To this live stream of Tesla's Q4 results: we are about 10 minutes from the end of market uh, from market closing and probably within about two minutes of that happening. We're going to be seeing the results. This live stream will take you all the way through the whole thing. We're going to go and see the results.

We're going to quickly go and look at some of the key numbers we're going to go and get an initial impression. Then we're going to go through the whole thing and try to capture some of the small changes in this report compared to what we were seeing before. Some details. There's a lot to talk about in this one.

This is probably the most controversial, bit different, a bit alternative, a bit high pressure set of results that Tesla has had in some time. There's a lot of talking points we're going to be covering in between the results and the live chord. The live call will start an hour and a half after markets close, so we've got a bit of time to go through the results properly. then go and discuss some of the points that were being made, then go and talk about um, so some other, uh, interesting points, um, and and cover some of the questions.

I've got all the stuff ready here. I've got some of the Um questions that we can cover before Tesla answers them so we know what to hear and what Tesla might say. But recently, the number one bit of news obviously that we need to go and discuss is the price drops. So at the Um back end of last year going into the New Year, Tesla went and put a massive Uh price Cuts First, initially some price Cuts over in China then big price cuts across the world in the US Etc more price Cuts in China and the demand seems to have picked up in terms of anecdotal data, but we're still not really seeing any wait times.

we're not seeing any Uh, official confirmation or denial from Tesla we're not really seeing any particular movements I'm going to cover I'm going to show you a few interesting things on the website and a few other things later. But how do these price drops really impact the margin? My take is that long term. this should not necessarily be a big issue just because the natural progression of the margin for Tesla because of the ramp of the new factories, the lack of having to pay Duty the transportation costs, the the fact that they've had all the fixed costs and new factories that haven't been built into the price of the cars while the production has been very low. So we haven't seen all the benefits of these new factories and the more direct-to-consumer model yet in terms of margins.

So that would have taken margins up from where they have been. These price Cuts will have an immediate impact obviously downwards in terms of margins, but in the longer term. So talking like three four plus quarters, the likelihood is that the margins will probably go and stay roughly where they were I should. I'm sure it's a mass and some numbers in a different video a few weeks back, but Model Three, there's a rumors out there.

the Model 3 is not selling particularly well despite the cuts, and potentially it is maybe because of the cuts that it is not doing so well Because Model Y is now so much cheaper. They cut the price on the model away so much by 18 or 20 or whatever depending on the model in the place. Maybe it is now so alluring that people are ordering the model um, why and not ordering the Model 3. And it's kind of interesting.

Like I'll show you on the Tesla website when you first go on the website, they switched it around. This was always a model. Why? well, not always. This was the model Y for quite a while.

Uh, the the first primary thing and they've switched it over to be the model three and I Noticed this just in the last few days because I checked this website quite a lot just to understand what the way times are and things like that. and I just noticed that they've switched it to Model three and I'm wondering whether this is because they're trying to push sales of the models. Maybe this is just completely anecdotal I Don't know. Oh My.

God. Um, if if any of my members are here I would appreciate any help with moderating I'm going to try to block this person. Um, but um I hate I Hate all this spam and stuff and all these live streams. Oh my goodness.

Anyway, all right. so um. next we have 4680 progress that we need updates on. They just announced, um earlier today that they are massively expanding gig in Nevada This was always on the cards.

it was meant to be happening I think a few years back, but they kind of like paused that project. Now they're finally completing the rest of that huge building. It will be pretty massive when it's completed and the extra capacity in there will be for producing batteries and for producing the semi. However, I Imagined this construction is going to take some time, probably at least a year and a half two years.

What is going to be happening between now and then? the lateral facility. How much can that actually produce? How many cars can that actually facilitate? Because there's mixed messages in terms of is it only a test and the small kind of thing? Is it A? Is it a big permanent kind of like thing that is now going to be building batteries for all North American Cars We don't really know and there's not been very much in terms of updates on this. Um Austin Berlin ramp and we had updates around Christmas time that they started making about 3 000 cars. um a month a week.

which is pretty good, does 12 000 cars a month sort of run rate. However, if we're going to be seeing anything like a 50 increase in production, uh, this year that production will have to come from those two those two new factories because the two factories that they already have Fremont in Shanghai they will increase production. They will find new ways of you know, the casting all of this kind of stuff. earnings in five to seven minutes I'm sorry, no the the actual results, then the earnings an hour and a half later.

Okay, so um, so if the Shanghai and Fremont factories, they might be able to get a little bit extra in terms of you know, like squeezing different bits especially with Fremont and without expanding the factory. and it's an old factory, it's just difficult to go and get an extra 20 or 30 or 40 out of that. Shanghai After the upgrades in the summer was already running at reasonably strong rates and maybe they'll be able to squeeze another 10 20 there. but realistically, we're probably not going to be able to see them go much.

Beyond sort of high 90s uh, per month 95 to 100 000 cars a month. So um, so the question is going to be how quickly can these new factories run Because if they're going to get the 50 increase in production during the course of this year, they need To start averaging during the course of this year, you know, on average from the first month to the last month, they need to be making 30 000 plus cars. Um, on top of the small run rate they were producing last year and at the moment, you know we only just a few weeks ago. Like three four weeks ago, hit 3 000 cars a week.

We need a lot more than that. I say we Tesla need a lot more than that if they're going to be hitting anything like the numbers that um that that they're trying Because obviously there was so much disappointment this year last year when they only hit 40 whatever percent um increase and people are going to be saying well, okay, it is a multi-year thing. It is an average over a long period of time. However, if you go and underperform one year, then go and underperform again the following year.

People are going to begin asking questions and they're probably going to be reasonable questions because they've only just announced this new expansion to the Nevada Factory to make the Semi, but the Semi is not going to be a 1 million or 2 million production run rate from that factory a year. You know the Semi's going to be a naturally lower volume um car we were promised at the Um I Think it was the shareholder meeting a year and a bit ago that we would hear an announcement of more than one gigafactory by the end of last year and that did not happen. So this is a problem because when we're looking and forecasting them out, even if we get an announcement today about new gigafactories, that announcement if it comes today, we're still going to be two and a half probably at best based on Shanghai based on Berlin basement years from when that factory starts doing any kind of production runs of cars because that's just how long it takes to go and build on them. So even if we hear one of them today, we're still not going to get any benefit from that announcement this year or next year in terms of production.

So all the growth that Tesla will experience will have to come from the existing four four and a half if you include Nevada factories. Anyway, we're a few minutes out from when the results come out, so we've got FSD plan FSD is coming and it's getting better and is getting you know more intuitive and all this stuff. But the thing is, how long are we going to be in this kind of limb before because it's very, very difficult to ascertain for me as a third party without any of the inside of data. but I think it's just generally very difficult to ascertain.

I Think people need to start asking questions because of course it is now on mass release in the US That means in Q4 results, we might get a bit of a one-off bump which I think most analysts are not expecting because all the FSD sold up to now in the US will get that money realized during the quarter and from whenever they did it. I think around Christmas time all the FSD sold after that will be able to realize 100 of the money um rather than only a fraction and then delay the rest until um, the product is actually available to customers. But what is the plan? Realistically because the thing is, we see we hear a lot of sort of idealistic you know it's definitely coming, is definitely going to be here, blah blah, whatever. We hear all this stuff all the time from Elon Musk on these calls, but it would be good to get some kind of realism because I think I think I think the problem we've been having recently, there's been a lot of sort of sort of ignoring what is evident in front of in front of people.

You know there's obvious concerns about Elon Musk and his time just today Elon tweeted in response to somebody posting on Twitter somebody posted on Twitter saying oh, um, um, why did Twitter block the BBC News article about Modi in India at the request of India and he said oh um, it's the first time I'm hearing about this You know, pretty big is he self-positioned himself as a free speech absolutist and here there we are Twitter is Banning articles and countries at their behest and he said oh, I don't have enough time between running Tesla SpaceX and Twitter to be able to be on top of everything and that is pretty important right here. Let me let me open this and we'll come to it. Um, probably at some point after I'll just open that Elon Musk tweezing because I think it's quite important I think um people, let's have a go Here we go. Are the results out yet I'll I'll switch to the I'll switch to the shareholder back as soon as the results are out.

um yeah and then one second, uh, where is it I can't see it now if some, if somebody can see it, put slap it in the comments uh, is there but but it's interesting because it's the first time that he's really admitting. oh here we go here we go. One second, the results out. not yet let me stick my screen on.

In any case, so here are the results. we're going to go and check but just before but you can see here this is. this is interesting because here's the point about this India thing. Um, over here and you can see over here what's going on in your mouth Twitter seems to go from freedom of speech not freedom of speech world and he said first, I've heard it's not possible for me to fix every aspect towards the worldwide overnight while still running speed and this is going to be a problem as a shareholder of a company.

When your CEO is admitting, well look I am not able to spend as much time on any one of these companies as I would like because previously people gonna elevated Elantas god-like status where of course he can do everything He you know everything is possible but the truth is every you know all of us have a constraint and a constraint is time. It doesn't matter how rich you are, it doesn't matter how smart you are, even if you're the smartest person in the world, time is still an issue. The amount of time you can dedicate to speaking to people to being on site to understanding processes to trying to identify how to improve processes. These are very real issues and we just not really heard anything since this acquisition.

um in October of Twitter from Elon Musk as to what he's planning to do about it. All right. We also have some other stuff like uh, is hardware for coming Is there going to be need for an upgrading? Hardware to run FSD the fully working version When are international versions coming Recently Tesla dropped um their parking senses and said it's going to be replaced with vision except for they've dropped the parking senses. So now you're buying a car for fifty.

Sixty thousand dollars. Seventy thousand dollars. whatever and you don't even have parking sensors in them. And and they said that Vision will replace parking senses.

The problem is, vision isn't there yet, and certainly in cars being produced in other parts of the world as well. Uh, who knows when it's actually going to be available and and how all these questions, all these little niggling things um, um I I Think it's going to be a bit of controversial. There's a few spicy questions for the first time in a while as well. and also Cyber Truck.

They there were pictures some weeks ago about them installing new uh Giga presses for the Cyber truck at the factory in Texas but we haven't really heard any updates at all. Like is the wiper now even bigger than it already was. What's the final design? What's the final pricing? I place an order when the original thing was announced many, many moons ago. Um I drive a Jeep So I like a big car? I I use I use the the actual 4x4 and I use the space as well.

Quite a lot, so you'll probably be right up my screen. But but how you know anything? Any any kind of realistic updates other than oh yeah, yeah, it's definitely coming. You know? Trust us, bro. Um, court case.

There's probably going to be probably going to be some kind of mention, uh, probably a question, maybe about it at the moment. Elon Musk is in court case for that Twitter thing when? uh, sorry for the tweet that he wrote uh, some time ago saying that he's going to take Tesla private at 420 because the court case is ongoing, it's not scheduled to finish another week or so. They're probably just going to back that back. We're not going to get any updates whatsoever about that so it doesn't really matter.

Um, still not got the results. What's going on? Okay, um, shall we have a look at what these questions are while we're waiting for the results? I Know that we're going to start. Oh, here we go. here.

we go. All right. All right, let's quickly read: let's go. let's go.

let's go. let's go. come on. Load.

Ah, why is it so slow I know why it's so slow. but come on. Oh, it's I can't remember it being this low I Think people are anticipating, um, are anticipating things. Oh my.

God failed to load I think I think something's going on with the Tesla website. Go on. come on. Oh man, their website is dead.

Oh come on. I Want to see the results? Give them to me. Here we go. All right, let's read: let's first look at the numbers.

Um, total revenue. The numbers are pretty hang on what people expected I think Wall Street Expectations Would um for the total revenue to be about 24.1 to 24.2 billion, we're in 24.3 so pretty much there or thereabouts. gross Margins: Surprisingly resilient 25.9 despite them having to offer all those discounts in China Um, and people saying it's gonna completely collapse? obviously all the big discounts globally the announced only came after the end of the quarter, so then I'm going to be reflecting this whatsoever. That's going to be down to the questions later on, but revenues look reasonably decent.

Operating expenses grew at a reasonable rate I Guess income from operations 3.9 adjusted the ebitda 5.4 and what do we got? EPS on an adjusted basis is 119 I think Wall Street Was expecting 113 from memory, so that's kind of good. We're gonna go and look in some details at all of these numbers in low second. Um, in terms of total, Uh Gap Gross margin got 25 3.8 But let's quickly skip down because we're going to go through everything in a lot of detail. But let's look at energy.

Oh, Energy Generation and Storage over here. I Think 1 310 Energy Generation Storage one one one five Uh one one five one on the cost of revenues, So that's pretty good. That's a 150, uh, 150, uh, million dollars there on profit on on the growth basis. Which is good because they only just recently started turning any reasonable profit from this whatsoever.

You can see it was only just over a hundred last time. So it's slowly moving, but it's just so slow. This energy business that Elon has been saying that is going to be the number one business for Tesla in the future is going to overtake Auto And it's just so slow. And they're now saying we're going to be putting these 4680 number uh batteries into storage which was obviously the plan all along.

I mean I think I've been saying this for several quarters now. The problem is the facility that they're building in Lathrop We don't have any data from this facility they built. they're expanding in Nevada is going to take probably two years to build the expansion. So what are they going to say about the plan for this energy generation storage? Because realistically, there is probably a very big business there.

Gen you know, there's there's an eye on endless amount of energy storage that you can supply globally. At the moment, the demand is so huge. if you can supply the right product, the right price, that whatever they make, they will be able to. This is not Cars where they're already making a huge volume.

So the question is what I'm going to be doing about that. But anyway, let's go and look at. read some of the highlights. Um, go through the charts.

go and read some of the um some of the data. Um, um I know there's some. there's there's some uh, people with mixed opinions guys. I'm just covering the earnings I'm an investor in Tesla if you don't like the company, if you don't like me, you don't need to go and post stuff.

You can just go and watch something like Funny Cats on on YouTube or something. There's plenty of other much better videos, so please go and do that. All right. Profitability: 16.8 Operating Margin in 2022 16 in Q4 13.7 billion Gap Operating Income 2022 3.9 and Q4 Yeah numbers Numbers: We just looked at all these numbers: Operating Cash Flow: 14.7 billion Free cash flow of 7.6 billion in 2022.

Well, I didn't look at. uh, what have we got? Free Cash flow Free Cash flow 1.4 Um, what do we got? Net cash provided by Premium activities 3.2 Um, it'd be interested to see what what happened there. Um, what the discrepancy is I'm guessing there's going to be Capex is only a 1.9 Let's see what they say. Um, Q4 2022 was another record-breaking a quarter and 2022 was another record-breaking year.

Yeah, I Mean that was expected. The question is, by how much in the last quarter, we achieved the highest ever quarterly Revenue Operating income and net income in our history. So they're very. They're very much pushing this.

Look, We are on the way up. It doesn't matter if the rate is not quite what you expected, it's up and that's all that counts. That's what the first paragraph says. In 2022, total revenue grew 51 year on year to 81.5 billion dollars.

and that income gap more than doubled year on year to 12.6 billion dollars As we progress 12.6 it's not quite as good as Citadel with their 16 billion profits, but you know, good enough. As we progress into 2023, we know that there are questions about the near-term impact and of an uncertain microeconomic environment. and in particular with Rising interest rates. Nutella Team is used to challenges given the culture required to get the company to where it is today.

In the near term, we are accelerating a cost reduction roadmap and driving towards higher production rates while staying focused on executing against the next phase of our roadmap. Uh, Asps have generally been on a downward trajectory, so they're obviously preempting the question on pricing. so they've put a massive off paragraph right here. the third paragraph and the whole presentation.

They're addressing this elephant in the room. Uh, I guess I Guess they had to because this is going to be the talking point, right? Rasps? Um, have been on a downward directory for many years. Improving affordability is necessary to become a multi-million vehicle producer and this is part of the long-term plan. I Am not sure if the long-term plan said we're going to be doing one-off cuts of 18 to 20.

How? Having said that earlier last year, Tesla did make substantial increases in price, so the actual drop through the year relatively speaking is not that big because in March and I think in June they were doing quite big increases in price and everyone kind of conveniently forgets them when they're talking about the decreases because the price at the end of the year was not that different to the price at the beginning of the year, but sure, there's inflation, etc. etc. Anyway, while ASB is half between 2017 and 2022, our operating margin consistently improved from approximately negative 14 to positive 17 in the same period. Pretty impressive over this kind of period from the manufacturer.

Um, the margin expansion was achieved through introduction of lower cost models build out of localized, more efficient factories, vehicle cost reduction, and operating. Leverage. In any scenario, we are prepared for short-term uncertainty while being focused on the long-term potential of autonomy electrification, and Energy Solutions Our Relentless cost control and cost Innovation is why we believe no other. OEM is better equipped to navigate through 2023 and ultimately succeed in the long run than we are I'm hoping we'll get some announcements about this specific thing: whether they're going to be doing better castings, one-piece castings, people, you know discussing potentially things like that.

By the way, what happened on the balance sheet Before we're going through any more details: what happened with the balance sheet? Um, because we I didn't really look again. That was too excited about some of the other stuff. So here we go: Cash is up to 22.2 Um, that's good. Accounts receivable up quite significantly.

So that's um, an interesting indicator that potentially towards the end of the quarter. Um, there were some orders being placed. Um, what have we got current so current Assets in total are up and any other big movements in here, not really seeing anything substantial. Um, what have we got on the liabilities front? Accounts payable, blah blah blah.

Um, nothing major on the liabilities, debt, debt they repaid another, uh, 500 million and we're down to 1.6 just under 1.6 billion. So um, good kind of. I mean I guess they could have just cleared the whole thing I guess I Guess it doesn't maybe make economic sense, but but they're paying it down. it's almost zero.

Um, and yeah, not not much else in here. Um, that is interesting. What about? um, what about the the that number that they have one? One second, what about that number on inventory? They print that uh, somewhere? where is that is it up front? Is it up up to the top? Um, okay. let's just go through the numbers in a bit more detail.

All right. So we've been through the the the high level piano so let's go and look at the financial summary. So production? so wait a second. Yeah.

Financial Summary: Uh, year on year. Okay, we're not going to be getting free annual numbers. Not so interesting. Financial Summary here.

Total revenue is worth 37 year on year to 24.3 billion dollars year on year. Revenue was impacted by the following items plus growth and vehicle deliveries. Uh, no. plus growth in other parts of the business Minus uh negative effects Impact of 1.4 billion dollars increase in ASP year and year excluding FX Impact excluding variable impacted model Remember earlier last year when everyone was jumping on the FX bandwagon saying, look, our performance is bad only because of Foreign Exchange And now the foreign exchange is kind of swung a little bit back the other way.

People are don't have that excuse anymore. These guys still printed something 1.4 billion. Yeah, Okay, our operating income improved a year only at the 3.9 billion in Q4 resulting in a 16 operating margin. Year and year operating income was primarily impacted by the following items.

Um, On the positives, there's four growth in ASP excluding effects and vehicle deliveries. You can grow with an Asp. Come on, you could have not. You could have written this in a different way given what's been happening last few days and vehicle deliveries despite margin headwind from underutilization of new factories and gross profit.

Uh, gross profit growth in other parts of the business FSD Revenue Recognition of 324 million dollars in Automotive Sales This is the bit I was saying. It's kind of interesting because I think a lot of people are not necessarily expecting it, so without that, we would have been slightly under that. Wall Street Um expected Revenue but you know it's not a huge amount of money. 324.

I Kind of thought. maybe this would be a little bit higher I Don't know. Maybe they already recognize quite a lot of it. Um, before lower stock based compensation and payroll tax expense related to CEO Awards On the negatives: for profitability, higher raw material commodity Logistics and warranty costs.

A lot of the raw material costs have come down substantially starting of June July last year through to the end of last year, and continuing into this year. Cost of production ramp of 46.80 sales Good question here in terms of how much is it costing to go and build all this out and how long is it going to take for it to actually go into cars properly? Negative effects: Impact of over 300 million on the profitability, quarter and cash cash equivalents and Investments increase sequentially by 1.1 billion to 22.2 billion in Q4 driven mainly by free cash flow 1.4 billion partially offered by their repayments of 497 million dollars. So production uh Q4 Model SX We've already seen all these numbers. Um, strong Deliveries were low.

A lot of people probably putting off purchases because of the EV credits not on the SX, but on the 3y. The Pro: The price has dropped now, so presumably presumably these people are now buying those cars. Unless you know, demand is generally low because of the microeconomic uh scenario. So um, what about total end of quarter operating lease? vehicle count has gone up? um, a little bit.

and this is going to be the thing that people are going to be pointing to Global vehicle inventory they Supply 13. And this was you know, four days, Three days, four days and people are not gonna be saying wait, hang on. So we've right towards the end of the quarter began running into these problems and this number has shot up and out of all these numbers they're all kind of roughly um in my opinions of expectations but this is a worrying number for any Tesla investors because this is kind of indicating look the reason that they cut the prices was they really had to because they suddenly saw a very sharp increase. You can see here very sharp increase in the amount of inventory they were building up that wasn't being sold fast enough.

and so all the arguments by. There's a lot of Tesla balls out there that will go and tell you hey, you know it's this has nothing to do with lack of demand. This has nothing to do with any competition Like ultimately it is good to invest in a company and think that you're investing in a good company. but at the same time it is really important to not wear Rose tinted spectacles and blinkers and ignore reality of what's Happening all around you.

So it's pretty important to um to kind of Beware things this is. this is not a bad number but it's increasing and I'm guessing it was increasing through January leading. So anyway, Solar deployed. nobody cares.

A hundred uh, megawatts storage deployed 2.46 so it jumped quite substantially I was quite excited in Q3 to 2.1 but the relative increase over here is still small. This is still a very small sequential increase for something that is still in the very, very early stages of the ramp. And so the question marks are going to be asked around. You know how long until this business actually makes any serious money, Because 150 million dollars in a gross margin basis is is not not very significant for a company that is worth 500 or whatever it is.

Billion dollars, Store and Service locations, yeah, increase slightly. and this is another worrying Trend Um in terms of the superchargers. So the superchargers grew 35 35 So you can see that the rate at which the cars are being produced every single quarter is substantially higher than the rate at which supercharger stations and supercharger connectors are being produced. I've been pointing this out.

This is going to become a problem for Tesla because in my opinion, if you're producing these cars and you're trying to take over the world, you're trying to become like the default provider. Um, every single quarter the rate of supercharger connectors and stations is being produced. Um, at a lesser rate than cars. And remember, like the cars are staying on the road, there's a lot more demand for the more busier locations.

Um, we're just seeing more And more question marks around Sustainability of this because Elon Musk was saying what was it A year ago? they're going to be opening up superchargers to all the other cars. There's trials in the UK There's trials I think in the Netherlands or Denmark or somewhere. and um, the the kind of the question mark is, Well, you're producing cars that are substantially fast rate than you are. and I Know the two are not the same because one is a production of cars that adds to existing and this is the total number of superchargers.

So this is not production of superchargers. The production would be the Delta between these numbers, right? So I I do understand this. I Am aware of this fact, but all the same. Um, I Kind of feel that this number really needs to shoot up if they begin doing some of these things that that they're talking about anyway.

Operational summary for the year: Okay, it's just the annual version: The same thing: Vehicle Capacity Factories California Model SX says capacity 100 000. We had absolutely nowhere near that ever. So hopefully, hopefully eventually we're gonna get there. Um, some of the wait times for SX and like in the UK I think you can't even order an uh, an S at the moment if you go to the order page for the model S Um, let's have a look So look so let's go to Tesla Uh, let's go Model S so this is the these kind of questions I think I think are important.

Um, so you go and order now. and if you try to order a Model S in the US no in in UK as an example in the US you can order them but in many other parts of the world. So look, it says pricing options will be finalized As delivery approaches, you'll be notified to complete your order when the final pricing options are published. Um, so is there a refresh coming? Is there something else? Is it just that the orders are going to be so far out they don't want to be.

You know, giving you any kind of estimates? But it the question is, if you have this capacity that you supposedly is there, why are you not producing cars and why are you not selling the cars that you're producing when there are plenty of other places where you can't even order one with a date anyway. I I Digress. Uh, model 3y 550 000 Shanghai is more than 750. We know that that is now pushing a lot closer to the 1 million Mark Realistically on a potential like maximum capacity that they currently have because some of the months they've been able to produce that when they didn't have other issues, Um, come up.

Berlin in Texas has greater than 250 000 and that's kind of encouraging in a way. but if we're going to be seeing a 50 growth in production this year, this number needs to increase to greater than 300 000 Realistically, especially when you account for occasional need to stop the production, etc etc. All right. So for anyone who's just joined, for anyone who's new, um, we are going through all the numbers.

We're going to go through all the numbers in detail all the way through that. I'm going to be talking about some of the talking points: some of the Uh questions that are going to be coming up in the early school because I have a list of all the questions um, that are pre, uh, pre-asked over here. we're going to discuss some of them. Um, the earning score is going to start at half past what is it, five Eastern standard time.

Uh, so in about an hour and eight minutes, um, and half past 10 UK time, I'm in the UK Um, so uh, we're just reading through all of this. Uh, for now, thank you for joining, by the way, and if you want more live coverage of earnings calls, not just Tesla, I'm going to try to do as many as I possibly can um in coming weeks and months and Analysis and stuff like that and just general investing conversations, make sure you subscribe and I'll see you later. But anyway, Berlin and and Texas um have more than 250 000 production model? Why in Texas Cyber truck is tooling so that's what we saw earlier. We saw people, um go and um uh, take pictures of them and stories that interestingly, there was an area within Texas where they've been installing all these things.

They've been expanding the factory actually building an extra little bit outside. um but they covered the windows in the last few days. um of that area. So because people were flying drones and taking pictures of what they're doing inside so they don't want people to know.

um and I guess it is kind of annoying. I would be annoyed if I was building and working and stuff and somebody was taking pictures a few times a day. But anyway Nevada Tesla semi pilot production. so this is good.

This is a question that I had on here and I haven't heard anyone else ask this question. Well mainly because you know, um, the Tesla Community generally doesn't like to ask questions that are not necessarily positive, but it says pilot production and obviously um in December We had this big event where they announced a semi and they made a whole big video about and they're like hey Pepsi's ordered all of these trucks we you know we're gonna make a million of them and they made such a big song and dance, made a whole big announcement about it saying we're starting production, we're starting deliveries. but then when we got the production numbers over here for Q4 there was no semi in there. So the question for me is going to be why not? Is it that they are genuinely pre-production models and Pepsi is basically acting as you're testing guinea pig because there's been a lot of reports, you know.

Reportedly, there's only a handful of them, a few dozen maybe running around and there were pictures and videos of several of them at different points on different roads broken down being towed. Etc So is it the case that this is just very early, essentially pre-production models that are being manufactured. and if that's the case, why not just say so? Because for me, as an investor like I I do get that they need to promote and they need to sell and all this stuff. but come on come on.

Um, you're not printing that you manufacturing you're now saying. So this line wasn't in here before, but now it's saying pilot production and it would be just good if they said that up front and they just said what is this thing because if we have to wait another two years for any meaningful production because that's how long it's going to take the Nevada Factory to scale up? well, I would rather know rather than we play pretend games and Tesla is really bad with playing pretend games in some cases, you know great company in many ways, but they're not good at this Communication business and I just wish that they were a little bit better. TBD Roadster Robo taxi and others? Yeah, I mean you don't need to write Roasters being TBD for like forever. Anyway, in Q4 each of the vehicle factories produce a record number of vehicles.

Let's read this together. we continued a gradual shift towards a more even Regional mix of both production and deliveries. While in Q2 2022, the third month of the quarter accounted of 74 of vehicle deliveries, the number fell to 64 in Q3 and to 51 in Q4 I Like how they're presenting this as a positive I Have a suspicion that some portion of this job in the last month as a proportion of the total delivery volumes in Q4 was not necessarily intentional, and it may possibly have had something to do with the fact that in the last quarter, they delivered far less cars than they manufactured. So although this putting a positive spin on it I just don't like it when you can tell that it's not quite as as they're putting it Anyway, we're working to reduce the percentage of vehicles delivered in the third month and smooth deliveries through the quarter.

They are doing that as well, but don't attribute all of that 51 to this fact. Um, which will help reduce cost per vehicle U.S California Nevada and Texas. So they're now including Nevada here and the car because previously kind of ignored Nevada because no matter was just the battery manufacturing hub. So anyway, um, the Model Y production line in Austin produced over 3 000 vehicles in a week towards the end of Q4 In Q4 we produced enough in-house 4680 cells in a single week to make over 1 000 battery packs.

This is bad, right? So so this is bad pilot production Tesla semicom medicine Q4 with first deliveries occur in December 2022.. So they're proudly saying look the model, what production in Austin is producing over 3000 Vehicles a week. They're saying in Q4 produced enough in-house 4680 sales in a single week. So in one week, at some point whenever that record week was, they produced so many sales that it could make a thousand battery packs.

So presumably that means that over 2 000 and probably in the other week significantly more. Probably you know, close to 3 000 of the vehicles being produced in Austin are being produced by the 2170s. Remember they started in April Uh, last year saying they're going to produce all cars with 4680. Remember this was in April last year when they started manufacturing.

Back then they were saying look, we're going to manufacture all the cars in Texas with 4680 cells. They were saying that when the factory was going to open at the back end of the previous year 2021. So now we're a whole year down the line and we're being sold. This thing that this is a very exciting kind of thing.

I Apologize By the way, I say the good and the bad at the same time. I'm not here to just say only good things if you want only good things, if you just want a everything is perfect. This is the best company in the world Going to five million dollars per share next year. Go and watch that I'm sure there are other channels covering with that kind of uh way of thinking.

please go, please go and watch it there. I'm just gonna say things how I see them. so a thousand is low because it's taken us a year of ramping and several you know was it two quarters an hour ramping in Lathrop to get to this level and I Understand that this is not a linear trajectory that this will increase over time, but this is low. We're a year down the line from when we were sold.

These are going to be the default batteries and all cars made in Texas and we're absolutely nowhere near. and I think for me the this is a pre. this is a pretty bad number and and probably the worst out of the ones that I've seen so far in this report. anyway.

China Production and delivery challenges in 2022 were largely concentrated in China Since our Chiang High Factory Since since our Shanghai Factory has been successfully running near full capacity for several months, we do not expect meaningful, sequential volume increases in the near term, Gigafactory Shanghai remains a main export Hub Supplying vehicles to most markets outside of North America doesn't I I Just read this whole paragraph and it doesn't really say very much. We do not expect meaningful sequential volume increases in the near term and running near Four capacity for several months. It's kind of something that we probably knew, but it is pointing to a couple of things. Point Number one is we were having rumors about an expansion in Shanghai.

You know, like the expansion that was meant to be happening in April Um, in terms of actual a big extra building that we're going to be building that never came. They did go and retool and upgraded production lines in the summer, but that wasn't the same thing as what they were planning. And then there was very, very heavy rumors of a second site that apparently Tesla is going to buy between the Shanghai Factory and the port and they're going to go and build a whole second essentially carbon copy Factory Because the Shanghai Factory is working so well, this is indicating that that has now been canned and canceled. You probably heard in recent weeks that a lot of other manufacturing I made a video some sometime last year about the fact that, um, a lot of companies are really having second thoughts about them being too concentrated in China Apple Just a few days ago announced that they're planning at least 25 of their total production to move to India and other countries.

I made a video saying this is going to happen a few months ago or I can't remember when it was. Go and find out um and I got a lot of hate for it Saying that I completely don't understand what's going on, but I think people are beginning to kind of ask questions. Do they want too much of their production to, uh, stay in Shanghai Now obviously there have been improvements, recent improvements where you know the zero cover policy is being canceled and so there's probably less likelihood of intermittent shutdowns in the whole city being locked down and all this kind of stuff. However, the stuff that we were seeing through last year with the covert Downs the Nazi Pelosi visiting Taiwan and then doing the military drills made people think I think a little bit more about the risk around.

what if tomorrow China goes and does a Russia goes into base Taiwan What if something else happens, something completely unexpected and you know because the the risk of something like that happening with China is probably a little higher than maybe some other regions in the world and so people are a little bit more mindful. I Think about concentration uh on production in China and this this I think between the lines is kind of saying that to me, you're a Berlin Brandenburg The Model Y production line in Germany produced over 3 000 vehicles in a week. Towards the end of Q4, we also introduced two new multi-layer paint colors from our Advanced paint shop. And how exciting? I Mean the red is pretty nice if you haven't seen it.

The midnight cherry red is pretty nice from the billion Factory um and Quicksilver Um, Okay, so we knew about the three thousand. um Texas by the way. Also, uh, sorry, yeah. Texas produced over three thousand a week.

Um, be interested to see if they say anything about what they expect the ramp from there to be. But here we have this graph. There's been the same sort of graph: market share of Tesla vehicles by region and this is Tesla vehicles as proportion of total Vehicles all vehicles including Ice. Um, and you can see that the chart is kind of heading in the right direction.

We're still very, very early doors. The penetration and total market share in the US is three and a half percent or whatever it is 3.6 Europe and China is sitting at around the two percent. Mark China Probably gonna struggle to really pull so far because the number of Chinese manufacturers selling very very cheap cars in China at almost no margin is increasing extremely fast. The likes of Byd Etc already have a huge position.

There's a million others doing things I Think it's gonna be difficult to compete just because China probably has a much more lower price weighted spectrum of cars that people want to buy compared to more mature markets. maybe us? Etc But anyway, Um, let's what we got on the next slide. What is this? Cumulative miles driven with FSD Beta? So they're kind of pushing the same thing saying. Look, we have a Ton of data.

We have a ton of data in which to train. uh, models. We have a ton of data on which we can go and build Fsds and be even better. And that's good.

Um, but remember I think it was a year ago. whenever it was at the AI day they they did this huge presentation about the dojo and the special custom computer chips that they designed that AMD is going to go and build for them. And then we're going to build this state-of-the-art biggest supercomputer the world's ever seen. Blah blah blah blah and then nothing.

Crickets, right? Nothing at all since then, or nothing on any earnings calls. Nobody's ever asked a question and then it's cool about it. With all these diagrams about the computer setup and how all these triplets are going to be designed, we haven't heard anything at all. And so it's good that we're getting all this data.

The question is, when is that data going to start? uh, converting into some kind of meaningful stepwise improvements? Because the problem with FSD is it needs to be so much better than humans in terms of being able to do all the little things. and or it can do a lot of the basic stuff like driving along a road with lanes and you know, stuff like that. but all the little things like avoiding un circumstances and situations that it is not encountered before and like, what does it do when it gets to destinations? What about parking? What about other things like that? And there's still so many of these little tweaks that it needs to do before it gets anywhere near to actually being able to offer anything like a robo taxi service that I think at the moment people are getting a little bit too far ahead. I've been saying this for some time.

we're we've still got a long way to go before Robo taxis are hitting any I remember when I think it was like a year and a half ago? um I remember doing videos when um. arganvest was posting all this stuff saying that there's going to be hundreds of thousands of Robo taxis in two years time on the roads and I was just looking at it going oh my God it's a bit like the Optimus robot excitement and everyone's like oh yeah, yeah, next year everyone's gonna be fired in all the factories and the Optimus is going to be doing everything I'm like come on at the moment, you probably heard all this about Chad GPT and how it's going to replace every single job and nobody is going to write any content anymore and every you know everyone's fired and it's just the best thing ever. I'm like it's pretty cool. It's pretty interesting, but I think people often see new technology and they just get way too excited without actually drilling under the surface of what it can and what it cannot do and how long it is until it can really do the thing like to a degree where it's going to be really good enough.

GPT is pretty impressive, but It suffers from the same thing people jump in the bat Wang and way too early and get way too excited anyway. Miles driven per accident in millions Um, I don't like the name of this I I get I get the point I don't like the name Tesla vehicles using autopilot technology and Tesla vehicles not using autopilot technology and the United States average. So they're saying look the United States average over here and actually looks like the United States average is actually increasing as well. And because the scale is obviously to show you the blue bars, you can't see you kind of the gray bars.

They kind of look like they're all small, but if you look at them a bit more carefully, this is what I don't really necessarily like about this, but the gray bars are definitely increasing as well. If you see here here, it's like a a half less than half. I Don't know what it is here is definitely more like 0.7 or something like that, so there's definitely quite a substantial increase in the United States average. So obviously Tesla's not the only car that is becoming safer that is improving emergency braking and other all these little driver assist features.

So the gray bars are increasing. But what they're saying is, look Tesla vehicles not using autopilot kind of jumping around. um I'm not sure if they're necessarily improving, but you can see the Tesla vehicles using Autopilot. The safety improvements over time are definitely showing and they're definitely looking pretty good, however, relatively speaking.

So from this starting point, um, relatively speaking, it doesn't necessarily look like the increase is much more than what's been happening in the background with the US average Maybe Maybe I'm Wrong Maybe I'm misreading this data. Anyway, let's read what this says over here. All right. Um, earnings call starts in 50 minutes.

Um, uh, I'm Sorry By the way, I am trying to read some of the comments. Um, as I go, they're just I've got one. I've got two different places where I can see the comments over here I can't read them all and answer them all at the same time. So please keep discussing and chatting.

and if I see something interesting, I'll try to call it out. Um, but I'm trying to talk um at the same time. All right. We've now released FSD beta to nearly all customers in the US By the way, talking in the chat helps this video reach more people and likes do as well.

So if you don't have anything better do just smash that like button for YouTube algorithm so we can get a few more viewers before the only school starts. Thank you very much for doing it autopilot and full cell driving! We have now released Fsdb to nearly nearly all because there must be some really bad drivers. Or maybe the nearly all customers in the US and Canada who bought FSD just means they haven't done Canada Has Canada had FSD released? Um? I'm not sure. um I didn't think so.

maybe I'm wrong. This is an important milestone for our company. Every customer in the US and Canada oh it says it says they can every customer years in Canada can now access Fsdb to functionality Boom! So I guess this is a more recent development uh, functionality upon purchase subscription and start experiencing the evolution of AI powered Autonomy. This year our annual holiday release was the biggest ever for the vehicle software.

Our customers can now video conference directly on their touchscreen via Zoom a very, very useful feature for when you're driving. Streaming video from the car's interior camera and the industry. First, we integrated Apple music into the media player and added a live view of the Interior camera and to the mobile app when dog mode or sensory mode is active. Yes, we are doing the conference call.

We are doing the conference call in the latest model Snx. You can now play all the games in your steam. Library using the powerful built-in gaming computer, picking up where you left off on other devices using wireless Bluetooth or wired USB This is so useful when you're driving I Can't believe nobody else has thought of this I Wonder why they don't install a coffee maker as well because that would be extra good. Maybe like brew a really hot cup of coffee like directly in front of your steering wheel as you're driving as well Would also enhance the Driving Experience I bet battery power training Manufacturing We are particularly focused on vehicle cost during this period of microeconomic uncertainty.

No, we just dropped 20 on the prices High Interest rates, this higher cost of vehicle financing and vehicle price deflation, we continue to focus on cost efficiencies while improving functionality and reliability. While cost efficient manufacturing of VVS is still rare across most of the industry, it is critical for profitability as scale and will ultimately determine long-term success of Oems. Um, right. A very, very long paragraph saying look, prices have come down and they're going to continue coming down as we, uh, improve our ability to run margins.

The Good The big question is going to be I think I think I don't know who's going to ask it I'm hoping somebody's going to ask it, but we see this 25.9 percent Automotive gross margin and the big question is going to be um, what is that margin going to become Um, when, um, when we see the full impact of these price drops. Because remember, even though the orders at the moment are several weeks out, um, if you place an order today, you know if you go and place an order, it's not not in the UK for my last, but we're talking like February to March uh, in the UK for these cars and in Germany it's February to March and then the US think it's January to March. So if you order now, you still have to wait a few weeks potentially and it's gonna, you know, maybe take a little bit of time. But the question the the the question mark is going to be when we see these Q4 numbers.

The drops in China at the end of the quarter probably didn't really very strongly fully make it into the numbers for that quarter because the numbers, um, would be coming through. um, later on the Q1 drops happened right beginning the quarter, so probably quite a substantial amount. The vast majority of those drops is going to feed through to the numbers in Q1, but we're still going to have some overhang of the people who took who placed orders beforehand. Um, um, and they're coming through.

Although probably given the price drops, we're probably going to be seeing the previous orders um, drop as well. But um, this number this 25.9 is probably going to be under severe pressure in Q1 and the question is going to be how severe is that pressure going to be like? What is Tesla Planning that's probably going to be the number one talking point? Um, in this earnings call? All right, Where were we? Uh here? Other highlights: Energy Storage Energy. This is what I'm mostly interested in actually, Probably, but not not the sexiest of topics. Energy Storage deployment increased by 152 year on year in Q4 to two and a half gigawatt hours for a total deployment of 6.5 gigawatt hours in 2022.

The second half of the year was, uh, definitely a big step up a big Improvement which is good. Would like to see a bit more of that. By far the highest level of deployments we have achieved. Demand for our storage products remains in excess of our ability to supply.

Uh-huh We are in the process of ramping production at a dedicated 40 gigawatt hour mega pack Factory in Lathrop California to address the growing demand. This Factory should help to further accelerate growth of energy storage. Bonus! And again, we're talking about this capacity thing and sometimes Tesla massively undercooks the capacity and says oh uh, Shanghai Factory has a capacity. What was it last year that we're printing 450 000 cars while the factory was producing a run rate of more like 700, 750, 000 cars? And here it's the opposite way.

Like we have a dedicated 40 gigawatt hour mega pack Factory in Mathrub, but we only made 6.5 gigawatt hours in 2022 at a run rate of Two and a Half gigawatt hours in the last quarter. So which is it? Like are you saying the 40 gigawatt hour is the theoretical capacity? If so when, because you know it's nice to say hey, look we, um, we have a factory that we probably will at some point increase to this. maybe in 10 years time. Um, it would be good to have a little bit more specificity on this.

Anyway, solar deployments increased by 18. People are talking about free cash flow? Yeah, we're going to be looking at the numbers in a bit more detail. That's what I Pointed that out at the beginning of the Um and relatively early in the early school. I Still as to why that is, we're going to go and try to understand.

Solar deployments increased by 18 year in year in Q4 One of the strongest quarters in recent years despite supply chain challenges. Would deployed 348 megawatts of solar in 2022. Your highest deployment since 2017. I Saw this version team continues to previously an efficiency enabling higher volumes and stronger economics.

Solar doesn't really matter. Uh, it doesn't really matter what you do with the numbers. It just does not do anything for Tesla valuation long term relative to the other business models, There's been a lot of rumors that the solar roof is going to get canceled just because it's just a product that hasn't gone anywhere and hasn't been able to achieve any kind of scale. And the question is, is will it ever just because I Know it kind of looks nicer, but it is nowhere near as simple, quick, easy, or efficient as actually just putting batteries on.

But anyway, service is another both revenue and gross profit from Services another reason all time high. In 2022, much of the profit 22 was driven by used cars and transactions in support of a growing Tesla Fleet such as part sales paid supercharging and others while I used car asbs decline sequentially in Q4 which was reflective of the industry I used car margins remained healthy. Um, yeah, I Wonder what what that's gonna look like? You won energy storage deployment going up? Um, good. Would like that to be slightly steeper number of supercharger locations going up.

Um, again, probably would be good for that to increase a little bit faster given what they're planning. But let's see. Outlook We are planning to grow as quickly as possible in alignment with a 50 cargo. Target We'll begin guiding to an earlier 2021.

We are planning to grow production as quickly as possible in alignment with this target. That's not quite saying that we are going to hit this target, is it? It's kind of saying. Look, we're gonna try last year I'm saying we're definitely going to do it Last year The wording was like absolutely yeah. Um, and now yeah.

it's just that little bit more wishy-washy on the wording. In some years, we may grow faster and some we may grow slower depending on the number of factors. For 2023, we expect to remain ahead of the long term 50 cargo with around 1.8 million cars for the year. So if they're guiding 4.8 that's pretty much bang on 50 Because remember, it was 1.3 uh, on production.

Uh, for the year? So an extra 650 means you yeah? um I Guess what they mean here is they set that kagger. Um, when was it? So if we look at the annual numbers I think they set it over here. where's the production on an annual basis? I think they set it in 2020? Uh, when when the volume was 500 and then they went and did 9, 30 and then 1.3 And so I think what they're saying is cumulatively from the 509, they're saying 1.8 is still going to be just about in the 50. Target However, what they are saying as a result is if they hit exactly 1.8 and this is this is maybe why the stock is dropping.

Some people are saying the stock is dropping. They're saying that they're expecting right now a 31. This is what I was saying earlier. They're saying they're exciting a 31 increase this year in production because they've been so slow with the new gigafactories.

These two existing gigafactories can operate increase production fast enough because they're already kind of at Max at the moment and the two new ones can't increase fast. So fast to make up for that. Gap And now that we haven't got any new gigafactories so far at the moment, maybe there's going to be an announcement of this call. Maybe there isn't.

We've been expecting one for months now that if the production this year is only going to go up by 30, Um, I think Tesla stock is going to suffer as a result of that. and long term it may not be an issue, but in the short term, that definitely is a problem. Uh, with the guidance, um, it kind of, uh. I picked up on the wishy-washy wording straight away and this isn't this is not gonna, um, be good for investors one sec, let me just go and get Tesla share price aftermarket.

Uh, let me just stick it on the screen so that we can go and see what's going on over here. Oh, it's green. It's slightly ever so slightly green. I'm gonna I'm surprised it is I saw a few negative things and I haven't seen any particularly positive things in this report so far.

So I'm surprised that the market is I'm not reacting too badly. but anyway, um, cash. we so so this statement is bad. Uh, just just for the avoidance of doubt, they are kind of saying that they are currently.

this is not guidance, but we expect to remain with around 1.8 million. They're kind of saying that they expect this year to only grow by just over 30 on the production and that's going to be bad. Um, so I'll be surprised if analysts don't actually read this at some point and actually start dropping because this is a problem. And that 1000 um battery packs with a 4680 cells at the moment is also a problem.

All right. Um, uh. cash. We have sufficient liquidity to fund our product.

Roadmap? Uh, long-term capacity expansion plans. Somebody's saying why why is 1.8 million cars? Uh, this year? not in language expectations Because 1.3 million this year. If you added another 650 000 which is half of that 50, that would be 1.95 million, not 1.8 million. Um, that's why.

um. anyway. uh, this doesn't really say any. Furthermore, we'll manage the business that should maintain strong balance sheet during this uncertain period.

I Really hope that what the sentence means is we're not going to do stock BuyBacks Like every single Twitter Tesla Shell wants them to do because it is just really not an important thing in the current environment. With all the uncertainties going on with the potential problems for Tesla stock at the moment, it could go even further south. It's possible you know the negative sentiment. May Return.

Who the knows? Um, why spend all your cash on that when you can be potentially announcing actual gigafactories, you know and actually building them maybe two? um alongside with Nevada you know time is ticking and the price of Tesla bakes in growth for the next few years. If you're saying look, we were growing at 60 before then we dropped to 47 last year and this year we're go