Hey guys, it's Sasha Last week Tesla released their Q4 results and the stock absolutely exploded I mean when bananas completely bonkers. the stock was already up 40 in just three weeks and anticipation of the earnings. but then boom Tesla stock goes and adds another 30 on top of that in the next two days. And of course, it makes absolutely perfect sense because Tesla absolutely smashed analyst expectations on Revenue Wait, What? they didn't No, really.

Uh, okay. well Tesla absolutely smashed expectations on car sales. Wait what? No wrong again. Oh the missed deliveries.

Well I guess Tesla must have guided for insane performance in 2023. Wait what? They got it for 37 growth in car production instead of the long-term Target of 50. So here I am sitting looking at these results and don't get me wrong, Tesla is now again the biggest position in my portfolio. Not that I added any money to my portfolio Tesla dropped to being the third biggest position at the end of last year, but after going up 70 odd percent in January alone, it is back to the number one spot.

So as an investor, I am personally not going to complain. But it is important to put things into perspective because having gone through the results and after listening to the earnings call, I went and updated my numbers I went and changed my forecasts based on my best estimate of what the things are going to do and I didn't quite share this weird sense of euphoria that seemed to have engulfed Tesla recently. In fact, my Target price for Tesla after this set of earnings has fallen by 20, which is a lot. It's still very high and I still see significant upside in the stock.

But I do feel that maybe I personally listen to a completely different set of results to everybody else. The key numbers: things like Revenue earnings, blah blah blah. All of that came in pretty much bang on analyst expectations, so it's not like anyone should have been surprised. but going through results I noticed a few small details that I think many people didn't pay attention to and I heard a few things in the earnings call that I also thought were not great.

To put it mildly, which is why I downgraded my valuation. The main bit of disappointment for me was the lack of any major announcements with regards to factories. Berlin and Austin are now ramping both across the 3 000 cars per week mug at the end of last year and Tesla has repeatedly made public statements saying that they plan on growing 50 a year in vehicle deliveries over a multi-year horizon. In October 2021, Tesla held their annual shareholder meeting and at that meeting, Elon Musk said that Tesla already had a few preliminary plans on where they might start building new gigafactories because Berlin and Austin were close to completion at that point, and he said that Tesla would announce at least one, but possibly or probably more than one new gigafactory site.

It probably wouldn't be imminent, but he said definitely at some point within H2 of the following year, hopefully earlier within that time span. and the following year was last year 2022. And of course, here we are at the end of January 2023 and no announcement has come. At the same time, there is no announcement of major new phases being built in Austin or in Berlin Now Tesla did announce a couple of weeks ago that they are investing 770 million dollars into expanding Austin but that expansion is for the production of battery sales drive units and to build a die shop at the factory side, so this should help increase potential capacity, should improve production in Austin and all that.

But we're not talking about a whole new production line with its building another Giga of sorts. Now there were Rumors in the November last year, the Tesla would maybe file some paperwork to expand Berlin They began cutting down trees apparently, but that never had happened either. and given the German level of bureaucracy, I am guessing it's going to take some time from whenever they do file anything to get the go-ahead They did announce that Giga Nevada is expanding the day before the earnings call and this will also Target batteries and the vehicles coming out. The only vehicles coming out will be the semi and the volumes of that semi are going to be relatively low compared to the model Y and Model 3 production and other factories.

and this is why this is a problem in their results. Tesla Said that they plan to deliver 1.8 million cars in 2023. this is only 37 percent higher than the number that they delivered in 2022 and 2022 was already only 40 up on 2021.. Now, Tesla's guidance for their long-term 50 growth came after their 2020 numbers when they delivered 500 000 cars.

So the point Tesla tried to make on the call is that even the 1.8 million cars is still above the 50 cumulative growth rate because 500 000 Cars Plus 50 in 2021 Plus plus 50 in 2022 plus 50 in 2023 equals 1.69 roughly million cars. So because Tesla grew so much in 2021, they can afford to not grow as much in the next two years and still be ahead of that. Target In fact, Elon Musk Nicole did say that Tesla is sandbagging with that 1.8 million. Target Anyway, he said that internally, Tesla thinks they can do 2 million cars, maybe even possibly more.

but because there's always some kind of a one-off thing happening like the Shanghai Factory closing for a month and a half because of China's zero covert policy, they baked in some Force Major But as a long-term investor, I am not too concerned for exactly what they're going to do this year: 1.8 million, 2 million I don't really care too much. What I do care about is 2025 and 2030. and Beyond Let's say that the ramps at these two new factories go really well and Tesla manages to hit China level production in Berlin and Austin relative really soon. Let's say next year in 2024, both of those factories I Know we're near right now, but let's say they go and hit an average of 75 000 cars a month.

At that point, this is going to be pretty tough Tesla China is an exceptional Factory But let's say these two new factories hit the same level of output. On the call last week, Elon Musk said that there is not much more that Tesla can squeeze out of the Fremont Factory It's an old factory, not buildings, not purpose-built The layout sucks. It's much smaller, has less space around it, blah blah blah. Not much of a surprise.

Elon Musk Also said that there will be no meaningful incremental increases in China production in the near future, so no expansions planned. No new factories being built there either. No new buildings, nothing. So given all that, if the ramps at these two new factories go perfectly well, we're potentially looking at a production run rate or at least a capacity.

a potential run rate of something like 3.3 million cars. maybe at the end of next year heading into 20 25. And if Tesla does want to hit that 50 average rate of growth Target that they set themselves, they need to sell 3.8 million cars in 2025. So in this perfect scenario, Tesla will already be 500 000 Cars short a whole Factory's worth it.

took about two and a half years from the time when Tesla first announced Giga Texas and Giga Berlin to the first cars rolling out of the factory and those projects were built in incredibly tight time scales, much faster than any traditional manufacturer takes to build a car factory. So from whenever Tesla announces a new Factory, it will probably be about two and a half years because this is what happened with Shanghai What happened Berlin What happened with Austin until that factory is operational and we're now one month into 2023. So even if Tesla goes and announces a new Factory tomorrow, it will not start producing cars until late in 2025.. this is critical so there'll be no meaningful production in that factory until maybe late 2026..

during the questions from the earnings call, someone asked Elon if cyber truck is still going to come in June As Tesla previously said, Elon Musk evaded the question and then said it doesn't really matter when production actually starts because you know it takes time to ramp so it doesn't really matter exactly what the date of the start is and in a way he's kind of right. But that is also an answer that is unfortunately full of because the ramp can only start and will only start when you actually start production. The massively evasive answer indicated that production of the Cyber truck is looking likely now to be delayed to some point later on in this year if it isn't pushed to next year. so the Cyber truck will not make any meaningful production headwinds in 2024 for Tesla either.

And by the sounds of it, a proper scaled version of the Cyber truck production line will need a dedicated facility probably maybe a second phase building in Texas And that building hasn't been announced yet because remember Tesla is announcing something on the 1st of March maybe a new model Maybe Be that model will take up additional space in the factories that they currently have, so it's not like they are swimming in space in terms of producing hundreds of thousands of cyber trucks. Yeah, the risk here is that a bit like with a semi initial production, could be going at relatively low volume until whenever that big ass production line is ready. and that could be years late, 2025 at best now. I Personally don't think that Tesla needs to make 20 million cars or 100 million cars or whatever numbers people pull out of their ass a year by 2030, which is what Tesla previously stated as some kind of weird goal and saying they're definitely gonna hit it.

My valuation never got anywhere near that number because it didn't look very realistic and Tesla reiterated that Target as recently as in the Q3 earnings. But realistically, even if they did announce four new gigafactories tomorrow, if those gigafactories are all as huge as these two new ones in Texas and Berlin, that would create capacity for around 7 million cars a year. and even if Texas and Berlin double their Max Capacity at the same time. So if they start pumping out 150 000 cars a month each because they build a whole new extra building that is the same size as their current building and they both reach the new building, annual building reached at 75 000 cars a month, production line Tesla will still only hit 9 million cars a year.

that's if everything goes absolutely perfectly well. if all of those are ready at the end of 2025, we're talking three years for the ramps to do the ramping. so if they announce them tomorrow, it then takes some time for the factories to ramp from when the first cars leave the production line. So realistically, that run rate can only get to 9 million cars a year by the end of 2028 AKA in 2029.

This is why significantly pushed back on my estimates for new factories arriving in the model in the model that I have for Tesla That's why my Productions uh, production numbers are significantly lower in some of the out years than they have been in the past. I've pushed back my average expectation timelines for the new factories by over a year and on the same earnings score last week. Elon Musk Said that at the end of last year, Tesla's battery production for the 4680 sales reached a level that could Supply 1 000 battery packs a week. Now it is a good level of progress coming from a complete standing.

Still zero start. but Tesla currently makes about 35 000 cars a week globally, so it's going to take some time before the 4680 sales can fully replace 2170s a long time. And Tesla also wants to change Omega pack production to use the 4680 cells as well. Remember back in October 2021 a year and a bit ago, whatever it is.

Tesla wanted to start producing cars in Texas imminently and all of those cars were going to use 4680 structural packs. that's what they were saying at the time. So a year and two or three months later, the ramp has only reached a 1 000 cars a week capacity, which is a lot slower than some of the optimistic initial projections. And the obvious question is is Elon Musk doing everything in his power to make these new gigafactories happen? Is he doing everything in his power to streamline the production of the 4680 cells? Because Tesla stock did take a massive beating since that Twitter takeover.

After people say that perhaps Elon is not a God after all and maybe he, too, like the rest of us, is subject to limitations and things like time just before the earnings score. Last week, somebody asked Elon on Twitter why Twitter censored a BBC news story critical of the Indian government centered in India at the request of the Indian government you know, with Elon being a free speech absolutist and all that and Elon replied saying first, I've heard it's not possible for me to fix every aspect of Twitter worldwide overnight while still running Tesla and SpaceX among other things and this very much sounds like Elon Confirming the obvious point that spinning too many plays at the same time is hard, especially when you're running all of these different companies that are all suffering from growth pains now Twitter isn't going away and neither is SpaceX. So my base expectation is that Elon's ability to travel to other countries, negotiate with the governments on new gigafactories and how it's all going to work is going to be relatively limited compared to if those other concerns did not exist now. I Do get it: Tesla does have more employees than just Elon but it wasn't long ago when he personally met with the President of Brazil, he personally met with the President of Indonesia and I haven't heard of very many trips or similar meetings being held recently, so on the back of all of that, I went and updated a whole lot of my assumptions in the model both on the car and on the energy fronts.

I've updated long-term margin expectations as well after the huge price Cuts although the impact of these are much lower, I Did let my patrons and my channel members know in the Discord last week when I did it and team members get to view the actual model. If you want to understand how your views and your assumptions are different to My Views and my assumptions. Now the result is that my personal price target for Tesla has dropped to 800 which I Know some people will say is ridiculous that I'm a Tesla shell that I'm completely whacking off. It doesn't really matter I don't have to agree with you.

you don't have to agree with me. That's how investing Works before anyone asks in the comments, this price Target is not for any specific year I Don't predict stock price movements or pretend that I know when they will be whatever level they will be. This is my take on what a fair valuation of Tesla based on the future cash flows that the company is today. So I continue holding Tesla based on that and I will be buying more Tesla stock as the year progresses and when I have the cash to do it at the moment I don't and hopefully we'll get some interesting news about this new model coming.

Maybe a compact at the investor day on March 1st. if you found this video useful, please don't forget to smash the like button for the YouTube algorithm. Thank you so much for watching I Really appreciate it and as always I'll see you guys later Foreign.