Tesla's Q4 2023 Earnings Call

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[00:01:40] My name is Bodie and I am your host for today's episode.

[00:02:41] You are very welcome. So the Tesla team did an incredible job in 2023.

[00:02:46] We achieved record production and deliveries

[00:02:48] of over 1.8 million vehicles in line

[00:02:51] with our official guidance.

[00:02:53] And in Q4, we're producing vehicles

[00:02:55] and annualized run rate of almost 2 million cars a year.

[00:02:59] This was really a phenomenal achievement.

[00:03:02] Looking at just the three month factory alone,

[00:03:05] we made 560,000 cars.

[00:03:07] This is a record. work there. Model Y became the best selling vehicle globally as predicted. The best selling vehicle of any kind, not just electric vehicles with over 1.2 million units delivered. The energy storage business delivered nearly 15 gigawatt hours of batteries in 2023 compared

[00:04:20] to 6.5 gigawatt hours the year before. So tremendous year of year growth, triple digits, complete architectural rewrite compared to prior versions. This is end-to-end artificial intelligence. Another bit nets basically photons in and controls out. It really is quite a profound difference.

[00:05:41] This is currently just with employees and a few customers,

[00:05:44] but we will be rolling out to So I think we're quite far ahead of any other company in the world in terms of AI and ferns efficiency, which isn't going to be a very important metric in the future and in many arenas. So see that the new Model 3 is now available globally.

[00:07:03] So we didn't update it in Model 3. could be far more advanced than any other automotive manufacturing system in the world, like by a significant margin. Several years ago I said that the perhaps the most important competitive characteristic Tesla in the future will be manufacturing technology and you will really

[00:08:21] see that come to bear with our next gen vehicle.

[00:08:26] The first manufacturing location for this will be I would have to say that is from the easy path, a very difficult one, but is it on the set of possible outcomes? And previously, I would not have thought it is in the set of possible outcomes. And thank you again to all of our investors, our employees, and our suppliers for a strong year. And looking forward to a great 2024 and years to come.

[00:09:41] Let's start off with a big congratulations to the Tesla team for producing and delivering

[00:09:45] nearly 2 million cars in 2023. pretty mature and their storage business is still ramping up. So that growth percentage is going to be quite high for the energy storage business, even though it's probably not a major percentage of Tesla's overall income. Let's see, moving on to FSD12.

[00:11:00] He mentioned that version 12 was released

[00:11:02] to some customers and employees. Number 3 are Hardware 4 enabled vehicles. So Hardware 3 was released in March of 2019. From 2019 to 2023, Tesla sold right around 1.8 million vehicles in all of North America. In April of 2019, full self-driving cost $5,000.

[00:12:25] And then the price continued to jump pretty quick here. I don't know how many of these people are subscribing for $199 a month versus who actually paid. What I became more curious about is how many people signed up for this in 2018 and 2019 when full self-driving was an actual promise that, hey, this is going to be here in the

[00:13:41] timeframe that you owned your car versus 2020 where people were starting to realize maybe between five and $8,000 is a lot of money. But it's something, if full self-driving was real, it would be something that was definitely worth the money. Getting, moving on down the road to 2021, 2023, I think the more people are like,

[00:15:00] you know what, that's a lot of money,

[00:15:01] and I'm not interested in spending that much money

[00:15:03] for a feature that may or may not get here

[00:15:06] while I own my car. I don't think it made it any better. Five-hove is Tesla's new CFO. So let's listen to his opening remarks. As Elon mentioned, we had a record year in terms of both production and deliveries for auto business, as well as record deployments in our energy business. This was achieved despite 2023 being a challenging year in terms of higher interest rates and higher inflation.

[00:16:22] Big thanks to our customer for being with us

[00:16:24] through this challenging period.

[00:16:26] I would also like to thank the whole Tesla team of Cybertruck. As a result, our autogorps margin improved sequentially. That said, predicting autogorps margins is extremely challenging since there are many moving parts to this equation, some of which are out of control, like the change in tariffs or local incentives to name a few. While the teams are focused on cost reductions, we are approaching the limits within our current

[00:17:43] platforms. On the demand front, as Secondly, we continue to offer very attractive lease rates for Model 3 and Y using a partner leasing program. Note that the sales under this program are recognized as upfront revenue and reported within automotive sales. An energy storage business had another

[00:19:03] record year with deployments, more than doubling and our suppliers for being with us in this journey. Before I get into the CFO's remarks, I do want to say normally I'll edit down Elon's opening remarks and the CFO's opening remarks because they get to be very wordy.

[00:21:25] And then for some Teslas and it sounds like the Model Y or some merfergions of the Model Y, you'll get that Inflation Reduction Act tax credit at the point of sale.

[00:21:32] So you don't have to wait to file your taxes if you're here in the United States like I

[00:21:35] do to get that $7,500 tax credit.

[00:21:38] You'll actually get that when you buy the car.

[00:21:40] Let's take that right off the price of the car, which I would have preferred that to be

[00:21:44] honest with you.

[00:21:45] All right, let's get into our investor questions. or treating your employees. We know that Elon likes to sleep on the line and or get very little sleep and berate his employees. So, but basically he wants ahead of the ramp with actually weeks of finished cell inventory. And the goal is to keep it that way, not only for cyber, but for our future vehicle programs. And as Elon said, it is an S-curve here too. Like it's hard to predict these things, but I'm just describing our goals.

[00:24:22] It's a hard problem, like,

[00:24:24] no, there are entire companies where all they do

[00:24:26] is make battery cells.

[00:24:27] That's like the, all they do. one. And in terms of what we're doing, we're currently running one production line, one assembly line, using two assembly lines in addition for yield and rate improvement trials. And we have a fourth in commissioning and four more will be installed starting in Q3 this year. So definitely this is a big year for ramping 42. But we also do want to emphasize that we can also expect to ramp orders from our suppliers.

[00:25:45] Yep. So this is not about replacing our suppliers, it's about supplementing our suppliers. question after another long pause. And I'm leaving this in here so you can make your own opinions. I have my thoughts on why Elon is doing this. I'm gonna let you listen to the clip, make your own opinion and then I'll share my thoughts on the other side. I want you to listen to two things here early on in the clip. You'll hear Martin asking the question

[00:27:00] and then he goes silent. Right before he goes silent,

[00:27:02] there's a, there's like a little click sound

[00:27:06] and then you don't hear him for portion. over the company at that stage that I could sort of be voted out by some sort of random shareholder advisory firm. You know, we've had a lot of challenges with institutional shareholder services, ISS, I call them ISIS. And Glass-L-O-Wis, But if this was somebody playing a joke or thinking that they're funny, especially when it comes to this topic, anything that Elon said, and again, I'm speculating, but anything that Elon said, which I thought was fairly reasonable in his answer, kind of gets shot out the window.

[00:29:42] And another thing that kind of shoots his reasoning out the window hasn't really demonstrated that he cares all that much about money in terms of his actions. He will do things that actively cost him money and he's fine with it because he has plenty of money. I do believe he's doing this because he wants to be in control. Whether the reasons he wants to be in control are valid or not valid.

[00:31:01] I'm not here to debate that.

[00:31:04]