On January 25, 2023 Tesla announced that Q4 2022 revenue was $24.3B up 37% YoY and GAAP net income was $3.7B up 59% YoY growth. GAAP Earnings per share came in at $1.07, 57% YoY growth. Net cash ended the quarter at $22B. In the shareholder presentation, it mentioned free cash flow is $1.4B in Q4. Reaction from investors on the following day was very favorable. Tesla shares on January 26 2023 at the time of this writing is trading significantly higher from the prior closing at $157.52, +13.09 (+8.97%) and volume at 88,244,722.
6.5GWh energy storage were deployed all of 2022 up 64% YoY. 2022 also saw total worldwide vehicle deliveries of 1.31 million. Through operational leverage, localized factories, cost reductions in the design of the vehicles, Tesla is able to support lower average selling prices ASP) from 2017 to 2022 while increasing operating margin from -14% to +17% during that period.
During the call Elon first addressed the question on most investor’s mind. He believes for 2023, demand for the Tesla cars will out pace its production capacity. He mentions that demand for January thus far has been the strongest in company’s history. He expects in 2023 they will produce 1.8 million vehicles on pace for 50% unit growth.
Q & A
There is question about whether margin might drop to below 20% as a result of the recent price drops. CFO Zach Kirkhorn replied that much of 2022, many cars had prices that were locked in prior to the hike due to long ordering queue. The ASP did not drop as much as the price suggests. Elon added that all the cars Tesla is selling are FSD capable. When FSD gets better the value of the cars will go up. FSD gross margin is 100%.
Questions came up about future lower cost products and Elon says more details will be revealed on investor day. A product designed for lower cost and leveraging the R&D spent on prior cars can increase the total addressable market and open up their cars to a greater pool of customers while keeping margins healthy.
Question from retail investor asks if Elon’s political statements in Twitter has been a negative for the company. Elon addressed the question and says he is by far the most popular user on Twitter with over 120M followers. Rather than a negative, he believes his continue increase in followers count is a sign of his approval rating and his social media actually benefits the company.
On Cybertruck production,Elon mentions Cybertruck will likely enter start of production this year. While is an important milestone, he reminds audience that the production ramp is exponential and will start very small. He says the more important metric is volume production of Cybertruck. For that he says it will take place more likely in 2024. Cybertruck therefore will not contribute significantly to the 2023 revenue and income.
Investor Day
Tesla will have more details on Cybertruck production readiness and new car developments on their Investor Day. It will be scheduled on March 1st 2023.