new York He can’t help it: Tesla boss Elon Musk had actually announced in July that he wanted to stay away from the presentation of the quarterly figures and the analysts’ conference – unless “there is something really important.” But both in January and on Wednesday evening it was the CEO is there.
The results were significantly better than expected on Wall Street: Analysts had previously forecast sales of $17.6 billion on average. The stock rose more than 5 percent in after-hours trading. “Q1 was a record quarter on many levels,” Musk said. “We achieved record deliveries and an operating return of 19 percent. And that despite chip difficulties, logistics problems and other obstacles.”
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Delivery record and ambitious goals
In fact, the automotive industry around the world suffers from persistent supply bottlenecks – for example with computer chips. Tesla is also affected. Some customers have been waiting for their vehicle for more than half a year, and some deliveries are likely to be postponed to 2023, it said on Wednesday. Nevertheless, the group increased its deliveries compared to the previous year by 68 percent to 310,048 cars.
CFO Zach Kirkhorn said the company is aiming for 50 percent annual growth in 2022 and beyond. Maybe even 60 percent is possible, Musk added. “In the past few weeks we have opened Giga Berlin and Texas, two fantastic factories,” said the CEO. Their output is still small, as with all new factories, but it is growing exponentially. By the end of the year, they want to have increased the volume in both Berlin and Texas.
The output in the new Austin factory is still small, but it is growing exponentially, Musk believes.
(Photo: IMAGO/ZUMA Wire)
Praise came from Laura Hoy, an analyst at wealth manager Hargreaves Lansdown: “Deliveries and production always come first at Tesla,” she wrote. The more cars Tesla produces, the cheaper the one-off would be for the group. In conjunction with increased prices, this ensures a higher profit. “That’s the textbook definition of economies of scale, and Elon Musk has brought it to life before our eyes over the past year.”
However, according to Hoy, the group is already highly valued today. Further price increases are all the more difficult. And: “The market has no problem sending shares into free fall when unforeseen challenges arise,” she says. “Musk’s impulsive behavior is not helpful in this regard.” Inflationary headwinds and the ongoing shortage of chips would also come as stress factors.
Lockdown in Shanghai
The many global problems then also played a major role in the analyst call. Musk expressly thanked his suppliers and the employees of the plant in China. “In particular, our team at the Tesla factory in Shanghai has had major problems due to the Covid outbreak. Still, they managed to get the factory back up and running.”
Musk was optimistic. He is confident of producing 1.5 million cars in 2022, after almost a million last year. However, whether that works also depends on factors that Tesla finds difficult to control.
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Musk explained that production at the plant in China had recently started up again to a limited extent. At the same time, he acknowledged that production could fall slightly in the second quarter due to the lockdown in Shanghai. “We lost a lot of working days in production,” Musk said. Now the factory will be put back into operation “with all its might”. According to estimates, production of around 40,000 vehicles has been lost since the factory was closed by the Chinese authorities at the end of March.
“With the two recently opened gigafactories in Grünheide near Berlin and Austin, the company seems to be well positioned to compensate for the reduced production capacities in the Far East caused by the Shanghai lockdown,” said car expert Alyssa Altman from the consulting firm Publicis Sapient optimistically.
Due to the ambitious production targets, Tesla also needs large amounts of rare raw materials, especially for battery production. “We are looking very closely at how we can secure the necessary supply of raw materials,” Musk explained. This is “a limiting factor.”
Autopilot problems
Musk also admitted problems for the first time with one of the group’s most important future projects: the autopilot, which Tesla markets as a “full self-driving” function and sells for a surcharge of $12,000. Contrary to Tesla’s own naming, the system has not yet enabled self-driving cars The NHTSA is currently scrutinizing the Tesla approach after several fatal accidents.
In contrast to other car manufacturers, Tesla relies exclusively on optical cameras in connection with artificial intelligence for autopilot development. Most industry experts advocate systems with additional radar and laser sensors to increase security.
Musk had repeatedly announced that he would launch autonomous cars by the end of the year. Now he acknowledged that advances in autonomous driving are taking longer than expected. “In terms of fully autonomous driving, of all the technology developments I’ve been involved with, I’ve never seen so many missteps where it looks like we’re going to make a breakthrough but then don’t,” Musk said .
Musk did not announce any new products on Wednesday. Musk also held back with details about the robotaxi announced in Texas – an automated driving service whose cars should not have steering wheels or pedals. “This is going to be a very strong product that we aim to get into volume production in 2024,” he said. This will be a big driver of Tesla growth. The same applies to the humanoid robot Optimus, according to the brief explanation when asked.
Of course, the bank analysts avoided the hottest topic of the past few days on Wednesday evening: Musk’s offer to buy Twitter. This had weighed on the share price, also due to the concern of many observers that Musk would be overstretched with the leadership of three companies – Tesla, the space company SpaceX and Twitter.
However, Musk did not receive a corresponding question from the analysts present, who politely thanked him for his answers. As usual at Tesla, press questions were not permitted.
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