Teslaverse #3: ⚡ Q2 (l)earnings — Supercharger with card payments — Cybertruck backstory

Hey, Jaan here.

I’m back with our special monthly edition on nothing but the one company that plays around in the EV/Charging/Battery/Energy/Software/ Robot/Autonomy/Insurance spaces all at once. I probably forgot a few here.

Some of us love Tesla.

Some of us hate Tesla.

Some of us are somewhere in the middle.

Wherever you place on this spectrum, one thing is clear: we have to keep up with what Tesla does, so we could understand where the rest of the industry is heading. And that’s exactly what we’ll do with this Teslaverse series, which comes to you in addition to our regular EV industry coverage.

I couldn’t have started this series (like really, it wouldn’t exist) without the collaboration with long-time friends of the EV Universe, the team behind the fully contactless Tesla rental startup, BEAST. Beast has a good model to increase its active fleet across all of its markets, where you can earn extra as a Tesla owner:

That’s exactly what Beast Partners is about (link).

In today’s Teslaverse, we’ll dig deeper into Tesla’s Q2 earnings report and Q&A, as it gives us the current state of the company best. And then, we’ll get you some of the latest insights about the Teslaverse.

Words: 2,441 | Time to read: 13 minutes

PS! See the online version of this newsletter for more pictures & ready-to-watch videos. Emails have their limits…

And in case you missed last month’s Teslaverse, check out my deep dive on what Tesla wins from NACS here.

Ok ok, let’s get to the good stuff.

Tesla held its Q2 2023 Financial Results and Q&A Webcast on the 19th of July. First off, here are the resources if you want to dig deeper yourself:

• Shareholder deck with financials, a 27-page pdf

• Q&A Webcast with Musk present, 1h audio

• 20-minute overview of the call from Rob Maurer (Tesla Daily)

I’ll do my best to give you the outline of everything important. Keep in mind that while I know my way around numbers, I have no background in finance. Same goes for anything on autonomy. This means I do not offer any advice or my opinions on these topics and you should do your own further research.

TESLA Q2 FINANCIALS:

• Best quarter in terms of revenue so far with $24.9B (+47% YoY)

  • $21.27B of this is automotive revenue.

• Operating income $2.4B, margin 9.6% (down from 11.4% in the last Q),

• GAAP net income was $3.14B

• GAAP gross margin was 18.2%

• Cash, cash equivalents and investments increased by $0.7B to $23.1B in Q2

• $282M in regulatory credits, $943M in R&D spend

• See the key metrics historically on the charts on page 17 of this pdf. Here’s one that is great for auto industry comparisons:

Here’s a more visual overview of the Q2 update:

PRODUCTION AND DEMAND

Info about the current state of demand for Teslas and how the price cuts have affected it and affected the financials are likely what most people were searching for. We saw the financials, now let’s look at the production and demand:

“Tesla will see a slight production output decrease in Q3 vs Q2 due to a lot of factory upgrades, but still targeting 1.8M deliveries this year.” The factory upgrades also likely refer to Project Highland (M3 Refresh) and Project Juniper (MY Refresh).

Tesla delivered 466,140 vehicles in Q2 (+83% increase year-over-year, +10% over Q1). It produced 479,700. This Includes 19,225 Model S/X (produced 19,489) and 446,915 Model 3/Y (produced 460,211).

Note that this is again the highest production & deliveries the company has ever achieved per quarter. These are Tesla's estimates for its market share of light-duty vehicles per region:

Related: Tesla workers in the Shanghai plant have reportedly received a large increase in their quarterly performance bonuses (link). Tesla had cut some bonuses in the previous quarter.

Tesla also says they are still committed to smooth the quarterly delivery waves, reducing the % of vehicles delivered on the third month of every Q. We saw this effort start at the end of 2021. Tesla claims that “vehicles in-transit, test-drive and display vehicles account for a substantive majority of our total days of supply.”

Installed production capacity: not too much changed here from the last quarter, except that the Giga Berlin Model Y capacity has been updated to ‘375k’ instead of the previous ‘>350k’, and that, perhaps even more notably:

Next-Gen Platform is now updated to “Various” region status.

We’ve only seen one official announcement on the next-gen platform build location and that is the Giga Mexico. However, we’ve seen Musk courting several countries (or actually them courting Musk) for EV and battery factories — it would make sense for most of these new locations to be building the next-gen car. We’ve seen India and Indonesia, France and perhaps Italy, Spain and South Korea, and some others that Musk and/or Tesla officials have met, most likely for these talks. Of course, this is just my (and some others’) speculation, no announcement yet.

Note that this here does not represent the actual rate of production. The numbers do, however, add up to 2,025,000 vehicles annually, giving a nice buffer for Tesla's stated 1.8M goal for this year.

Cybertruck: equipment installation at Giga Texas is in progress, producing release-candidate builds, with deliveries remaining on track to start later this year. I wonder if end-of-Q3 plan still holds or are deliveries moved to the end of the year?

Some numbers:

• Tesla locations (all sales, service, delivery and body shops): 1,068 (+68 locations QoQ);

• Mobile service fleet: 1,769 (+22% Year-over-Year);

• Supercharger locations: 5,265 (+33% YoY)

• Supercharger connectors: 48,082 (+33% YoY)

• Global vehicle inventory (days of supply): 16 (+300%)

Tesla Energy: for the first time, we’re seeing Tesla Energy gross margin reaching 18.4% (+67% over Q1). Storage deployments increased to 3.7 GWh, up 222% YoY.

This part of Tesla has long been underestimated. Seems the growth and, well, scale is becoming more visible, expecting more awareness now.

Solar deployments remained roughly flat sequentially at 66 MW, declining YoY, predominantly due to a high-interest rate environment.

Commodity prices: “We have seen a reduction in pricing across the board for all commodities, such as nickel, cobalt and graphite.”

4680 cells: Giga Texas cell production increased 80% in Q2 over Q1, and the team reached 10M production cells produced. 25% reduction in cell COGS. The "Cybercell" brings energy density and cost improvements.

Tesla Bots: In case you follow the Tesla Bot topics, Musk says Tesla has “around 5-6” Tesla Bots working. “Optimus bots should be doing useful work in Tesla factories next year.”

FSD: Tesla owners have now driven 320M miles cumulatively on FSD Beta. This is quite a significant jump from around 150M miles in Q1.

FSD-related: Tesla says that in July they started production of Dojo, the training computer, which is expected to make neural net training faster & cheaper.

FSD licensing: Musk says Tesla is in early discussions with a major automaker to license Tesla's Full Self Driving technology to them. This is actually a rather significant step towards validation of the FSD tech in the industry. And could create a similar flood as the NACS. I wonder who it is? What if… ah, I won’t speculate further today.

FSD transferring A request I’ve seen for many Tesla owners so far is the transferability of FSD from an older car to a new one, usually when a Tesla owner buys a new car. Musk said Tesla will allow FSD to be transferable, but only in Q3. Although no public info is out yet, this seems to be the T&C of the new program (link).

A Quote:

What we didn’t hear about

Sadly no new info on the non-Tesla charging on the call. I’d love to see more info on how opening up its network (both non-Tesla elsewhere and NACS adoption from next year in the US will start to impact the overall charging-related costs and revenues.

We do get a little glimpse at it through the perspective of the “Services & Other” gross margin. I expect this to grow with the partnership rollouts, especially from spring next year when NACS adoption really kicks in:

I also didn’t hear or see any new info on Tesla’s advertising efforts.

Tesla Semi progress was also untouched and not yet shown under production numbers.

I think we’ve now gone through with most of what was of interest here. Do let me know if I missed anything juicy.

Tesla has updated its Referral Program policy:

• you can now refer 12 people per year, instead of a cap of 5 imposed earlier;

• you are now allowed to post your referral link on social media and public platforms.

This means that if you reach the max 240k “points”, it’s enough for 100,000 free Supercharger miles.

S&P Global Mobility’s study on brand loyalty — which shows the likelihood of a household owning a specific brand will buy the same brand when returning to market — had an interesting verdict on the luxury segment: Every brand but Tesla is losing more households than it is keeping. (link)

In the first four months of 2023, less than 50% of households bought the same brand again, but with Tesla, 68% of its owners bought another Tesla.

CYBERTRUCK

Tesla shared this image of the first production Cybertruck. I think it’s safe assume it is one of the ‘release-candidate’ builds. Here’s the same one caught on video riding out.

We now know the Cybertruck will come with a >6ft bed while apparently fitting into a regular US garage (>19ft), and seats 5 adults. It seems that the foldable seat/console that was shown earlier which would’ve created a middle seat in front, will be a fixed console instead.

Walter Isaacson is about to publish a biography on Musk in September. He added an interesting photo for us from a little behind-the-scenes:

Isaacson, a great writer that he is, also captured the whole situation in a short read here.

Tesla has now officially launched in Malaysia, debuting the Model Y in Kuala Lumpur (video) (link).

Model Y was the best-selling vehicle of any kind in the first half of the year in Europe. Here’s how the top 20 looks like (Iink):

GIGA BERLIN

Tesla held a Q&A session on Tuesday for citizens of Brandenburg state about plans to expand its Giga Berlin site to a capacity of 1M vehicles per year and battery cell production capacity of 50 GWh. We have covered these plans before when they were less… official. Going to 1M would make it the largest car production plant in Germany. (link) For the expansion, Tesla has committed to not using any additional water capacity, instead recycling the 1.4 million cubic metres of water it is licensed to use.

GIGA INDIA?

Tesla has reportedly asked its battery suppliers to engage in negotiations with the Indian government to establish battery plants in the country. Panasonic has reportedly approached the Indian gov. (link) We’re seeing several moves towards India now, looks like this time it might be for real.

Samsung will reportedly make Tesla’s next-gen FSD chips (for its ‘hardware 5’ computers) and will be mass-produced in 3-4 years from now. (link) Before, TSMC was the sole supplier.

A Tesla Model S&X HEPA filters have a Filter Media Area of 3.52m² , compared to a standard automotive filter at 0.70m² (link).

Tesla is starting to implement AirPlay to allow higher quality streaming of audio and potentially video content to the vehicle, hinted in its 4.23 app update: (link).

You’ve seen the non-Tesla NACS adoption news we’ve covered in our newsletter along the way already, so I won’t dig deeper into it. Fitting well into our charging conversations too, is this:

Tesla showed off a Supercharger V4 design with… a contactless card payment area and space for screen. (link) Fits in nicely to our cardpay-at-chargers topic from last week’s newsletter.

Tesla will be installing what it calls a “CyberCanopy” over the 20 stalls of Superchargers in Canton, Massachusetts (link).

• “25 Guns” are, per rumors, a special group of Tesla engineers reporting directly to Elon Musk. He says they ‘were instrumental to the success of Giga Berlin’. Looks like there’s also a job opening for one of the positions in Germany.

  

• Tesla on this year’s Goodwood Festival of Speed (30s video).

• POV: A camouflaged Refreshed Model 3 passes you on highway (17s video). And a Cybertruck flies by (4s video).

• Tesla seat-testing robot… on Cybertruck seats (30s video)

• Tesla.com website and its model pages each have new intro videos.

Do check out the great work that our partner, Beast Rent, does for increasing EV adoption (link).

Aaaaaand we’re done. This newsletter went out to 3,517 EV Universe subscribers.

— Jaan