Guys. It's sasha over the weekend. Tesla released their q2 production numbers and they they were pretty much bang. On expectations slightly ahead of my own forecast with over 000 cars produced and 254 000.

Cars delivered obviously these numbers dropped from q1 because in q1 tesla delivered 310 000. Cars and as was expected all the usual analysts have turned up to share their insight and thinking. The citibank. Analyst.

Itae. Mikhaili. Has reiterated a sell rating for tesla. Stock.

With a 375 price target. Because q2 delivery. Numbers. And margins.

You know will be down. Unfortunately. There are a lot of really bad analysts on wall street who seem to genuinely be incapable of doing their jobs. The reason why tesla made less cars in q2s because the shanghai factory was shut for a month.

Because of the co with lockdown in china and after that it was operating on a reduced capacity with just one shift of workers for three to four weeks and then it started ramping production back up in june. So the reason for lower production has exactly zero impact on the long term production optics for tesla. But i guess. There is probably a reason.

Why this particular city analyst is rated 789th out of 796. Analysts on tip ranks. His general success rate is a little bit worse than just flipping a coin when making your investing decisions. And he has advised the people.

Sell. Tesla stock. Since 2018. Here.

Is this tip to sell tesla stock at 38 back in 2019. Most of the analysts. Who are rated a little bit better and that's 99 of all the analysts tend to broadly agree on a price target of somewhere in the 1 000. To 1200 range.

But remember one really important thing. These analysts are not making their calls. They're not making their decisions in the same way as you a long term retail investor is making decisions. They do not have a 10 year window or 20 year window in which they can wait.

And see they are under pressure to make calls and make money in the next three to six months and it doesn't matter. If the stock goes and does a 10x in the next 10 years. If they don't get the short term. Guess right they get fired they have to go and get another job.

It doesn't matter whatsoever. What the long term implications are they are not investing at their own money based on a long term projection. It's a job for them that has very specific targets and short term. Expectations.

The really interesting thing is that in the short term. Tesla. Stock may well face challenges. And there is a very reasonable chance that the stock could get hit really hard particularly after the q2 results come out by the way.

I will be covering the tesla q2 results live on my channel as per usual. They will come out after trading closes on july 20th. So make sure you subscribe to get that immediate analysis and commentary. When that happens the problem.

Though is that although most analysts have acknowledged that production numbers are down the latest projections on earnings are still i think somewhat on the optimistic front the latest consensus on earnings for q2 has. 1748 billion dollars in revenue with 198. Earnings per share. And you can see that this earnings per.

Share has dipped. Recently but it was 248. 90 days ago. Right at the start of the shanghai factory.

Closure and here is the issue in q1 tesla made 188 billion dollars in revenue while delivering 310 000. Cars. If we take that q1 automotive revenue and scale it down by 18 which is the difference in the car production numbers we get. 138 billion dollars in automotive revenue instead of the 168.

Billion. Now tesla delivered 1400 more model s and model x cars in q2 and only 12 of them were sold on lease compared to 17 back in q1 so they will get a small revenue boost from that. But it is small tesla also did raise their prices several times in recent months. They raised their prices for the model.

3 in the model y cars by 2 000. And 3 dollars on june 16th. But that was too late to really count in any way towards the q2 numbers. But they also did increase the prices by three thousand dollars across the board on the model three model white cars and buy more on the model s and model x.

On march 15th. Just before the start of this quarter. And again. They increased them even more earlier on in q1.

So the revenue per car sold is probably going to be up five to seven percent. But that still means. There is going to be a hole of around two billion dollars for revenue in q2 compared to q1 and that is a much bigger gap than what analysts are currently forecasting. We know that the 4680 cell ramp is going slow so it is unlikely that the energy part of the business is going to suddenly post a big leap and fill some of that gap.

So it looks like there is a good chance that total revenue is going to be at or around the 17 billion mark possibly even. Lower but certainly somewhat unlikely to be above the consensus 175. Billion dollar estimate. Although who knows they could pull a rabbit out of a hat a much bigger problem.

Though is on the earnings per share front. During q2 tesla. Was ramping production in texas and berlin and hiring thousands of staff across those factories. These staff and the operating costs of running the factories are going to be very noticeable this quarter.

There are 22 000. Staff working in fremont and the plan is to make berlin and austin produce more cars than the fremont factory produces. But let's say that those factories are more efficient. Their processors are newer.

They don't have all of the r d. And admin staff that sit over in california. So. Let's say they are targeting say.

30 000. Staff between texas and germany to start off. With and to get an order of magnitude. Let's call.

It 50 000 per member of staffing costs per year. Maybe. That's a bit of a low estimate. I don't know.

But if it is the problem is just going to get worse. But at fifty thousand dollars. Thirty thousand staff will cost one and a half billion dollars per year. And that's about four hundred million dollars a quarter now i presume that the factory is also going to have a giant load of other costs on top and they're going to start depreciating all of the newly installed machinery and as a conservative estimate.

I'm guessing the total was probably going to be at least double. The staff cost maybe 800 million or something around that i am guessing. Though that the cost in q2 will be a little bit lower than that go to because they're only in the process of hiring. All those people in the process of setting up and getting started.

So i don't know let's call it somewhere in the 500 to 600 million dollar range. Now i'm presuming that even though. The shanghai factory was shut down for a large period of the quarter. The majority of the operating expenses associated with the factory or at least a giant chunk of them were probably not affected.

R d. Mostly sits over in california. Anyway. So that probably didn't get touched.

And the general admin cast were probably still being incurred even when the gigashank high factory was closed so in q1 tesla had 36 billion dollars in income before tax but if you go and subtract the two billion dollars in lost. Automotive revenue and the 600 million dollars in say those operating costs for the two new giga factories that number comes down to just one billion dollars in net income. Remember also that bitcoin collapsed by 57 during q2. Which means that tesla will have to incur over 400 million dollars worth of impairment.

Which will drop that net income figure. Even further the big question is going to be how much production cost was saved in shanghai during the shutdown. I presume there will be some kind of reduction in cost because the factory wasn't running and they were probably spending less on supplies. Parts materials all of that but it's hard to know how much of that cost base is fixed how much is running on long term agreed contracts and how much of the salaries still have to be paid and all the associated costs even when the workers are not coming into the factory.

I don't know how those contracts look what exactly is in. There but remember that the consensus for the tesla earnings is. 198 per share and that means that tesla need to find about 12. Billion dollars worth in cost savings in shanghai.

Because of the shutdown to hit that number so the profit number for q2 is going to largely pivot on that number how big. It is but all of this is ultimately just short term noise. And this is really critical because in this production. Update.

Tesla. Also said that june. 2022 was the highest vehicle production month in tesla's history. So as a long term investor.

I would absolutely love these q2 numbers to stink if q2 ends up posting a loss for whatever reason and the share price absolutely tanks. I personally would be over the moon. Because i would love the opportunity to load up over the next several months at the moment we have fremont running at maybe around 135 000. Cars a quarter.

The shanghai factory is being closed for a few days beginning of july. Because they are upgrading the production line to increase capacity and june. Was already a record month for tesla overall. So it's looking likely that the shanghai factory is pushing towards the 210 to 240 000 cars a quarter giga berlin started off making cars with 2170 cells.

Which because of the issues with 4680 celsius is now looking like a big win because production there can now scale more quickly. Most reports seem to conclude that berlin made about nine to ten thousand cars in q2. But over the next few quarters that number should begin pushing up relatively quickly they broke 1 000. Cars a week a few weeks ago in the middle of june and there is a decent chance that the factory is now going to hit about 20 to 30 000.

Cars in q3 as a result and austin has actually been very slow to start production and the big reason for that has been because austin was aiming to start production with 4680 cells in structural packs. But tesla still hasn't figured out how to ramp production of those cells fast enough. There is a lot of work going on behind the scenes. They've just applied for an extension to the factory.

Which a lot of people are saying is because of the extra capacity required to manufacture the cells. They now have samsung lg and panasonic. All joining in and building their own production lines for the 4680 cells as well so it is coming at some point in the future. But the problem with this ramp has really been a blessing in disguise for tesla.

Because now austin is switching over to producing cars with 2170 cells. And that is a good thing for production over the next couple of quarters. I'm guessing q3 should reach 10 to 20 000. Cars.

Because of that ramp progress a bit like berlin. A bit like shanghai at the beginning of their ramp. And if you add all of those numbers up for the different factories you get 375 to 425 000. Cars as a potential target for q3 and that is huge that is a massive jump even on the q1 numbers.

Which would make for absolutely mind numbing p. L. Numbers. When those come out at the end of q3.

As well and after q3. Berlin and austin will continue ramping up they will continue ramping up to their full capacity over several quarters. The shanghai factory is due an upgrade that should increase production capacity to more like 12. Million cars per year.

And that is yet to come there are rumors also that tesla will be building a second factory in shanghai mirroring. The current one and if that happens and the production there increases by another factory that is going to be a pretty big impact too. But then remember that at the shareholder meeting last year. Elon musk.

Said that tesla will announce sites for new factories at some point in the second half of this year. And we are now in the second half of this year. And recently elon has met with the presence of brazil and indonesia. So those might well be two potential new gigafactory sites after india refused to play ball.

And remember that this ridiculous growth that we are seeing we know is coming. We can see that it is coming for tesla is coming at a time when the global car market is compressing hard. So the market share that tesla is stealing is crazy. The wait time at the moment for a model y.

Long range is six to nine months in the united states and three to six months in the uk europe. China and other parts of the world. So demand is still far in excess of supply for tesla. Despite.

The price rises. Despite what's happening in the economy. And we've just had numbers come out for gm whose q2 sales in the united states were down 15 year on year in the same quarter. Although tesla reduced from q1 to q2 they still were massively up year on year in the same period.

Gm sold 7. 300. Evs in q2. Which.

I guess is an improvement on the 26 cvs that they sold in q4 last year. Remember that's the quarter. When mary barra led the world in making evs. According to joe biden.

But what it really shows is that gm and many other traditional car manufacturers are still twiddling their thumbs and not really bothering whatsoever to transition to evs literally. Just one percent of their car sales in the united states in q2 were electric. That is great news for tesla. Because the competition is still actively refusing to come sure.

It looks like volkswagen. Hyundai and kia are taking things seriously and there are some chinese manufacturers as well that are doing pretty well although i am not entirely sure if they will ever start selling cars in any significant volume outside of china for multiple different reasons. But the fact that many large oems are just not moving at anywhere near fast enough. Just.

Means the window is opening. So wide for new players like tesla to steal as much market share as they want and that makes me really excited for what q3 and beyond. Holds for tesla here is hoping that q2 results are massively disappointing. So that the share price tanks for a few months and the sale continues through to the end of the year.

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