows direct sales across the country however congress is not willing to take up this sort of legislation at this time (so Tesla is approaching it on a state-by-state basis)

800V Battery Architecture

  • Tesla is not ignoring the reality that they can go to a higher voltage however there is not any compelling reason to change at this point
  • Going from 400V to 800V might save them $100 per vehicle (however requires changing all of the backend infrastructure)
  • Switching to 800V might make sense down the road however Tesla needs to increase vehicle volume to absorb the cost of moving from 400V to 800V first
  • For larger vehicles where higher power on the battery side and/or charging side is required (where current requirements go up), savings can be seen by increasing voltage as it would reduce semiconductor needs (and thus save $)
    • Tesla is considering different voltages for CyberTruck and Semi
    • For 3, Y, and Robotaxi they see no need to switch

4680 Batteries

  • Tesla is working in all areas that they described during the battery day event and making good progress
  • Going to take several years to achieve the cost savings and performance numbers they described during battery day
  • 4680 structural pack will be competitive with the best alternatives later this year and exceed the best alternatives next year
  • New chemistries hinted at however will be included in 4680 production later on
  • Based on Giga Texas factory construction, the 4680 production equipment cost 5x less than what it would have been with other battery cell designs
    • Cost model well understood, rate and yield will be better understood as they ramp over next few years
  • Giga Berlin will transition to 4680s from 2170s later this year
  • Giga Texas has the capability to produce non-structural pack for 2170s (mitigation)
    • Volume production for 4680s in Giga Texas targeted by end of Q3, for sure Q4
    • Sizable cell inventory thanks to Giga Shanghai shutdown and allows them to be more deliberate in 4680 development (gives them some breathing room during ramp)
    • 4680 production not a risk to achieving vehicle production target in 2022 however would be in 2023

Raw Materials Required To Scale

  • Tesla needs to think about tonnage of Nickel, Iron Phosphate, Graphite, Separators, Electrolytes for the world as a whole
  • Then take action on limiting factors that get in the way of the advent of a sustainable energy future
  • Tesla is thinking about mining & refining Lithium is a current limiting factor and responsible for cost growth per cell as of late (single biggest on a percentage basis)
  • Lithium only makes up only 2-3% of a Li-Ion cell (5kg per car)
  • Cathode (Nickel & Iron Phosphate) is the heaviest in terms of cost and raw materials composition of a battery cell
  • Exciting announcements on the raw materials topic in the months to come, Elon hinted to a follow up call / event
  • Tesla committed to recycling at all cell factories, recycling 50T per week in Reno (ramping to 150T) which is putting materials right back into their Cathode supply chain
  • As they are building new vehicles at new factories, Tesla is recycling everything they can from a raw materials perspective
  • Tesla figured out they can recycle cast aluminum wheels from retired ICE cars and throw it into their aluminum melting pot and use for vehicle body production for 3 & Y
  • Half of Tesla’s products were LFP-based in Q1 2022 which shows how nimble they are regarding battery chemistry
    • Also looking at other cathode options to give Tesla further agility
  • Some of the challenges with Lithium market are not related to supply & demand fundamentals (frustrating to Tesla)

Giga Berlin & Texas Ramping related to Giga Shanghai

  • Elon thinks they need to ramp Berlin & Texas faster than Shanghai as they are more experienced now and have learned so much in the simplification of Model Y production
  • Body line for front & rear cast underbody + structural pack is 60% smaller than it would be otherwise in terms of equipment required
  • If you are waiting for the best Tesla ever you will be waiting forever as they are constantly improving

Robotaxi

  • Unveiling event sometime next year, Elon doesn’t want to go into too many details until then
  • Volume production in 2024
  • Sizable investment required to build robotaxi production lines

Prices Over Time

  • Elon wants to make EVs as affordable as possible however this has become very difficult due to inflation (40-50yr high)
  • Likely to continue for remainder of 2022
  • Long term contracts with suppliers have helped Tesla keep costs down longer than expected but eventually they run out
  • 20-30% cost increase from suppliers over last year which is why Tesla has raised their prices
  • Lithium margins are practically software margins right now (Elon encouraging more to get into this business)

CyberTruck

  • Ignoring battery cells Tesla believes the CyberTruck is made of 20-30% less parts than a typical pickup truck

Giga Nevada

  • Room for expansion there and the plan is to expand production at Giga Nevada further
  • Majority of battery cells will be produced at Giga Texas going forward

COVID Shutdowns in China

  • Elon doesn’t think recent COVID shutdowns in China will negatively impact production elsewhere

Elon compensation

  • No plans or talks to increase Elon’s compensation further

3rd Party Access to Supercharger Network in USA

  • Tesla plans to provide 3rd party vehicle access to the entire world and remains committed to that
  • Tesla is pursuing a technical solution to address the difference in charging connector in the US (magic dock)
  • Growth of Supercharger network is being accelerated to match increase in vehicle production 

Tesla Insurance

  • In state of Texas Tesla is the second largest insurer of Teslas and should be #1 in the next quarter
  • Working to get 80% of states access to Tesla insurance by end of year at which point they’ll look to expand to other markets
  • Having realtime feedback for driving habits (safety score program) is proving helpful to Tesla owners w/ Tesla insurance as it directly relates to a lower rate
  • When a crash happens it gives Tesla a new feedback loop to improve vehicle design, reduce costs, etc (End-to-end visibility)

You can also find outlines from previous earnings calls on his website DBurkland.com.

Tesla's Dojo Project Faces Leadership Shakeup

By Kevin Armstrong
Dojo Leadership Shake up
Dojo Leadership Shake up
Tesla

Ganesh Venkataramanan, Tesla’s project lead for its ambitious Dojo supercomputer project for the past five years, has left the company. Bloomberg reported this development, stating that the news was confirmed by sources familiar with the matter. Peter Bannon, a former executive at Apple Inc. and a director at Tesla for the last seven years, has now taken the helm of the project.

Venkataramanan's departure from Tesla last month is now stirring conversations about the potential impacts on Tesla's future initiatives. His contributions to the Dojo project have been pivotal, especially in designing the custom D1 chip that powers the supercomputer. Venkataramanan, with his extensive experience, including a significant tenure at Advanced Micro Devices Inc. (AMD), was a crucial asset in setting up Tesla’s AI hardware and silicon teams in 2016.

Dojo: A Cornerstone for Tesla’s Self-Driving Aspirations

The Dojo supercomputer is a critical element of Tesla's strategy to enhance its self-driving capabilities. Designed to train machine learning models integral to Tesla's autonomous systems, Dojo processes vast amounts of data captured by Tesla vehicles. This rapid data processing is essential for improving the company’s algorithms, with analysts suggesting that Dojo could be a significant competitive advantage for Tesla. In a recent estimation by Morgan Stanley, the project could potentially add $500 billion to Tesla’s value.

Elon Musk has been vocal about the company's commitment to the Dojo project, planning an investment exceeding $1 billion by the end of 2024. The project's importance was underscored in Tesla's decision to shift from relying on Nvidia Corp.’s supercomputers to developing Dojo, poised to rival systems from Hewlett Packard Enterprise Co. and IBM.

Looking Ahead: Impact and Future Prospects

The recent leadership changes raise questions about the future direction of the Dojo project. Venkataramanan's exit, coupled with the departure of another critical artificial intelligence player from Tesla last year, Andrej Karpathy, signals a transition period for the company’s AI and self-driving teams.

However, Tesla's robust talent pool, blending experienced and emerging professionals, offers a silver lining. Bannon's promotion to lead the Dojo project is seen as a strategic move, leveraging his experience and insights gained from his tenure at Apple. Moreover, the recent installation of Dojo hardware in Palo Alto, California, marks a step forward in centralizing and enhancing the project’s capabilities.

Tesla’s ambitions for Dojo extend to making it one of the world’s top supercomputers. The company envisions reaching a computational capability of 100 exaflops* by October 2024, a testament to its commitment to advancing artificial intelligence and self-driving technology.

* Confused about "exaflops?" "Flops" stands for Floating Point Operations Per Second. It's a way to measure how fast a computer can process data. "Exa" means a billion billion, or 1, followed by 18 zeros (1,000,000,000,000,000,000). So, when we say a computer can perform 100 exaflops, it can do 100 billion billion calculations per second. That's incredibly fast!

New Parking Visualizations and Custom Locking Sounds Also Coming in Tesla's Holiday Update

By Kevin Armstrong
Tesla is adding a new 'High Fidelity Park Assist' feature in this year's Holiday Update
Tesla is adding a new 'High Fidelity Park Assist' feature in this year's Holiday Update
Tesla

Following initial reactions to Tesla's 2023 Holiday Update, Elon Musk acknowledged the need for improvement, stating, "We need to step up our game." His post on X was followed by Tesla shedding more light on the Holiday Update than what was in the initial leak.

Call me old, but I remember a time when you bought a car, and that was it; the dealer and manufacturer didn’t give you anything else. So is the Tesla community acting a little bit spoiled here? Absolutely. But it also shows how high Tesla has set the bar with its previous Holiday Updates.

Initial Release and Feedback

The initial release of the 2023 Holiday Update, version 2023.44.25, received mixed reactions from the Tesla community, with some owners expressing disappointment over the lack of groundbreaking new features. But the newly announced features may serve as better stocking stuffers.

The initial rollout included something owners have been asking for, the blind spot monitor. The camera that turns on when you change lanes will now have a red color added if there is something in your blind spot. It’s not clear whether it will be accompanied by a tone.

Here are other features in the leaked update that are being tested by employees:

Navigation and Safety Features: Including symbols for speed cameras, stop signs, and traffic lights in navigation, and the automatic 911 call feature in case of an accident.

Trip Planning via Tesla Mobile App: Allowing for more detailed trip planning, including multiple stops and charging points.

Apple Podcasts Integration: Allowing users to sync with Apple devices for a seamless podcast experience, directly addressing the demand for a richer in-car entertainment system.

New Games and Enhancements: The update brought updates to Tesla Arcade, with Beach Buggy Racing and Polytopia Diplomacy updates, as well as the Vampire Survivors Chilling update.

Light Show Improvements: There’s a new light show that’s included with your vehicle. You’ll also be able to upload several light shows on a single USB drive and pick one from the vehicle, instead of having to use multiple USB drives, one for each light show.

More Live Sentry Mode Cameras: You will now be able to view the B-pillar cameras directly from the Tesla app. This brings the number of viewable cameras in the app up to seven. The only ones still missing are the alternative front-facing cameras that are telephoto and wide-angle, which wouldn’t bring much additional value. Although the B-pillars are viewable in the app with this update, they will still not be used to record during Dashcam or Sentry Mode events.

High-Fidelity Park Assist

Tesla's High Fidelity Park Assist
Tesla's new parking assist feature will dynamically recreate scenes in real-time
Tesla

In response to the feedback and Musk's statement, Tesla unveiled additional features in its updated holiday update, including an improved park assist with enhanced visualizations.

This feature provides a 3D reconstruction of the vehicle's surroundings while parking, akin to a 360-degree camera system found in other high-end vehicles. The system is clearly leveraging improvements to Tesla Vision to create the surrounding environment, such as cars, pillars and walls.

This feature also appears to change the color of objects depending on how close they are to your vehicle. In the image we can see the pillars are orange, but if we look closer, the object behind the vehicle is also orange near the bottom. The sides of the vehicles next to the Tesla also have a slight hint of orange, indicating their proximity.

However, it looks like this feature may be even better than it initially looks. The vehicles in the image aren’t just predefined 3D models that Tesla created, like the ones used in Autopilot visualizations. These models appear to be dynamically created using vision, so that no two cars would look alike, much more similar to what LiDar is able to achieve. The visualization provides a true representation of the environment around the vehicle. You can see that each vehicle is made up from layers and have blurred edges toward the rear, where the camera would have a hard time seeing.

These 3D models could be a sneak peek at the future of FSD visualizations.

High-Fidelity Park Assist Requirements

A big question on everyone’s mind is who will receive this new park assist feature. Tesla didn’t address this in their post on X besides providing a disclaimer that the features in the holiday release are subject to model and region availability. Tesla often likes to test features in select markets before making them available everywhere. It’s hard to say whether that will be the case here. There likely aren’t any legal ramifications around providing visualizations, so that’s a good sign that this feature will be available in most regions, either in the holiday update, or soon afterward.

However, there are still questions around which models or hardware will be required. From the image shared, we can see it’s offered on a Model Y, removing any speculation of it possibly requiring the HD radar in the new Model S/X. We also don’t think it will require FSD hardware 4.0, so the remaining questions are whether it requires MCU 3, or the FSD package.

Given that Tesla is calling this Park Assist, it doesn’t appear to be linked to Auto Park, which is a FSD package feature. When Tesla rolled out visual and audio alerts for vehicles without ultrasonic sensors, it called the feature Park Assist, and that was available to all owners.

Whether this improved Park Assist feature requires a vehicle with MCU 3 will depend on the level of processing power required. It’ll certainly require more than the current visualizations given that its building the scene in real-time, so we’re hopeful that it’ll work on MCU 2 vehicles too, but we just don’t have enough information right now to make the call.

Custom Lock Sounds

Soon you'll be able to choose a custom locking sound for your car
Soon you'll be able to choose a custom locking sound for your car
Not a Tesla App

Tesla also announced a fun and whimsical feature that allows owners to customize the lock sound of their Tesla. No longer will you need to listen to the car’s horn when it locks as you walk away. Now you’ll be able to customize the lock sound of the vehicle. Tesla is including several options, including sounds like a screaming goat, a jingle, a rubber ducky, a quack sound, an old school horn and applause. However, you’ll also be able to upload your own file to create a truly unique experience.

You can pick anything, from a bird’s tweet to a favorite video game sound. You’ll only be limited by the maximum upload file size, which according to a Tesla engineer, is a 1MB file in WAV format, which is roughly about 40 seconds at good quality.

This feature is possible due to the vehicle’s external pedestrian warning speaker. So if you have Tesla’s Boombox feature or your vehicle makes a sound when traveling under 20 MPH, then you should receive this fun enhancement.

Rear Seat Audio and Gaming

You'll now be able to play games on Tesla's rear screens
You'll now be able to play games on Tesla's rear screens
Tesla

Enhancing the Tesla Arcade experience, passengers in the rear seats can now play games on the rear touchscreen. This feature, especially when paired with Tesla Arcade’s compatibility with PS4, PS5, Xbox Controllers, and rear-screen Bluetooth Headsets, is a welcome addition for families and long trips.

Much like the new Model 3, which received rear audio over Bluetooth support in the 2023.38 update, the new Model S and Model X will also receive this ability in the holiday update.

New Game - Castle Doombad

Tesla announced one other feature in the 2023 holiday update that hadn’t been previously leaked, and that’s a new game called Castle Doombad. Castle Doombad is a single player tower defense, puzzle-like game that’s currently available on iOS and Android, but has an upcoming release on PC and the Nintendo Switch. This game is expected to require MCU 3.

Release Timeline

The rollout of the 2023 Holiday Update is expected to follow a similar timeline to last year. Tesla announced that the update will roll out starting next week. However, it’s not clear whether this will also include FSD Beta testers that are on a 2023.27 update.

Looking back at the 2022 Holiday Update, it started on December 13 and took about a week to get to the entire fleet.

Speculation on Future Features

Like a spoiled child on Christmas morning, Tesla owners still ask, “Is that it?” Well… possibly, but there may be more to look forward to early next year as Tesla builds off of the new High-Fidelity Park Assist feature.

Advanced Smart Summon: Upgrading the Smart Summon feature to be more intuitive and efficient, especially in complex parking scenarios.

Reverse Summon / Park Seek: What happened to Tesla dropping its passengers and driver off at the location and then finding a parking spot on its own?

Enhanced FSD Visualizations: Expanding the Full Self-Driving visualizations to more regions or models or completely recreating the FSD visualizations using the same neural networks Tesla is using for the High-Fidelity Park Assist feature.

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