Somebody to this live stream of the Tesla Q1 2023 results. We are going to be covering the entire thing, so the results should be coming out in about seven minutes from when this live stream starts. that's going to be about 4 pm. EST If you're in America it's going to be 9 p.m UK adjust for for wherever you are.

If you're starting watching this later on, it's going to be about seven to eight minutes until the results come out. so you might want to skip until that bit. Um, to get the data. So what we're going to do is we're going to go and read through the results.

We're then going to go and discuss the some of the numbers. We're going to try to understand what's happening with the margins, what's happening with the earnings, what's happening with Revenue growth or not? Um, all of that to be discussed later and hopefully by the time we finish talking through all of that stuff, it will be time for us to go and join Mr Musk and the rest of the board. Um, on the Ernie's call that is going to be this didn't age well. Oh my God people I'm going to read some of your comment.

If you have any interesting comments, please find them. I have comments screen on here and on here I I have two different places where I can read them um and the main screen where we're going to be looking at the early so we're going to be listening to the earnings call. I will interject very occasionally if there's something useful or important, but generally I'll just probably not. Uh, talk over.

uh, they only score too much, but hopefully throughout this whole thing I'll provide a bit of commentary and if you appreciate commentary that is neither hating on Tesla and wanting you know to just make up and just say whatever. um or if you know if if if you want a little bit of the Rose tinted spectacle stuff but maybe with a bit of fair criticism at the same time, this is the right place for you. If you want the everything is perfect Tesla Can do no wrong. They are the best company the world has ever seen.

Um Etc There are probably more fanboyish kind of live streams that you can join out there that will deliver that in in bucket. Force So please, please please go and decide, decide what what kind of version of the coverage it is that you want. Um, here. Um, we're going to be just calling Spade Spades And this earnings call is maybe maybe one of the most important ones that we've had in a long while.

And the reason it's really important is because um, starting from uh about I think currently these a day but about a week into December from memory um Tesla started cutting prices and so the first cut starts right at the end of the Q4 so they didn't impact Q4 numbers all that much although Q4 Also, motor gross margins did drop on the back of that despite the two factories ramping um. and then the prices really started tumbling. Uh, first in the US, then China. Then around the world we've had two rounds of it, and yesterday we've had the third round start in the US Which presumably means that we're going to have another round in China, another round in Europe.

And this is really riled a load of people because Um, On the one hand, there is this argument that Tesla has a a long-term mission that you know you know is to pass on Savings of lower production costs, more scale, etc etc. to customers. However, Tesla does need to invest a load of cash in the coming years into building new factories, the development of new models Etc that is coming down the line. Um, and if margins begin collapsing as a result of all of these price, Cuts we're going to see exactly what's happened in Q1 in just a few minutes.

If the result, if the result is emergence collapsing I Think some of the investors are going to begin having question marks in their heads because the company can perform really, really well. The company can do really, really well, but at the same exact time, they might not be the best company to invest in if the margins are having to reduce in order to sell more cars. And and there's this perennial argument you know, um, when the prices were going up, they were going up, because there was a huge amount of demand. and that is the case.

So you had to wait six nine months Etc to get your car. Um, and that you know because the demand was so high relative to production Tesla Had to go and increase prices. But now that we're in a situation where prices are, um, having to come down, the argument is 52. Oh well, it was always Tesla's long-term Mission You see, it was always in the pipeline.

They were always going to go and reduce costs. And it is true. There were two factories ramping the cost of production is going to reduce in the per car basis. Because those car factories have a lot of overheads, they're now going to be divided between a lot more cars and also commodity prices have come down.

Although it is not really clear as to exactly how far in advance Tesla buys these and what kind of deals it has, what the longevity on those deals is. ETC So we don't know exactly how much that's going to play into q1 or Q2 numbers However The fact is, and I think regardless of where you and where you sit, whether you're a Tesla investor, whether you're a Tesla hater. the fact is, um, demand relative to production for Tesla has dropped right. Um, the reason is like if if it was in the same place in relative terms proportionally would still be having long wait times and the prices would not be coming down because the price would have to come up to manage that.

uh, demand. but relative to the current level of production, demand is not as high. There's lots of reasons why there's the economy, you know. cost of living crisis.

People are not as prepared as as able to go and buy cars that cost a lot of money. There's all these different issues. Um, we're gonna just go and check. uh what's going on? Uh, on the Press on on this.

Let me just let me stick my face next to this so that we can go and check and refresh this every now and then. Um, hi to everybody who's joining. I'm looking forward to turn on Super Chat I thought it was on. um okay, I'll I'll I'll turn it on.

but um, in a few minutes. In a few minutes just after this, um, turns on? um, hopefully there's going to be a second. I'm going to figure out how to turn on all the different features that people want people want people are going to get. How do you even turn the stuff on? Nobody knows.

Um yeah. I don't know? Uh, live chat, slow mo I don't know I don't know how you even turn it on? maybe I don't know? Whatever. All right. Uh, we have quite a lot of people in here.

Thank you very much for joining I Really appreciate it As soon as the data comes in, we're gonna go and um, cover it. Thank you very much to everybody who is joining from the Discord I Can see quite a few uh faces that I know, um and I appreciate it in advance. Uh for you deleting um uh, all the spam that's going to come inevitably. if somebody can't hear anything, maybe try turning the volume on it.

um I think it's all good because nobody else is is voting opinion. We have the questions over here. We're going to go through the questions. um in a second.

Uh, because uh, the top X number of these are going to get asked. Uh, so we're going to go through and discuss, um, what these are. Uh, after we've covered the the data, the shareholder that actually turn up over here. Um, but yeah, these earnings are kind of interesting that nobody really knows exactly what to expect.

We all know that margins are going to drop. The real question is how much the problem with Tesla is that the vast majority of people who cover it are very strong? Bulls So there is a wave of optimism that, although it's only been one quarter, and production in Q1 wasn't like millions of miles ahead in terms of total volume of what production was in Q4 Despite these things, Um, put it up a chart if possible. We're going to look at everything visually. uh, as much as possible.

Um, despite these things, the likelihood is that in just the space of three months, um, the cost of production for Tesla has not reduced to a point where they should be very easily able to swallow a what's being depending on which numbers you look because different models have come down at different rates. Etc But something like 20 24 drops in prices And obviously these drops happen through the quarter. So right at the beginning of January people taking deliveries of all of those ships that were arriving from memory like around turn of the Year, those would have been going through at pre-price drop prices. So the effect of all these price drops will be felt considerably more.

Uh, when we see the numbers for uh for Q2 uh come true and obviously just a few. Just what. Yesterday the prices came down. even more so there's going to be um, um.

However, it is important to remember that these are short-term fluctuations and as so for you know, for those who are not aware, I'm a Tesla investor and I have a reasonably big position in Tesla Um, and so this is one where I I feel you can appreciate some of the short-term headwinds and short term. Here, you know, several quarters, um, sort of time frame What? I Think a lot of people when I talk about short-term long term. Uh, misinterpreters are being what's going to happen today or tomorrow or next week. Um, but um, but the long term? Oh, here we go.

Shut up. Sasha Let's look at the data. Let's let's have a look at the data. Uh, what's gonna happen? Come on.

everyone's loading the same thing. Come on Tesla Server: Give me, give it to me. what have we got? Oh, there is thank you so much. I'm gonna have a coffee or a bit of beer Later is maybe where I'm going to spend.

Although maybe you'll have to be spent on coffee tomorrow morning. All right, let's have a look quickly. We'll read the stuff later, but let's have a look. Um, wowed.

The total margin has fallen to 19.3 percent Operating margin: 11.4 The operating margin that I think is going to be a lot lower than what many people expected. Um, that's low. It's going to be interesting to see what has affected that. Justin Bieber Margin: 18.3 percent If you guys not see this, hopefully you can see this.

Um, all right. what do we got? EPS On a gap basis 73 cents 85 This is a lot lower than what many people were expecting this time around. I think Wall Street was sitting around 85 or something and I've been warning about this on social media for quite a while and here we are and Q2 numbers are going to be a lot worse than this probably. Um, this is pretty bad.

Um, in terms of the bottom line profitability. but we're going to go through the numbers in a bit more detail and try to understand what's going on. obviously production numbers. we already know um, the global vehicle inventory as is at 15.

So if you believe all those numbers in terms of on Twitter people adding up what the inventory numbers are Etc Um, if you believe those numbers, this number was projected to be 16. by Tesla's own manufacturing numbers. By the difference between the deliveries and the production I Thought that this number the total Global vehicle uh days of Supply would be 16 or 17.. it's coming 15.

I Guess it depends how it's defined, but it's growing. Um that that thing to be aware of solar deployed and this to nothing. Uh, very low quarter, but storage deployed? Very, very very high. This is a really, really good sign of progress.

We'll come in a second and go and look through the P L in a bit more detail. Actually, why don't we do that now and then we're going through through all the little things. Let's go and look through the detail. P L So Automotive Sales let me get my trusty Casio I had a much more trusty Casio before that I had since school but it died on me.

So I now have this FX 83 Ms that I'm going to have to learn to use better I'm very sad about it. It happened a few months back but I can't get over it. So automated sales. So this is stuff before regulatory credits and before, um, uh, the leasing stuff.

We've got 20.241 on Revenue we have 15.4 on costs. So what does that make? Uh, 20 to uh, come on. 20 241 minus 15 433 divided by 22 for one. Um, 23.8 That's actually pretty good.

That's actually really good. Um, given these price, Cuts So I'm expecting there's going to be a bunch of surprising surprises somewhere else. and I can already see some of the surprises further down. so on on the car prices.

Oh sorry, wrong column sorry I was like oh man, thank you for pointing it out I'm an idiot I was I was too I I I ignored the pink. what is it? 18.3 All right. okay, 18.3 Okay, that's more like it. Thank you for pointing it I'm I'm a dumbass.

All right. 18.3 That's that. That's that's low. That's probably about kind of roughly where I was expecting it, probably below where most of the and Twitter personalities were expecting it.

But but let's look at energy. so create credits. Nobody cares. Half a billion there.

Leasing: Again, nobody really cares. Energy Generation storage. We have 1.5 billion. Um, against 1.7 Okay, so it's going to be interesting seeing the commentary.

What they say about this: What is it? No, sorry 1.36 because this is improving. Um, and this last one was just over 100 million. Now we're at almost 200 million for engineeration storage, which is pretty good in terms of margins. we're you know, sitting at what is it 12, 13, 14 So energy is is is is doing something.

Finally, it's like you know that Meme when somebody's standing there poking the thing on the floor with the stick like you do something? Um, that I Feel that? That's what Tesla's been doing with their energy business for quite a few quarters because of batteries being prioritized going into cars. but um, on the operating expenses. everything kind of in line with, so there's nothing in here that looks out of place. The real, the real thing is if you look at the cost, the cost of being very consistent managed very well.

Etc But what's happened is 1.4 billion dollars came off the sales. Um, the cost is almost in the same place on the production. So the car factories Etc which is a little bit surprising. So obviously there's been a few um, upsides on improving production on the lower commodity costs Etc Because as the factories have been ramping, they've been hiring a load of people so that the cost should have probably gone up a little bit in Texas and Berlin.

So the fact these two are very consistent Automotive Sales indicates that they are getting some benefits from the scaling, but 1.4 billion down despite selling a heck of a lot more cars, right? If we look at the delivery numbers, where are they here we go? Delivery number is 422 versus 405. So a pretty reasonable step up and we're seeing the impact of uh and by the way, I'm gonna just find what's happening with Tesla stock in that after market. Uh, what are people saying? Oh, it's not doing well at all. Oh, people are not taking this very well.

Um, only 1.1 percent down. aftermarket. It was tanking in the right. It looks like somebody was front running because it was tanking a lot just before the Bell but what's happening? What's happening I Accept Uh, we'll come to that later.

I think I think maybe it's just a little bit too early to get the the aftermarket data anyway I need to get the the pay for the life Anyway, let's go and look and read through everything um and cover the actual details. Um in in what's actually happening here So 11.4 operating margin in Q1 Remember last time around uh when they were discussing numbers Tesla was trying to make a point through Zach Kirkland the CFO That operating margin is ultimately what Tesla should be measured on and it's really interesting because he made that point and the operating margin is now tanks significantly because of these price Cuts So it'd be interesting to see how they position this because two earning scores ago I think it was um Elon Musk was answering any question and he was saying Tesla is very happy to run the margins down while we're in this downturn in the economy wild. Um, you know all of the stuff is happening post Ukraine energy, blah blah blah. whatever.

He's happy to reduce margins all the way down to zero if necessary while maintaining growth and production. The question mark is going to be: is the growth of production this year going to be substantial enough because they're currently still guiding and not really any substantial growth from Q1 up to Q4 Sure, year on year there's going to be growth, but through the year they're not saying. Although you know, maybe maybe there's that. Maggie Morsi Um 2.7 billion Gap operating income in Q1 2.5 billion Gap net income in Q1 2.9 billion non-gapna income So they're really focusing on the fact that they're remaining profit.

It's almost like look, our margins dropped. but here, look, we are making money. It's okay. Calm down, call fire.

Like three separate points at the top. like we're making money Cash Operating cash flow 2.5 billion and free cash flow of 0.4 billion dollars in Q1. This is, um, interesting. Let's have a look on the detailed P L: Where is it One sec sorry I need I need to drink some tea otherwise I'm gonna lose my voice way too early.

Foreign vestments? Um, two billion? What's this? Proceeds of maturities? Investments 1.4 So they got they got some money back. Uh, from whatever it is that matured. have they still got that stupid Bitcoin on there? Yeah, they still got that Bitcoin 184 million? All right. sorry I Digress: I I Uh.

jumped all right operations Cyber Truck Factory Tooling on track producing Alpha versions. This is good news everyone. I Think kind of moved on to expecting Cyber Truck to only really start producing any sort of numbers right the end of the year are best to be included if that happens earlier. Pretty good.

I Guess we'll probably find out on this call as to where it's at because originally they were targeting June Um and given that we're sort of at the end of April Um, presumably if they were delivering them to customers in June would probably hear something about you know I don't know. final pricing timelines something so I'm guessing we still have a little way to go because remember Alpha versions of the cars manufactured in Berlin were showing up I Think it was like September time for starting late August September Time and the first cars were actually coming out the factory for actual sales and deliveries to customers in mid to late April So there was quite a long lead. Um, and obviously there's a lot of variables that are different here. like Cyber Truck is a brand new car.

the model Y was not, so this may increase the time. However, it's also being manufactured in Texas and um, you know where their HQ is and maybe initial runs are going to be relatively small volume so they could start sooner. Whatever. Model Y was the best-selling vehicle in Europe in Q1.

Um, if you've been on social media, you'll know this, but this is pretty impressive. Not, you know, electric vehicle Model Y has become incredibly popular across. Europe in March was the best-selling car in the UK where I live, but in many other countries there's been the case for a while places like Norway but it's pretty impressive and Moto y was the best-selling vehicle in the US in Q1 excluding pickups. Hopefully, the Cyber truck will address that excluding bit.

All right. Tesla's dropping. People are saying it's now dropped to below 175. Yeah, Um, people look, people don't like the margins.

Um, I mentioned in the Discord um earlier today that this is exactly what I expect to be happening I expect Tesla price to tank significantly after this. Um, but I didn't do anything on the back of this expectation I Just hold my position because, uh, guessing this kind of stuff is usually not not. Not a mathematically a good idea, but let's read the summary. In the current macroeconomic environment, we see this year as a unique opportunity for Tesla.

As many car makers are working through challenges with the unit economics of the EV programs, we aim to leverage our position as a cost leader. We are focused on rapidly growing production investments in Autonomy and vehicle software, and remaining on track with their growth. Investments This is a really interesting opening paragraph. The reason it's really interesting is they're kind of between the lines trying to tell their investors.

Look, we know that the margins are dropping, but uh, one of the things that we're trying to do here. and they're not saying this, but between the lines. This first paragraph saying look, these price cuts are going to really a lot of our competition because the competition is not, wasn't able to produce Um cars at any kind of profit. they were losing money in every car sold in the EV space before these price cuts are really gonna pull.

um, a lot of them underwater. Um, it's going to be interesting with some of the new challenges as well, because obviously Lucid Um has reported very low sales for Q1 Lucia There's not really material on the grand scheme of things, but it's just as an example: with the model S prices collapsing by twenty thousand dollars, Twenty Five thousand dollars. Whatever it is. Um, that's going to be another very, very substantial blow to these guys trying to get this slice of the pie in the future.

And if Tesla is able to run at, you know, a margin 18 point? Whatever it was three percent automated, gross margin is still pretty good. Uh, still a pretty good margin. It's important to remember because it's easy to kind of think oh my goodness, it's so low, but it's Still It's still, extremely healthy. I'm sure they're going to show a chart further down.

Um, that highlights this when we look at the numbers, but they're basically saying look, bear with us, we're doing this and we're going to kill a bunch of people in the process. Um, and as we grow ourselves, uh, investment's gonna begin coming. Uh, coming in and paying off, um, in the long run. Anyway, all right.

so our near-term pricing strategy considers a long-term view on the per vehicle profitability. Given the potential lifetime value of a Tesla vehicle through Autonomy, supercharging, connectivity and service, we expect that a product pricing will continue to evolve upwards or downwards depending on the number of factors. So they're kind of saying, look, our prices are gonna be flexible and that's just the sort of company that we are and the sort of thing we do I Kind of disagree slightly in the sense that, um, good marketing doesn't necessarily have to be just marketing or like adverts and things like that, good marketing. It also means stability in the brand, people knowing what to expect.

Etc And when prices of vehicles oscillate, um, considerably, you do have a bunch of significant downsides as well as upsides of, you know, we pass on things that we can to customers. Downsize being if you're a customer in the market for a Tesla and I was saying this several days ago, you know you'd be sitting there going Should I buy one now or do I wait a week because the price is going to come down another two thousand dollars. and hey, what happened yesterday the price came down another two thousand dollars. So you're sitting there going if it's not urgent.

If you don't have to buy a car, a lot of people are going to be putting off the purchases and like whether you're a big ball, whether you hate Tesla that is that is a fact that is the sort of you're inciting that kind of behavior here by creating these very arbitrary, like very consistent, just down, down, continuously moving the price. You also have an issue where the customers that you booked um, before us and the customers who bought your car like three months ago, you are eroding their Customer Loyalty by saying well look I've just made your used car price twenty five thousand dollars less than it would have been and as a result, if that, you know if the customer keeps the car it's not really a big deal because it's a sun cost fallacy. But if people need to sell their car if there's whatever, like life reasons Etc you're not going to be building Lifetime, You know, Brand Ambassadors. Uh, by doing this kind of stuff, there are downsides.

There are downsides to doing this. Although we implemented price reductions on many vehicle models across regions in the first quarter, our operating margins reduced at a manageable rate. We expect ongoing cost reduction of our vehicles including improved production efficiency at our newest factories and lower logistic costs, and remain focused on operating leverage as we scale. We are rapidly growing energy storage production capacity at Omega Factory in Lathrop and we recently announced a new Mega Factory in Shanghai.

Yeah, so that's that's the one really big positive that we saw I mean Obviously relatively speaking, this is still a tiny business. It's not even a 200 million gross profit type business for Tesla which is insignificant compared to cars. But the relative growth Step Up in Q1 was really good and that's only coming from California at the moment. So I was like.

that's really really good news because in the long run, that I think is where Tesla is going to be making quite a bit of money. All right. We're also continuing to execute our product roadmap including cyber Truck a Next Generation Vehicle Platform autonomy and other AI enabled products. When are they going to give this next Generation vehicle platform a name? Are they still thinking about it or are they just gonna waiting for the optimal time to tell the world? Um, we'll see a balance sheet a Net Income enables to continue making these capsule expenditures in line with their future growth.

In this environment, We believe it makes sense to push forward to ensure we lay a proper foundation for the best possible feature a paragraph that doesn't really say anything. All right. in terms of the numbers Total: Um Automotive Revenues: 19.963 billion Um, and another three and a half billion coming from other so of which 1.5 billion coming from energy generation storage, 1.8 bidding coming from sources. And and it's interesting because the services and other line is just growing slowly but surely as the fleet of the cars grows as there's more potential customers to go and sell various different things you know, car maintenance Etc et cetera et cetera.

Etc Um, there's going to be This line is is one that nobody's really been paying attention to, but is there Um and is playing into Um, the revenues and the profitability? Operating expenses Very consistent. We just saw that a second ago. Income from operations: 2.66 billion Um, and you can see that in the year on year numbers. Um, it's quite.

It's quite interesting because year on year growth in automotive revenues is 18. As investor looking at going, it's good. But Tesla as a stock rather than Tesla as a company is priced on quite substantial long-term growth and if you're growing units, but your margins are eroding and you expect it in order to go from you know, manufacturing a run rate of 1.8 million cars a year this year, to manufacturing at a run rate of 20 million or whatever it is the Tesla theoretically wants to get to at some point, maybe in the future. I Think there is a no chance they'll get to that level in 2030 Personally, with a what are we mid approaching the middle of 2023 and we have one Factory and no additional phases under construction.

But anyway, um, people are going to begin questioning this. So when you see the price drop in the stock, there is a reason to it. It's not just dumb people doing dumb things. The reason being is Tesla company can execute extremely well Tesla The company can go and Electrify the entire world right? Tesla The company you can go and in advance, the electrification and green energy and all this stuff.

but if they're not at the same time making a shitload of profit while they're doing it, then Tesla The stock may not be as good an investment as other options and the question marks is going to be I think And this is probably where I'm hoping where the questions are going to be from investors on the call and maybe some of the discussion involving Elon question reminds me when the economy bounces how flexible is Tesla going to be at that point Whenever that happens late this year, next year, the year after, whenever to be able to increase prices to go and pull the margins back up because you know you're going to get to this point where people are, um, expecting prices to be in a certain range. Is it going to detrimentally impact, uh, demand? Uh, are, Tesla gonna be uh, having competitors at that point or not And a lot of interesting things to consider? Um at that point? All right. Tesla Price apparently down 172 dollars? All right. Um, adjusted Ebit Dart has dropped to the lowest um in three quarters, like lower than it was in Q1 last year minus 15 And these are all very, very real numbers Because when investors are looking at this, they're going and saying okay, Well, price drops were happening through the quarter.

There was actually quite a big drop really late on in the quarter. there was the big one in the beginning of January then the big one. Um, late on the quarter. Now we've also had a huge one dropped just yesterday.

like I Think the bait. the cheapest model dropped by two thousand dollars. So when investor can be looking, they're saying okay, so revenue is going to continue falling um, on a per car basis and the total revenue will probably continue falling um, next quarter as well. The profitability is going to fall even more and we're going to be seeing margins for so you know, margins now 19.3 on a gross basis and we're already down to just earning 73 cents on a gap.

Look, we're earning 95 cents a year ago, so 23 down already and a lot of people are kind of saying look, um, the revenue the the price of the cars has come down 20 whatever percent. But you know, scaling the factories, blah blah blah commodity prices, reducing. That's definitely of course going to mean that Tesla will be able to make all of that up in just one quarter and the answer is no, you can't I Mean maybe over time, maybe in two years, Maybe in two and a half years they'll be able to improve their production to a point where they can swallow that. But it's not going to happen overnight.

And what that means is that next quarter when we're seeing this number, we're probably going to be seeing profitability of dip even further from here. So if we're seeing profitability dip even further from here on, you know in percentage terms people are going to begin asking questions. You know, because up to now people are just kind of taking for granted that margins can just be multiplied by a higher number of total cars. and therefore the Tesla stock price is worth a lot of money.

Now you, the status quo is changing and now the question was going to be well, Tesla will probably be able to increase margins and add all these additional things, but the current valuation assumes quite a lot of margins at quite large volume growth and for quite a long period of time. So so so I Think there's very valid questions that are being asked here. It'd be really interesting to see how they address this and how they talk about it because I I Know the opening remarks are going to be very lawyer designed as they have been last three earnings calls or whatever. but it's what happens when Elon has one of his brain farts or when one of the analysts asks a question.

um, from the left field. Um, that's going to be uh, interesting I'm sure Capex minus 2.1 billion dollars. So quite substantial actually on the Capex front, so obviously they're installing more Machinery Uh, finishing some of the build-outs I guess, but quite substantial. This Capex line is going to be very consistent.

Um, until they start building the factory at which point will go up because obviously a lot of the building cost of the two new factories are going to be spread over quite long periods of time. So we're going to be seeing the same sort of number show up in this field. um, all the time. But you can see here, the free cash flow number has gone right down to zero and this, ultimately, as a shareholder, is kind of what you care about.

Um, for anyone asking the question, the earnings score is going to be on in about an hour's time at about 5 30 PM EST Um, 10 30 p.m UK We're going to be covering it. Live right here. So if you want to go and listen to it, uh, you can say right here, uh, it will be right on here whenever it happens. Just ask for talk numbers I Just have to talk to analysis.

The good news is you know why all this is happening. While it's craziness, craziness is happening, Cash is remaining High Cash is still a 22.4 billion. That's quite a big war chest. Tesla has, um, the ability to weather quite a lot of storms.

However, having said that, imagine a situation where profitability dips are much next quarter that the free cash flow number is negative. This is possible. It's it's a plus 400 million down from you know, quite strong figures. Over the past year, it's possible at this point people are going to begin naturally asking the question.

Well, hang on. So if you're ramping all these factories you're gonna, you still have low demand. Maybe the economy takes quite a while to go and really recover from these high inflation periods. blah blah blah.

Um, you can watch here. The call right here in one hour is it is it? Am I Am I Listen, Listen, one second one. is it 10 30? Yeah, Okay, yeah, we've got one hour. it's gonna be on here.

If anyone asks the question, tell them it's going to be right here. Okay, so um Tesla YouTube Yep, you can watch on tested. YouTube But if you want a bit of commentary, some thoughts, and maybe just partake in the discussion in the comments with me and other people, feel free to stick around. It's going to be right in here as well.

Uh, you can go and watch a direct if you want. All right, what does this say Revenue Um, total revenue grew 24 year on year in Q1 to 2.23.3 billion year and year Revenue was impacted by the following items plus growth and vehicle deliveries plus growth in other parts of the business minus uh, reduced ASP year on year excluding FX Impact sorry ASP being average selling price negative effects impact of 0.8 billion dollars. it's quite substantial actually. I Mean given given things have normalized quite a lot I Guess my the normalized through the quarter so probably Q2 This becomes meaningless and nobody's nobody reports on it.

Um, Profitability: Our operating income decreased year on year to 2.7 billion dollars. It's quite unusual to read a decreased year on year on profitability for Tesla Let's see how they word this: Uh, resulting in an 11.4 operating margin you're on. Your operating income is primarily impacted by the following items plus greater vehicle deliveries. This is funny, despite imagine headwind from under the utilization practices because look I know that this is sort of saying what we think it's saying but I actually think that they are being core and smart in this as well because what they're really doing is they're kind of saying look Revenue not growing at the sort of 40 50 like level that you might want.

Profitability is down right as a bad sign and in the reasons for these things happening, they're not really giving in the reason, they're giving you a reassurance. In a way, they're kind of saying look, yes, profitability is down. but remember, vehicle numbers are growing and that is ultimately the aim at this stage and blah blah blah. So it's kind of interesting because I think a lot of this.

A lot of this wording so far that we've read is kind of, um, managing investor expectations Thank you very much Philip By the way, I'm gonna have so much beer on this. Uh, really, really appreciate it. It's extremely kind. Thank you.

Stop invading Ukraine Is this address to me? You should go and watch my video When that first happened I Collected quite a lot of money for refugees hot meals. Uh well. I donated a lot but my supporters donated even more than I did so. Um, not sure if this is directed than me, but there we go.

Um I Guess having um, been born and grew up in Russia it has its downsides and people's perceptions. Um, gross profit? um, growth in energy business as well as Services Another, This is the most positive thing I've seen so far. Uh, the gross profit? uh, number on energy Uh, suddenly beginning to deliver 200 million almost on a 1.5 billion dollar Revenue stream that's pretty good minus reduced average selling price year on year minus higher raw material commodity Logistics and warranty cost. This is quite an interesting one because we have just come down.

Um, in terms of prices of Um so shipping has come down in price considerably. Um, many of the raw materials like Lithium Etc has come down like hugely recently. Aluminum is down. not a lot, but a bit.

Um, so if you look at the Commodities and stuff they've they are all doing a lot better. So I Guess the question mark here is how they account for the various different for the various different ways that they buy in advance long-term time frames I Don't know. So it's interesting that they're kind of citing this. although the prices of these of many of these things are actually significantly on the way down.

Um, there we go. Cost of production ramp of 4680 cells? Uh, uh. minus cut. So so they're in.

so the 4680 cells at the moment are still burning money for them. So although they're making more and more cars and they've just recently started selling more variants, um, coming out of the Texas Factory with the 4680 cells, they're still citing it as a negative on a cost of Um on a profitability that's really interesting. I Think like, as a point, let me just write this down because that's something I did not expect to see in here. Um, and lower credit revenues it seems.

Okay, minus 4680 cell costs okay, cash quarter and cash cash equivalence and Investments increase sequentially by 217 million dollars to 22.4 billion Q1 driven mainly by free cash flow of 441 million, partially offset by other financing activities including debt repayments. Oh yeah, I haven't even looked at what the debt situation was. Did they repay it all? Um, so I'm presuming not all because it still had a little bit. Where is it? Balance sheet? Um, debt? 1.27 Okay, it's pretty.

It's getting pretty low. It's getting pretty low, All right. Let's go back and read what the rest of it says. Okay, I think we've been through this whole Um table.

Tesla except for the bottom bit Tesla Locations 1000 grew slightly, mobile service three grew slightly 27 and 23 year on Um. year on. Year Good. Um, not growing anywhere near as much as the cars are growing.

So I think it's just a consideration for while you're ramping production of cars, it is critical to ensure that service levels remain where they need to be. And I don't know if there's a one-to-one relationship. probably not. Um, probably a lot of it is geography driven.

You know, like you need presence in particular locations and each particular location is probably not 100 utilized when it first shows up. Um, but we're seeing a bit of a pickup. A little bit of a pickup in the superchargers. Uh, which is good.

Um, yeah. so so that's what. Plus two and a half thousand supercharger connections quarter and quarter. Um, last quarter we saw a little pickup as well.

It's interesting to note like these obviously don't include um, all the charges that people are building at home. Which is where this is all going to swing towards in the long run, because at the moment, every single car has to visit the petrol station every single time. Gas station, whatever you want to call it every single time, they need to go and fill up, right? Um, in the long term, this won't be the case. and you're going to have, um, you know, the vast majority of trips.

Um, not requiring charging on the road unless you're going long distances. or for some, you know, park somewhere where you couldn't charge overnight, whatever it is. So um, I get, But let's read some of this stuff. So what? What we've got in the charts: Market share of Tesla vehicles by region.

This is the same chart they always showing. it's growing U.S and Canada Fast approaching four percent and next quarter might hit percent of the total And it's no, not bad. Pretty impressive. Um, if you think about the total, Market Um, you know, even the biggest manufacturers still have a relatively low percentage of the total.

So getting to somewhat noticeable figures now: Europe Um is uh, at what 2.3 whatever it is, China is breaking two percent in Q1 China Sales towards the end of the quarter did really, really well. Let's look at the installed annual vehicle capacity: Model S Model X 100 000 in California model 3y 550 000 Shanghai All of these numbers are exactly the same as they were: Berlin Oh Berlin now says let me let me just double check. This was this number different last time around. Was this number different? It was I was right Berlin Look, it said 250 000 last time.

See yeah! I spotted it. It now says more than 350 000 while Texas still says just 250 000. So that's interesting because Berlin is ramping a bit ahead of a bit ahead of Texas People expected that probably Texas would run faster just simply because it's the HQ it's in America it's closer to California It shares some of the staff blah blah blah um and Berlin has had all the problems with red tape. but look, Berlin is ramping a little bit faster.

They're now saying the installed capacity is um greater in Berlin it across the 5 000 vehicle. Mark Um, just before I think Texas crossed a 4 000 vehicle a week Mark So the Berlin Factory's doing very, very well and it's interesting that it's been acknowledged. um in this line over here. Let me write that down: Berlin 350k capacity Okay, Cyber Truck tooling.

um Tesla Semi Pilot Oh this is interesting. This is interesting. Okay, he said the same thing last time around. but um, the one thing that's really bugged me.

Um Tesla is they did that big reveal um of the semi truck it was. You know, the production has started blah blah blah and I was pointing out that there isn't any space in any of the existing factories that's big enough to actually have mass production of the Tesla semi and I got a lot of hate for it. But lo and behold, Um, the Dem report. Um, the production of the Tesla semi car.

Um in these numbers. When you look at the production numbers, it's not in these and that's because we're waiting really for the Nevada Factory to come through. My is my understanding before we get any meaningful production. So for the next two to three years, we're only going to have a very, very low volume of the Tesla semis coming out until the Nevada Factory is ready.

at which point I'm guessing production is going to really start ramping. so on the semi-front semi. whatever. I I I'm a Russian guy living in the UK so excuse my accent.

but um, the semi is not going to be coming out any meaningful numbers anytime soon and it's kind of immaterial to Tesla's P L for for a little while Tesla's Roadster in development. um I Think you'll be in development in a decade as well I Feel sorry for everyone to put deposits down for that thing. Um I Don't know if it'll ever come out. Um, all right vehicle capacity.

In Q1, we produced a record number of vehicles thanks to ongoing ramps at our factories in Austin and Berlin. We remain committed to reducing the percentage of vehicles delivered in the third month and smoothing deliveries throughout the quarter, which will help to reduce cost per vehicle while increasing in transit inventory at the end of each quarter. So we've been seeing this and they previously published a chart which they've not published this time around for some reason. Strange.

Oh, this is interesting. Um, so briefly publish a chart of the deliveries across months and kind of saying, look, we need to stop doing this end of the quarter delivery Rush Although at the end of Q1, they still did quite a bit of that. A lot of the China sales happened at the end of Q1. Um, so although they're saying that this is what they're doing and it is, it seems to be a very, very slow transition.

Uh, from you know, doing the maximizing each quarter's numbers to just flatlining the production and I'm guessing there's probably some question marks about, you know, booking all the ships in advance, blah blah blah um yeah. I Kind of feel this is one where they say one thing, but you look at the numbers and they're not really moving away from the maximizing quarterly numbers all that much anyway. U.S California, Nevada and Texas. So they're now kind of highlighting all these different factories Nevada being the one that has been up to date just involved in battery uh, work.

but it's now going to be manufacturing the semi whenever they finish building it. Um, Oh yeah, thank you very much to everyone encouraging people to like and stuff. I Really appreciate that. Thank you to everyone from the Discord doing the moderation.

If you're in the Discord and you want to do moderation, please leave a comment somewhere in the live section and then message me in the Discord and I'll be able to add you for the next one. With the earnings season, we should do quite a few of these. I Hope the Model Y was the best-selling non-pickup vehicle in the US. In Q1, we showcased 4680 cell production in a March 2023.

investor day production rate continued to improve sequentially in Q1 equivalent installation for cyber production and gear Factory Continued in Q1 and remains on track. remains on track for when I'm expecting. That's going to be one of the questions that we're going to be hearing. Since our Shanghai Factory has been successfully running near full capacity for several months, we do not expect meaningful increase of weekly production run rate.

Um, we launched sales in Thailand the new market supplied out of Shanghai. Thus far the percent should be very positive is a main export so Shanghai has basically being maxed. They're building a mega Factory which is not going to have anything to do with cars, is going to be a mega pack production facility in Shanghai. Um, but they're kind of saying at the current level it's sort of maxed and I'm guessing that they're waiting uh, for the geopolitical stuff to sort itself out like you know, all the tensions around Taiwan China being amazed with Russia blah blah blah all at the trade Wars between us and China each passing laws Banning each other's exports Imports blood whatever all that stuff.

I'm guessing that they're probably gonna go and expand in China at some point because Manufacturing in China You know, maybe they'll go and build in other countries Indonesia India Etc First, but we'll see Europe Berlin Brandenburg The model-wide production line in Germany produced over 5000 Vehicles a week towards the end of Q1. Uh, that's a pretty good run rate. That's a pretty good run rate. You know we're talking about 22 000 Vehicles a month sort of run rate Shanghai is an epic Factory and on average when everything is going well before you know any on unexpected things happen Etc The the strong manufactory manufacturers what? 75 80 000 cars? um, a month.

So getting to 22 000 already in Germany is good ish. I think I think a year in I think Shanghai was at this sort of level for a while trying I said at about 20 in the 20s for quite a while before they really started ramping and the model operation okay in Q1 2023 Tesla Model y became the best-selling vehicle of any kind in Europe EU plus eftapol TK So it's interesting because you're now seeing like this is the 57th time that I'm reading this bit. So the basically highlighting look, we're the best-selling vehicle. We're selling a Lot of cars.

Look, we're selling a lot of cars. Growth And vehicle deliveries. Growth And vehicle deliveries. blah blah.

So I think the reason that this message just keeps being repeated over and over and over is because they know that investors are going to have the question on profitability. Investors are going to be concerns boot. Tesla Stock might take a nosedive as a result of this. So they're kind of keep repeating the same point and to try to illustrate people as to what's happening.

Okay, Autopilot is in full self-driving Excuse me if I don't take a sip every now and then I'm gonna die out here. Um, I've got another cup of tea over here. All right. So um, a growing Fleet of FSD beta users has an exponential impact on total Fsdb to miles driven with over 150 miles to date and Counting and this level of data collection is unprecedented in the industry.

So the reason this paragraph that doesn't really descendants it doesn't really say anything is here. Is it kind of saying: Look, there's a lot of people talking about their own Autumn automatic driving software, blah blah whatever but apples and oranges? Um, is the situation here because one is building a genuine AI driven system that is able to drive wherever there are roads and others are glorified. You know, tram, tram, track cars that have to have a car that they follow in front like what's happened with the Mercedes recently Only in sunny weather on a very particular type of Road Only under 40 miles an hour on a road where everyone should be driving 70. It doesn't make any sense but that they're just trying to explain I Guess again, the reason the reason for the difference? Um, just just a very subtle touches there.

uh to build awareness Mass collection of a diverse of diverse data sets is essential for AI based approach. The only approach We Believe can work for scalable autonomy. In Q1, we enabled the latest FSD Beta software stack for highway driving. So yeah, so version 11 of the FSD software is bringing a big Tech Improvement um I Think it's come with some down downsides in terms of once they merged the various different models that essentially understood the world around the car, there's been a lot of reports that the actual quality of the drives reduce, so more takeovers.

Etc I'm guessing it's just a byproduct of switching to A system that should in the long term perform better. What's this cumulative miles driven with FSD Beta Millions Um doing pretty well. Obviously they opened up FSD Beta to North America Um, several months ago now and so we're seeing more and more uptake over there. Although fifteen thousand dollars? I'm guessing most people are not buying it outright.

Um, given it's still um, you know, a little way away because that's probably why this curve is not quite exploding as much as it should. I Think the latest data that I saw, um, about 20 percent cumulatively of people bought is a board. FSD And so that's where these miles of data are coming in. And obviously, this level of data should, in theory enable Tesla to be able to build the AI software far ahead of any other competition.

I Think in a moment, the only other competitor is in China that's actually collecting data for a full self-driving type thing from cars on the road, but anything around any Us or European competitors that are doing this at the moment anyway, vehicle another software while our various Vehicles provide different by the way, we're going to read this, but where it's about 45 minutes until the call happens, when the call happens, we're going to listen to it right here. We're gonna listen to what Elon Musk says. We're going to go through the questions just before, um, that happens and the questions that have been submitted over here ahead of the earnings. Obviously, we can't We don't know what the questions from the analysts, which are usually a bit more interesting I'm gonna be last time, Actually, last time these questions were really good.

so I'm kind of excited to see what happens on that one. All right. Vehicles Another software. While our various Vehicles provide different range, acceleration or vehicle size, we believe the Tesla software experience is the best in class across all vehicles even the base model 3 off a seamless integration of vehicle control Safety and Security features Sentry mode, dog mode, and a full Suite of connectivity entertainment features Spotify Other music streaming services, video streaming 4G Etc and ongoing software updates bring yet more functionality over time.

Recently, we launched Homegrown Recruitment and Employee Health and Safety platforms as part of the broader Tesla OS ecosystem. More details on page 12. Okay, uh, that's going to be interesting. We should leave a bit of time for that.

Global Model 3 Cost Normalized Okay, is includes material cost manufacturing costs Okay, so what they're saying is: look relative to 2018, they've seen a roughly 30 decline in the cost of manufacturing a model 3. and that's pretty good. However, it's important to remember that the 30 decline and took them four years, whereas prices have dipped by what 20 to 24 or whatever it is in the space of three to four months. So although they'll probably continue innovating and reducing costs even further, it's going to take time for those margins to normalize in the back of it.

Um, there we go. Producing electric vehicles profitably is a challenging endeavor. It requires rethinking how vehicles are designed and produced from the ground up. A cost journey is nowhere near finish, which is why we recently announced transition to 48 World Architecture for Vehicle Electronics Starting with Cyber Truck Um, this should be good.

It should reduce some of the background wastage um on energy and also a lot of weight because um, when you have an architecture that runs higher voltage, that means for the same level of power output School Physics here. Uh, the same level of power output. You need less amps running through the wires and the thickness of wires is based on how many amps are running through them. So um, it's an interesting thing where obviously like this has been mooted for some time.

I'm not going to go into the wheeze and the details, but um, wiring looms and cars are huge. If you take out all the wires out of a car, there's a huge amount of weight. um, and like, miles upon miles of the stuff. So if you're able to go and reduce them all and simplify by having relays because obviously with small wires, you're able to potentially run.

You know, instead of running 10 different wires from point eight point B run one and then have relays. Um, you can reduce a lot of the weight which improves not just the cost, but also. uh, the weight of the car goes down and the range of the car goes up. and all these other good things.

And that's why this transition is significant in the longer run. starting with Cyber Truck I'm guessing this is coming to all the models at some point in the future. higher penetration of In-House design controllers, cheaper, more scalable drive units, and further Innovations and Manufacturing process cost reduction Remains The main enabler of delivering on our mission. Um, all right, somebody is asking a good question.

the same in the chat you said. Tesla We need to bring prices back up when the economy settles. Pretty sure they want to keep prices low. They can keep the prices low and as a company, this will help them achieve their long-term Ambitions They can keep cutting the prices.

They can go make the margin go all the way down to zero. This is all great, but this is where you really have to separate Tesla the company and Tesla the stock you can be a huge fan of Tesla The company. You can be a huge fan of the mission of the company. It can be a huge fan of what they're doing, what they're trying to achieve, how they're trying to better the world.

All of these things, however: Tesla The stock is priced on the car, the company having significant margins way above the rest of the market, and those margins being multiplied by significant growth in unit production. If the significant growth in unit production does not yield the sort of profits that people were expecting beforehand, Tesla's company can still do incredibly well Tesla As a company can still be the number one manufacturer of cars for however long into the future you want, but the the appropriate value of the stock as a result may be lower. So this is one where a lot of people kind of think that if you're investing in a company, you have to join in the fan club. you have to just think, oh well, you know this is the Tesla Mission I Believe in it, It does.

Every all the naysayers are just spreading fud, But it's incredibly important to understand that you may think that the company is great and the company can really deliver on their long-term objectives and Ambitions but it can still theoretically be overvalued, right? So it's important to to have that distinction. All right. Energy. Uh, this is the bit that I'm most excited by because look at this chart over here.

Energy storage deployments. Huge jump. We were having this long period over here where it was yo-yoing and Elon Musk came on the earnings scores around this point I Think like early 2021. Uh, somewhere around here saying look, we currently have an issue where every battery that we can get our Hands-On is going into cars so energy is going to have to wait.

It seems like something is happening here. It seems like the supply chains are improving. They're able to get a few spare battery. Maybe maybe the lower demand for cars is enabling them to try to you know, get a bit more of a push on this on this front.

But anyway, energy storage deployments increased by 360 year on year in Q1 to 3.9 gigawatt hours. The highest level of deployments we have achieved due to ongoing Mega Factory ramp. The ramp of our 40 gigawatt hour mega pack Factory in National California has been successful with still more room to reach full capacity. Very exciting because they're kind of saying look, this is still not not the Max Capacity Um, and it's not huge, it's only 200 million sort of run rate ish.

but if this thing can get to a stable place where on a gross but basis is earning them, you know, 500, uh, million dollars a quarter and then they can begin replicating it by building more Mega factories. maybe utilizing the Buffalo facility More like they were at one point thinking maybe this this is the start of something pretty interesting. Recently announced our second 40 gigawatt hour Mega Factory this time in Shanghai with construction starting later this year. Solar Nobody cares about Solas I don't care about Solomon I'll read it anyway.

Solar deployments increased by 40 year and year in Q1 to 67 increased by 40 percent. What a way to word this! The reason I'm laughing is, let me show you. Look at this: look at the solar chart. It's just like being yo-yoing but every chord has been substantially high.

It's just Q1 last year was also low. It's probably a bit seasonal I don't know, but it's funny to kind of like go and write. oh, it's increased when actually it's been a kind of low quarter. But anyway, um, ignore that.

Um, where is it Here we are so, uh, increase by 40 year on year in Q167 megawatts, but decreased sequentially in a quarter, predominantly due to volatile weather and other factors. In addition, the solar industry has been impacted by Supply and chain challenges. The reason I don't really care about solar I Think a lot of investors don't care either, is it's a massively commoditized kind of offering. Sure, the solar stuff can come alongside the um, you know, storage facilities and the car and everything can be integrated and really cool blah.

but um, a lot of people are are showing that the solar bit is not really a very critical component. You can easily have all the other Tesla components that are smart that are actually that have you know unique USP and not have the Tesla solar. You can have any other kind of solar. It's the margins on the Tesla solar stuff.

Um, there's a reason why they're not growing their business and I think long term it doesn't really matter. So this is another both revenue and gross profit from services and other another region all-time high in Q1 2023. Within this business division, growth of used vehicle sales remains stronger year on year and had healthy margins. Interesting when um Tesla flips their cars um for a profit while at the same time reducing the value of used cars for all of their customers who bought new cars from them in the first place.

It's kind of a weird, a kind of weird thing to be bragging about, but um I don't know. Supercharging while still a relatively small part of the business continued to grow as we gradually open up the networks and non-tesla vehicles. Yeah, and there's a few Pilots where non-tested vehicles are able to use superchargers. The UK is one of those pilots and it's I Think it's not a lot.

It's like 15 pound a month or something plus the cost of charging. which is like what? Twenty dollars? I I don't actually know I don't I don't have an electric vehicle, but um, it's not a lot. Um, but I'm not sure what the take-up is. service is another gross margin.

You can see that. Um, so there's another is now beginning to actually make a bit of a profit on the growth basis, which is good. Um, yeah. positive volume.

Outlook We are planning to grow production as quickly as possible in alignment with a 50 kagger. Target We began guiding to an early 2021. in some years we may grow faster and some we may go slower depending on the number of number of facts. For 2023, we expect to remain ahead of the long-term 50 Kagger with around a 1.8 million cars.

So they have not changed the 1.8 million guidance. It's the 1.8 on the call. Last time around, they said it could be as high as 2 million. If everything goes well, Um, yes, call here.

The call is going to be here for anyone watching in 34 minutes. Um is going to be the call. The one question mark is um they as they announced the 50 growth rate on a unit basis. Um for the long term.

they obviously had a huge year when they went from 500 000 to 1 million cars in one year. Pretty much. And so that set them up for if you know a real, relatively easy few years, where to retain the long-term 50. Target You don't have to grow at 50 in all of those years.

The issue, Um, is that is I Think for me, the issue is this: I'll show you I'll show you the sentence. That is the issue here. Um, since the Shanghai Factory has been successfully running near flow capacity for several months, we do not expect meaningful increase of weekly production run rate. So the Shanghai Factory opened in 2019.

Um, whenever it was like ramped for uh, two years and now is at Peak capacity and is sitting there and the same situation