Tesla needs to get the Cybertruck to production and deliver to customers. The truck is a big hit and a smooth ramp can grow Tesla’s revenue. In a tweet, investor Dan Ives listed 10 recommendations Tesla should follow to course correct for 2023 for success. The Cybertruck makes it to Dan’s list at #5.
Execute on reducing cost of vehicles. 2023 will be a tough year as interest rate keep rising. Cars which are usually sold via loan will be impacted. New EV credit can help offset the rising cost. Tesla may also need to lower price of Model 3 and Model Y. Ramping up the new cell form factor 4680 cells can reduce cost. The switch to front and rear single piece pressed structure reduced build time and cost. This is related to Dan’s list at #3 which is Reduce delivery targets to 35% growth rate. He believes unit deliverables might grow slower in 2023. Elon Musk had said he rather have higher unit sales than lower sales and maintain margins.
Improve FSD. Take advantage of the large increase in number of users enabled for FSD Beta to accelerate the rate of improvement. The larger user base increases the chance for covering the corner cases that the Tesla FSD development team has encountered before. Solving FSD is similar to memorizing the 12×12 multiplication table. To get competency in multiplication you need to memory all the 12×12 squares. (Actually, it’s half of 12×12 due to communitive property of multiplication. ) FSD currently has gaps because it has not seen every single type of roads and driving situation. By encountering these gaps at a higher rate with larger user base, the FSD development team can close the gap quicker.
Continue to ramp Texas and Berlin Gigafactory.
Announce New factory
Announce new $30k model.
Tesla share price can also improve on sentiment change. On Dan’s list at #1 Name a CEO for twitter and #2 strategic plan for Twitter will help. CEO change should happen after Twitter is in good financial shape and stabilized and start delivering new features that generate revenue. The blue check mark that brings in $8 /month helps offset ad revenue decline. The staff reduction helps cut expenses significantly. These two actions help balance Twitter’s cashflow. With a financially stronger Twitter, Elon Musk will not have to sell additional Tesla shares. Dan listed Elon selling Tesla shares as a concern at #2. In a recent Twitter space conference, Elon had pledge he will not sell shares until 2024.
At #7 on Dan’s list is for Tesla to announce share buyback. In bad economic times, companies need to have strong balance sheet. Loans will be hard to come by and interest rates are not favorable. Tesla should only do buyback if there’s enough cash leftover after accounting for factory expansion and R&D for new car development. The share price also needs to be much below fair price for share buyback to pay off for shareholders.
Tesla has a lot of positives going for it in 2023. Executing on these items will make 2023 a success.