Tesla 2022 Q3 quarterly report: (https://tesla-cdn.thron.com/static/WTULXQ_TSLA_Q3_2022_Update_KPK2Y7.pdf)
Conference call and other links: (Tesla Investor Relations)
Tesla’s best quarter ever in most respects, but beat analyst EPS estimates by only a little. Mostly, so far as I can tell, due to vehicle average selling prices being a bit lower than expected. Most of that attributable to lower than usual regulatory credit sales, and foreign exchange issues due to the strong dollar.
Tesla could have made up for this by just selling more cars, but they decided to (finally) smooth out the delivery wave a bit. As they’ve grown they’ve been straining the capacity of their delivery systems during their usual end of quarter pushes. So they’re spreading out the deliveries, which should make transport and various expediting costs go down. But, in the immediate term it means some of what would have been Q3 deliveries get pushed to Q4. See the chart of page 21 of the quarterly report for some details.
Lots of pretty charts and pictures in the report. The trailing twelve month charts on page 19 continue to be things of beauty. Forward guidance is that this will continue for as far as the eye can see.
Great summary of what really counts. Don’t sweat the details.
What makes production cyclical?
You can imagine vehicles with minor repairable defects waiting for repair and a push to get them out by end of quarter. But why not steady state rather than cyclicality?
Maybe they are telling us this problem is finally receiving management attention.
IGU can probably explain it better, but my understanding is that it isn’t production that’s cyclical. It’s deliveries.
IOW, the factories produce at a constant rate. But at the beginning of the quarter, they produce mostly for distant markets that don’t have a local factory. Later in the quarter, they start shifting to production for local markets.
So, for example, at the beginning of the quarter Shanghai will produce a lot of cars for the European market; then, later in the quarter, they will produce a lot more cars for the Chinese market. Production remains constant, but they have fewer deliveries at the beginning of the quarter (when production is being loaded onto cargo ships instead of going out to nearby customers), and more at the end of the quarter (when the cargo ships are reaching their destination and the nearby customers are getting their fresh-from-the factory deliveries). That happens to a lesser extent domestically in the U.S., as Tesla emphasizes trying to deliver to California buyers at the very end of the quarter so that they don’t have a lot of vehicles stuck in transit when the quarter ticks over.
Having a factory in Berlin will certainly ease that, as will having a second location in the U.S.
Production isn’t cyclical, deliveries are. Did you look at page 21 of the quarterly report as I suggested? Explained there.
They have, historically, been minimizing the number of vehicles in transit at the end of each quarter. This is expensive and difficult, not to mention a poor use of resources. But it makes Wall St. happy. They have been saying for years that they’re going to stop this nonsense, but they haven’t. Now they’re starting to.