Tesla (TSLA) 19 Apr 232023 Q1 Earnings call transcript

Good afternoon, everyone, and welcome to Tesla's First Quarter 2023 Q&A Webcast. My name is Martin Viecha, VP of Investor Relations and I'm joined today by Elon Musk, Zachary Kirkhorn and a number of other executives.

Our Q1 results were announced at about 3:00 P.M. Central Time in the update deck we published at the same link as this webcast.

During this call, we will discuss our business outlook and make forward-looking statements. on and based today. as are comments our expectations predictions of These

our with events materially uncertainties, risks in differ results including recent to mentioned Actual could of due or SEC. the a number those most filings and

please During one yourself use raise question today’s join to Please to hand follow-up. limit button the one the of question-and-answer the portion call, and question queue.

into Q&A, remarks. opening Elon Elon? some jump has we before But

Thank you, Martin.

the kind best-selling Model Y vehicle became best-selling in So Europe States. a any and lot of United in QX recap. the and challenges just is in spite non-pickup a vehicle in the this production of And delivery. of

So it's for team Tesla to a huge the results. achieving these great credit

think know, out while think it margin worth pointing early remains among I'm the especially -- industry. that anyone don't is best worth that people the prices operating purchases reduced anything, QX, And with I cars. macro it's such as noting in environment large already current in The considerably telling we remains I the uncertain. our

We've pushing is a for fleet and larger here a choice right the volume that a and higher lower view higher margin. volumes taken versus

our expect generate profit time, autonomy. will vehicles, be significant able to over through we However,

important the laying as we lower perfect better of here, cars margin the future So margin, that point. in extremely believe we're at and a autonomy. large we do is like and it's a ship then groundwork to number subsequently, an harvest This

see. Let's

event, volume in delivery It's at great our probably completing great Texas, QX. we we're production line Cybertruck, product, build Regarding the the having event we're purposes. installation anticipating Giga Cybertruck versions continue to a line of delivery and the pilot the a Alpha for testing of on and

follow new production all S slow and As products, so will then with accelerates. curve, it starts out an

different. is So the no Cybertruck

to of It's made other products, product, there's get obviously. -- for time amount all it way But hall it's view, new fantastic in of really a press line a this cars going. a And not as product. the And is with radical made. takes it the is my the are product, manufacturing famer. demand So very that

to progress. making regard with Megapack, So great we're

California. storage this per quarter achieved Lathrop, still gigawatt the our year. some in was by hours thanks nearly to And we gigawatt ongoing reach strongest rate in additionally ever. XX There's announced hours factory way far, is, Mega then following of deployment energy start the go And growth ramp Our to to the QX. new of in reached factory X Mega Shanghai. at This a the

we've the expected, actually the storage stationary significantly So as will we're exceed growth -- vehicle growth.

and Autopilot XXX this no mean, of is this training we've data driven to Those that one importance AI has. miles Full exponentially. outcome. and the an number achieving is advantage of how data Regarding Self-Driving, growing beta, that and incredible by We're crossed -- is over understand else will Full who data Self-Driving fundamental understand really I now a million --

autonomy. yes, as main focused factors of neural one is so also on our full we're of improving the capabilities achieving net So, limiting very training

continuing of magnitude of make an to a in simultaneously Dojo, putting purchases effort cost improvement also and of lot the we're for order believe So, we significant of GPUs potential the which training. has into NVIDIA

offers same a offer it as out though Web also sellable Dojo would -- also companies Services we it other that Amazon potential web to way And has even that services, a become the the service to bookstore. in started

really is very that, significant. yes, Dojo So, I the potential think

increase environment, further, in to good want fast making continue a that taking our this as invest time this a an and view many possible. lead being and selling Despite we we're to In as to as we conclusion, macro growth cars as keep can. uncertain is we'll

worldwide employees to like I'd yes, Tesla an incredible are super who appreciated. to huge all again. again, Once doing give job And a thanks

some Thank much. as Zach well. has remarks you And very

Martin. want record and congratulating volumes deliveries. vehicle the as by well. to And for for production Tesla I energy record team to congratulate start our team I storage Thanks also want

want make. main three I points to There's

X items, in the increased revenue well as the reduced of pricing margin include notably First, one-time older healthy Autopilot second particular, remain few But vehicle as S impacted half was gross transition and gross adjustments as at features most and sequentially. last automotive operating Elon action these earnings the by discussion certain deferred quarter margin our for and automotive improve In call, to mentioned, a since factors margin vehicles levels. which on warranty on we additional technologies. taken as

to vehicle meaningful with Progress and some on cost logistics beginnings QX on be cost starting commodity realized. reductions reduction improvements continued the of in

Per Berlin as improved driven unit and by Austin record cost well, for volumes.

still our likely after these factories volumes. margin headwind provide until reach and stabilize at intended to continue However, and so a will we do

balanced Note that build our a mix QX regionally was plan deliveries. our quarter to and to more third multi-quarter of move in

quarter for in an lower and within has quarter prevalent in particularly and was on due cars This this volume X cash impact a begin the at flows. previously, results of free mentioned deliveries we international associated end S I've As the and to transit production deliveries. of higher a as exporting QX in cars for quarter-ending

percentage rate This shape, after and by as focus. for starting driven this Second, highest many to exciting in revenue growing increasing level company's products. the our of and see is deliveries our is is years and business storage a an the of of its yet reached of businesses QX, business Megapack investment to take

the gross profit We are in making quarter. on progress also our storage generating profitability, highest yet

reiterate Third, the I this to business philosophy year. the operating we're by, which want

remain capital the possible include production, to left particular, as focused inventory into we and energy healthy We and on heavily businesses. platform, and to to volumes to as continue which our working in in-house And business need this next-generation Our invest both and cost while keeping industry energy quickly business buildup efficiency plan approach from autonomy cell this, products. to storage do accomplish strategic and future To in Cybertruck unwinding our the our plans, the over we is grow pandemic. AI-enabled leading. vehicle plan financially the and

want to again, suppliers team I thanking and well as by our thanking our as the customers. Tesla conclude

Thank you go And on to investor say.com. let's very questions much.

first adjustments? one you is What variables what The to do auto process make How do review is pricing frequently consider? the you pricing?

Do you want to or me Elon, do take that, you want take that? to

My apologies.

add, do it's and on talk unless the to mute. I really think and something was production best there's -- not But a evaluate to output, something you'd our that we can macroeconomic Sorry, -- Yeah, It's this is I about. we decision. just conditions, we Zach. make like

right. are a team, where get leadership team. basis very into details that's weekly review But mean, is something certainly, reasons as by we the subset on globally we the and stand that's why the actively I managed it decisions made. I think certain of a can't I of a

you. Thank

is, than believe be Energy? provide will bigger Tesla guidance and And formal The overall more you second still Tesla will Energy when question auto? you do on Megapack

clarify than Yes, standpoint I deployed. gigawatt the hours total like should from just of auto bigger like

be So its storage. hours may gigawatt possible higher will automotive revenue be probably but I stationary with higher, think

to than storage. the there is storage to just If economy, sustainable -- there stationary what's needed look world at more energy needed energy transition mobile the you is a energy

stationary of well are we in automotive. seeing of excess storage our growth So and --

in So that is with line expectations.

margins, next question, this for Yeah. have with maybe, Martin, part we single which can and question, the combine And on the on the there. guidance a guidance just is of comment

Megapack I the think storage point company, business combination we, a both guidance are a of and storage we business. where get say -- Powerwall the on we will is as the business. to the provide I

from the has and pool Relative as financials to But terms volatility the that of still business customer currently, a as it. of far and there. business as volumes fairly small this lot just of the the volumes of And revenues we're think diversification grows I smooths total don't company, out, both small. given in it's well away

day think about release year. two including on our expectations start doing the can our over and we these deliveries a talk I as formally that we'll business production and something more then coming is volumes

will I be think few get there. we before it quarters more a

was answered, said, let's next as The go so you. to already battery the Thank question, question. you

Sorry.

one other mention wanted thing on I Just to margin.

we're in the business any where think just the gross seen While probably margins in we've generally there, guidance we we to set to We generally providing for go what program vehicle margins, this mean, business. on launch. historically of not I of specific will mid-XX% terms ballpark that expectations of look

we're so there not business, working that's what we're And yet but on towards. this

We're a an hopeful but to that's year, get there later aspiration. promise. not this That's

expectations well XXXX until are those The meeting How the on Day? is, cells it be Thank long the next goals? Drew? will meet the Battery described cells how you. question

Yeah.

the making was we structural areas the factory these a cost-down road map discussed, all itself, progress Day, and XXXX concept cathode of anode we've then. materials, Battery effort. been established the on of and across across design and cell There cell So we pack five aspects since through

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the manufactural design, today. Battery tablet in generation production version first more but Texas cell we only a in the On cell in second we're unveiled not Day, with

Day per road number map. On we have of the the a cathode materials side, underway Battery activities

May. this our For Christi breaks ground refinery Corpus lithium, Lithium

to byproduct Battery no concepts It process all construction sulfate-free these goal of refining embodied is can caustic end refinery commissioning a the energy. spodumene of of that reduced the start be portions process the acid with beneficial or Our We repurposed The before facility in lower reagents, on Day. the materials. produces uses discussed actually year. costs,

that are the waste cathode Same this both Austin technology end scale phase Battery our the lab cost, process successfully cathode we've on for facility. in we demonstrated precursor and incorporating with into described pilot and water lower process at detailed Day zero of design front precursor,

new On of the quarter commissioning target next year. end are and XX% a our our XX% cathode utilities wet we equipment and dry material installed cathode quarter goal at in building Austin, the first produce begin with this with and to to production, before

and output improvements we cells structural one. this year. design the floor architecture to pack the manufacturing the XX% We XX% of with the do structurally to per concept, use is pack future We'll the hours and believe same the and pack, to while XXXX execution factory the saw A-level gigawatt It's in a programs. lower smaller structural a good with Structural load iterating as B-level vehicle big for the concept closer in as cell pack continue of simpler. CapEx

in the Altogether, for Texas and XX% XX% increased production cost the catho of about over And one, COGS track accomplished cost we through the to by made significant achieve and Cybertruck the zooming quarter, team, XXXX we production team cost the by and steady-state both We out going in are for priority, year. rate XX through increased ramp is forward year, yielding months. peak the improvements yields on over next of was next XX% improved yields rest quality. quarter-over-quarter XX%. and targets And QX a XXXX areas. reduction steadily ahead all the program as XX% the increased for

Thank will you credits ex you the is, next do pricing margins current XXXX The what question much. anticipate company's be very at levels? automotive gross

lot and a Yes, of on to which what's I basically of subject there's also is is asking There's go. costs, in one. do the set projection and going costs which headwinds macro environment There's the within of this a we're make macro in a question think start in I uncertainty. And costs about of on world. viewpoint to kind set like where can we costs will that's This off control And difficult a this this. tailwinds. a

work intended to Drew things COGS. control, then cell, cost ramping most in on part there. we're Austin which into the Austin factory cost of volumes bucket Within optimization a the down the we around mentioned, the as our of is Austin is, And our stabilizing the cost doing input XXXX that our we get the journey an is that factory, of the working and once

course the the of as of factory good and so, non-cell the portion year trajectory the Drew in see a on pretty program cost, and then the XXXX we the And over as improves Austin improves mentioned, facility.

Berlin still localization to factory. have the A an as story is journey but in exists for that the not XXXX input, does ongoing. complete factory, It similar

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our chain you supply to thank So team.

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lot. significantly. Lithium of a the dropped price has that It's has mentioning worth lithium dropped

And impact down the And, second as that see in Yes. have a impact of a to that's generally, meaningful and we prices expect year. more half piece expect on to commodity come the the we more in do QX. company,

Yes.

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excess orders overall we the think say I production. are thing is can that in of

to that Thank pricing you. maybe make and it updated last the features specs new give Cybertruck can investors, question production? will from and any And for you

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Yes.

Yes.

Perfect. Okay.

on was there. question growth -- first it's the So, Lathrop. to see that's great Obviously,

wondering Just deliberately just Demand, sort curve to be Are closer S limitation. obviously, isn't working when the the might you think you up facility that utilization? full your way there? of

the utilization I So unlocking guess, what are what are to there? full steps,

some the But in parts side. we factory the year with And following, of are classic ramps We of have There on two also addition, aspects are with that some actually we those and that general assembly Sure. unlock of We side around phases the our on suppliers the going Lathrop. CapEx the there. had see we facility. electronics in faced the on what's latter so will power both sell this in half inputs. of of

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So Yes. that's what like. looks it

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the And automotive Zach. Back on question then for Understood. margins. a gross maybe

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Colin, please. Oppenheimer. Colin go ahead. go Let's to from Rusch Unmute

structure minus lithium seeing? Can talk you a if that cost volumes you guys. much, on the actual us And these on much you're is about those little range of within how pulse cost a give the bit variable so contracted Thanks could or vehicles?

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that the up be by It So battery car. that time sense will months. several makes ends it in

as make mentioned also earlier, efficient. commodity very But focused the metrics that pricing, beyond on just production very other Zach we're

expedites. air demurrage and So, for example, detention

our XX%. be dollars and down vehicle. I of the air of per hundreds XX% expedites is That think demurrage can Detention peaks. from thousands are down

of attacking becoming So efficient. and vectors we're very sort all

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to Drew, take do want you that?

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Yes.

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America to approach over going North So we're coming and we China do the take a continue as this to in quarters. similar

very much. Okay. Thank you

from Wolfe Let's Research. go Lache Rod to

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therefore, reduces and affordability reduces it So demand.

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elasticity consumers recession, financially actually Okay. And price less in feel the secure, when a deteriorates. normally, --

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Thank you.

Adam to from go Stanley. Jonas Let's Morgan

Hi everybody.

leg. Break first, Chica. Boca Elon, So, of luck good a tomorrow's launch with

Thanks.

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you. Thank

Barclays. Dan to Levy go Let's from

Hi. Thank Good evening. you.

and supply Austin Berlin. ramping you're at question, First

environment some further pace the to historically, allows just continue integration going that should expect your it questions. the -- demand the you've you're get critical you just supply that wanted to max we continue at of to to in of to how your is within mean, those whatever broader vertical the capacity to market produce broadly, volume there? just increase the we produce I to to is which get that constraints, what at operating gauging out at your volume demand. face -- economic allowed to as regardless generally Should I the understand just opposed supply plants And at So been to you're with benefits

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very Philippe Jefferies. final Houchois our And from question Okay. Thank comes you much. from

model in should or market words, the a other direct And taking -- selling so it? need fell market market for EV as share you wondering, term. is comments for your of into look about share share and of longer share. not you business I importers And date think kind as agree with develop smoothly, there you we practice the at should thanks guess, by question. more direct and agency today? auto evening, just there terms forward, globally? in model you build basically to It's I completely as to market we the good look is using limit Yes, going the I'm up it Tesla the that business But to globally, practice slightly

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have three the much, months you. see Unfortunately, we time this very now. again from quarter. everyone. you Thank Thank in you all for We'll that's