Tesla’s Q3 2022 Global Production Volumes and Stock Price Action Afterwards

Sales results look promising but the Street’s confidence is quickly eroding.

Wayne Gerdes – CleanMPG – Oct. 2, 2022

2022 Tesla Model Y

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In the third quarter, Tesla announced that it produced over 365,000 vehicles from its factories in Fremont, CA, Austin, TX, Shanghai, China and Berlin-Brandenburg, Germany. The fast growing OEM delivered over 343,000 of them.

The company stated supply-chain constraints have now moved into its vehicle transportation capacity. In Q3, Tesla began transitioning to an even regional mix of vehicle builds each week, which led to an increase in cars in transit at the end of the quarter. These cars have been ordered and will be delivered to customers upon arrival at their destination.

Model: Q3 2022 Production/Deliveries

Model S/X: 19,935/18,672
Model 3/Y: 345,988/325,158

Total: 365,923/343,830

The Q3 2022 production totals are up a very healthy 53% over the Q3 2021 total of 237,823 vehicles produced. With the multitude of price increases, I suspect revenues will be up by 70% which is in line with its near term expected sales growth rate albeit slowing with larger volumes.

With Europen vehicle sales collapsing, China's on again, off again Covid lockdowns, and the U.S. heading into its own automotive bear market including much more potent – less expensive, all-electric competition from most major OEMs here now or arriving shortly, somebody is seeing something.

After 2 weeks since the production and sales announcement, the Street appears to be tiring of Musk's charades with the Twitter buy and messing with Ukrainian sovereignty. The once hot tech segment has already collapsed but this one appears to be in its own nasty downtrend for a lot of the Tesla faithful going forward…

TSLA 2 Year Stock Price Activity Ending 10/14/2022


A new 52-week low was hit on Friday and the YTD is down some 48.7%.​

With the rearview looking 20, 50 and 200-day MAs not only breached but all having rolled over into downtrends, no upward momentum indications, and the upper and lower band trendlines for all of 2022 - lower highs and lower lows, pointing to even more depressed prices ahead, there is not much going right in terms of a short to intermediate term investment.

On a more positive note, there is finally an oversold indication and possibly base support where it closed going back to early December 1, 2020, which could bring in buyers on Monday.

If TSLA closes below $200 next week, expect buyers to come in again around $180. If that price floor breaks, $125 could be the next downside support target going all the way back to Sept. of 2020.

In conclusion, micro tailwinds that could help Tesla shareholders include segment topping sales revenues, the plants are built and producing, they have Semi coming online shortly, and especially that oversold condition could really make TSLA pop to the upside.

Micro headwinds include 3/Y being available at much higher prices than non-HEVs, HEVs, and PHEVs with similar size and equipment - price cuts coming?, slackening demand with inventory showing less than a week to pick up a 3 and less than three for a Y, and expensive factory ramp ups in Europe, Asia, and the U.S. are going to continue to cost while output is constrained to meet slackening demand, and the stocks technical trends look bad.

Macro headwinds include higher interest rates forcing many aspirational buyers to be disqualified for a $60k Model 3 loan at 7 to 9% vs 2 to 5% just a year ago, collapsing auto demand around the world, and more affordable competition either here or coming online shortly.

Betting against Tesla has proven to be a foolish endeavor prior to the start of 2022. Going forward however, who knows.

And of course disclosure, I have had no past or current position in TSLA but like anything automotive, I am always interested.

 

Hi All:

Tesla reports Q3 2022 Earnings After the Bell

10/19/2022 -- After the bell, Tesla reported reasonably robust earnings.

Top line revenue fell just short at $21.45 billion vs $21.96 billion expected.
Bottom line earnings beat at $1.05 vs 99 cents per share expected.

In after market trading, shares initially jumped up $6 but almost immediately fell $14. It is still volatile in after hours trading with the current price at $211/share, down $8 or 3.5% as I type.

Deliveries for the Q3 ending September 30 were reported above.

During the quarter, the company achieved a record production volume of > 83,000 vehicles in China in September along, the highest volume in a single month since the plant opened in late 2019.

Musk promised Tesla will begin deliveries of the company’s heavy-duty all electric truck, the Semi, in December and Cybertruck sometime next year.

And the charades? Musk is in the final days of the - overpriced, $44 billion USD acquisition of Twitter.

Wayne

 

Hi All:

More from good ole FB...

Wayne, when do you see the Fed turning the corner on rates?

I am just one of hundreds of millions making a guess on that and my guess is no better than yours.

We know the Fed wants 2% inflation back and have moved the Fed Funds rate from .25 to 3.25% over 5 rate hikes beginning in March. The group has stated they are considering a target rate of 4.4% before the end of the year. That indicates to me another .75% hike on Oct. 2, and another .25 to .5% on Dec. 14th.

If a 4.25 to 4.5% FF rate is not enough to increase the unemployment rate to 4+ % in Q1 of 2023, they are going to go higher and they are not going to stop despite many commodities having rolled over.

Between March of 2021 ($38,490) and October of 2022 ($48,490), the base Model 3 has increased in price by 26%. That is a hell of a price increase and Tesla's Achilles heel. That base model price is higher than many luxury vehicles today. With a 27.9% automotive margin announced last night, Tesla has room to drop prices and remain profitable but with every price drop, they have to make up the revenue shortfall with volume to simply maintain earnings at 0% growth rate.

2022 Tesla Model 3

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Musk's remarks last night about a $4-trillion Market Cap is way out there. If you take that to the bank, there is a 5 to 6 bagger in the years ahead. It will be Semi that does it, but it is still extremely pricey and the chart still looks terrible.

As I typed this up, TSLA touched a new 52-week low at $202 with a PE of 66. PE compression is this markets signature over the past 12-months and Tesla looks pricey.

Wayne

 

Hi All:

I received an inquiry on FB about what I thought TSLA's PE should be?

A PE is indeed a great question. Here is a $**tload of Operational discussion.

Tesla's Q3 2022 revenues were up 41% while net was up 97%.

In April, Musk said Tesla could hit 60% growth in deliveries. That has already missed. In July, Tesla reduced that target back to 50% for this year. I doubt they will hit that target leading to yet another miss. Wall Street absolutely hates misses!

Tesla reduced sales forecasts and missed slightly in Q3 yet is expecting to make that up in the Q4 despite a slowing economy, increased competition, and falling Tesla order backlogs? The backlogs have fallen from months to weeks for the Model 3 and Y over the past two months.

2021 Tesla Vehicle Production: 930,422 - YOY up 70% <-- Pay attention to this.
2022 Tesla Vehicle Production: 1.4 million if they can reach it??? - YOY up 50%?
2023 Tesla Vehicle Production: 2 million??? - YOY up 43%?

Notice how the volumes are falling as Tesla becomes a major OEM?

2022 Tesla Global Vehicle Production by Quarter

Q1: 305k vehicles produced
Q2: 259k vehicles produced
Q3: 345k vehicles produced
Q4: 500k vehicles produced <-- An extra 155k units over Q3 this quarter?

2022 Production Totals: 1.4-million vehicles produced "IF" they can hit 500k in Q4.

Tesla has a shot of producing/selling 1.4 million vehicle sales in 2022, and its current forecast puts it above 2 million vehicle sales in 2023.

What it tells me: Tesla wants to build 500k units in Q4 of this year. Who is going to buy 500k units over the 325k they sold this quarter with the recession beginning to hit globally? Earnings are everything and a possible recession here, Europe and Asia in a recession, will Tesla be able to sell another 500k units - over what they sold this year, in 2023 at the elevated prices?

The biggest concern is what happens when the competitive OEMs finally release their products in volume? Having driven the Model 3/Y, Mach-E, ID.4, EV6 and Ioniq 5, the Kia/Hyundai products are the best in this competitive comparison. However, Hyundai/Kia's shortsightedness with regards to production in Korea is going to kill them next year with no Fed TC. This allows Tesla to earn and sell more despite a higher price by $7,500. It is the 2024 Equinox EV, available next fall, that will be the one to watch. A mid-trim LT2 long range should arrive at < $50k retail and the Fed TC should bring it to $42,500 for those that qualify. A short-range Model 3 sedan is $43k once the $7,500 Fed TC is reapplied for those that qualify.

2024 Chevrolet Equinox 3LT

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In Tesla's favor, the SuperCharger network is by far the best by orders of magnitude compared to EA, Chargepoint, and EVgo so that is going for them.

To maintain sales targets - aka demand, Tesla "may" have to reduce production, reduce prices OR both. With a 28% operating margin, the average $57k Model 3 costs $41k to produce. Semi is probably going to cost Tesla money through 2023.

Back to the PE: If revenues do not increase by Tesla's rosy 40% increase due to the sales growth rate declining and earnings going from 97% to 40% due to a possibly lower priced 3/Y going forward to maintain those volumes, a PE in 2023 of 40 makes sense to me. The 2023 Forward PE is at 38 right now if all goes perfect going forward.

What if Musk is doing the ole "Pump and Dump" to keep the stock high so he can come up with another $10+ billion in TSLA sales to buy twitter? Who is the fall guy in that story?

As an addendum, I was stopped out of ABT just before the close last night so my once somewhat rounded large cap, 7-stock portfolio with Tech HW, Tech SW, Utilities, and Pharma I have owned for > a decade is down to just 1. If the S&P 10-day crosses the 50-day around 3,800, it may be time to start looking for more long-term ideas all over again? Purchasing more ABBV, buy MRK, CCRN, SGML, DG, and COST as first-time positions plus a long shot with no fundamentals to speak of - TELL, are on my short list.

Regarding TSLA, it is just too expensive, and its chart is still terrible right now.

TSLA 1 Year Stock Price Activity Ending 10/21/2022

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Wayne

 

Hi All:

2 weeks later and TSLA is holding at the lower end of the trading range within the downtrend channels but its relative strength vs the overall S&P, DJIA, and NASDAQ is falling quickly as they accelerate to the upside.

Tesla (TSLA) Stock Price on Friday, Nov. 4th, 2022: 207.47, down 7.84 (-3.64%).

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Wayne

 

Elon Musk on Twitter Regarding Advertiser Exodus - Threatens "Thermonuclear Name & Shame"

On 10/31/2022, just 7-days ago, Elon tweeted a link to a fringe conspiracy theory article full of lies about the violent attack on Paul Pelosi. Musk, who has 112 million followers on the platform he now owns, posted the baseless story about Pelosi in response to a tweet from Hilary Clinton at 8:15 am ET. He later deleted the tweet around 2 pm, but not before racking up more than 28,000 retweets and 100,000 likes...

On 11/04/2022, the same day Twitter started laying off thousands of workers, Elon Musk doubled down at an annual investment conference in Manhattan on the challenges to boost profits for the ailing social media firm including an advertiser exodus over the proliferation of hate speech on his platform.

That morning, Musk tweeted that advertiser were fleeing because of “Activist groups,” which is “Extremely messed up!” and an attempt “to destroy free speech in America.” Even though “nothing has changed” since I took over.

After thousands of replies including insiders detailing that he was lying and telling Musk to essentially "F off", threatening advertisers with a retaliatory boycott is a sure-fire way to convince them to give you money.

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He replied to the onslaught with the following:

I cannot think of a surer way to destroy your company in just days than this load of $**t.

Advertisers don’t want their ads appearing next to disinformation and/or racist/sexist/harassing twitter content while Twitter is one of the few major social media platforms that allows adult nudity and that constitutes upwards of 13% of Twitter activity. In simple terms, what advertisers wants to be associated with that?

A word of advice to the world's richest man. STFU before you blow up your whole damn thing!

Wayne

 

Hi All:

And just like that, TSLA hits a new low despite Twitter users possibly reaching an all-time high?

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Wayne

 

Hi All:

An update as I am 2 hours into the 4+ hour 2023 Investor Day Recording from last night.

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It appears TSLA has bumped its head on the 200-Day and is coming back down with support again in the $160 USD range.

While its price to earnings are completely out of whack, it is the only OEM that is still growing at 10+ % and a lot more than that. In TSLA's case, 2022 vehicle deliveries were up 40% YoY to 1.31 million with production up 47% YoY to 1.37 million.

Automotive/Total revenues have been increasing at the following rates in billions of (USD) between 2018 and 2022.

2018 - $18,515B/$21,461B
2019 - $20,821B/$24,578B +12.5%/+14.5%
2020 - $27,236B/$31,536B +30.8%/+28.3%
2021 - $47,232B/$53,823B +73.4%/+70.7%
2022 - $71,462B/$81,462B +51.3%/+51.3%

In 2022, total revenue grew 51.3% YoY to $81.5B and net income (GAAP) more than doubled to $12.6B.

Adjusted EBITDA and EBITDA Margin in billions of (USD) between 2018 and 2022.

2018 - $2,395B/11.2%
2019 - $2,985B/12.1%
2020 - $5,817B/18.4%
2021 - $11,621B/21.6%
2022 - $19,186B/23.6%

In 2022, EPS diluted (GAAP) grew 122% to $3.62/share. EPS has been growing at the following rates in (USD/share) between 2018 and 2022.

2018 - (0.38)
2019 - (0.33)
2020 - $0.21
2021 - $1.63 +776%
2022 - $3.62 +122%

Forward Looking Statement(s)

Volume - Tesla is planning to grow production in alignment with the 50% Compound Annual Growth Rate (CAGR) target they were guiding
to in early 2021. In some years they may grow faster and some, slower.

Cash - They currently have sufficient cash flow and cash on hand to fund a very aggressive product roadmap, long-term capacity expansion plans and other expenses.

Profit - As Tesla continues to reduce the cost of manufacturing and operations, over time, they expect their hardware-related profits to be accompanied with an acceleration of software-related profits with an operating margin much higher than volume OEMs.

Product - Cybertruck production begins later this year at Gigafactory Texas. I suspect it will be the brands first failure with its weird looks. Their next generation vehicle platform - Model 2???, is under development, with additional details to be shared at Investor Day in early March.

What was missing? Any specifics on volumes, future product, and timelines. I mean nothing other than they plan to produce 20-million BEVs/year with a $150 to $175 billion USD investment over whatever time they plan to reach that goal at some time in the future. The largest Auto OEM in the world today is Toyota and they produced 9,566,961 vehicles in 2022, down .5% from 2021. Tesla states they will double that at some point. Maybe they can. And maybe they cannot.

They also hope to reach 1 TWh of energy storage "at some point in the future" with an investment of $28 billion USD at some point in the future. I sure hope they do and sooner than later. Right now, individual consumer's Powerwall's are not that reliable and are extremely expensive but the big Utility scale installs appear to be doing ok. This to remains to be seen.

All-in, the price of a Model 3 or future Model 2 cannot be $45k as there is not enough consumers that can take on that large of a note. A 50 KWh pack equipped Model 2 with 250-mile range - all rumored for the new Mexico Giga-Factory near Monterey, needs to cost less than $25k. IF they can reach that cost and these volume targets in short order of less than 10-years, all other OEMs are quite literally dead and bankrupt.

The presentation had no specifics but the overall feel is that there could be a 10 bagger in Tesla over the next 10-years if they can execute as they think they can. It will be one hell of a crazy ride however.

Wayne

 

Hi All:

Yesterday, Tesla reduced the price for its slow selling Model S and Model X BEVs.

2023 Tesla Model S

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Tesla Model S Pricing down $5,000

Dual-motor AWD w/ 405-miles of AER - $89,990
Tri-motor AWD (Plaid) w/ 396-miles of AER - $109,990
D&H = $1,390 + $250 order fee

2023 Tesla Model X Pricing down $10,000

Dual-motor AWD w/ 351-miles of AER - $99,990
Tri-motor AWD (Plaid) w/ 333-miles of AER - $109,990
D&H = $1,390 + $250 order fee

Wayne

 

Hi All:

I should have posted this months ago as it explains why Tesla is a company to look at.

For one, the Tesla Model Y finished up as the 6th best selling vehicle in the U.S. last year. The Model 3 finished up as the 14th best selling vehicle in the U.S. last year. 5-years ago, these two vehicles did not even exist and now they are outselling some of the stalwarts as shown below. I do not see how a $50k compact CUV and sedan can continue to sell in these types of numbers but they do.

2022 Top 15 U.S. Auto Sales By Model

1. Ford F-Series (653,957 units sold)
2. Chevy Silverado (513,354 units sold)
3. Ram Pickup (468,344 units sold)
4. Toyota RAV4 (399,941 units sold)
5. Toyota Camry (295,201 units sold)
6. Tesla Model Y (252,000 units sold)
7. GMC Sierra (241,522 units sold)
8. Honda CR-V (238,155 units sold)
9. Toyota Tacoma (237,323 units sold)
10. Jeep Grand Cherokee (223,345 units sold)
11. Toyota Highlander (222,805 units sold)
12. Toyota Corolla (222,216 units sold)
13. Chevy Equinox (212,072 units sold)
14. Tesla Model 3 (211,641 units sold)
15. Ford Explorer (207,673 units sold)

Tesla Model Y Long Range Pricing on 03/20/2023 -- (Model 3 Long Range NA yet)

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MSRP: $54,990
D&H: $1,390
Order: $250
Total: $56,630 + TTL

Wayne