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Home » Tesla Q1 Earnings Call: Key Takeaways, Elon Musk’s vision for the company’s future.

Tesla Q1 Earnings Call: Key Takeaways, Elon Musk’s vision for the company’s future.

Canaccord Genuity just cut his price target on $TSLA from $267 to $234

Tesla just concluded its Q1 earnings conference call, and as usual, Elon Musk had a lot to say about the company’s plans for the future, how Tesla is paving the way for the future of electric cars. From updates on the Cybertruck to insights on the energy storage business, here are the key takeaways from the call.

According to Musk, the Model Y is already the best-selling vehicle in Europe and the best-selling non-pickup truck in the US. This is a significant achievement for the company and shows that Tesla’s focus on producing affordable electric vehicles is paying off.

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Price is Key

While Tesla cut prices in the first quarter, the company’s operating profit margin is still at the best level in the industry. Musk emphasized that in the current macro environment, price is the most important factor for consumers when buying cars. Lowering prices can drive higher sales and greater fleet retention, which is crucial for long-term profitability.

Autonomous Driving is the Future

Musk reiterated his belief that autonomous driving will be a game-changer for Tesla. Over time, the company’s vehicles will be able to generate substantial profits through self-driving capabilities. This is why Tesla is laying the groundwork now to deliver a lot of cars at lower margins, with the goal of reaping the profits in the future.

Cybertruck is Coming

The Cybertruck is one of Tesla’s most highly anticipated products, and Musk provided an update on its progress. The company is currently building an Alpha version of the Cybertruck on its pilot line for testing. Musk also announced that Tesla is completing the installation of the mass production line in Giga Texas and expects to have a great delivery event in the third quarter.

Megapack is Making Progress

Tesla’s energy storage business is also making waves. The company’s energy storage deployments reached nearly 4 GWh in the first quarter, the strongest quarter ever. This growth was achieved due to continued growth at the Mega facility in Lathrop, California. Tesla also announced the opening of a new Mega factory in Shanghai.

FSD and Dojo are Critical

Tesla’s Autopilot and FSD capabilities are key to the company’s success, and Musk emphasized the importance of data in training the neural network. Tesla has accumulated 150 million miles driven under FSD and is continuing to invest in improving its neural network training capabilities. The company is also putting a lot of effort into Dojo, which has the potential to increase training costs by an order of magnitude.

Tesla’s Business Philosophy

Despite the uncertain macro environment, Tesla’s business philosophy this year is to increase sales of automobiles and energy businesses as soon as possible. To achieve this, the company will focus on cost efficiencies and working capital, especially eliminating legacy strategic inventory buildup.

Energy Business is Growing

From the perspective of the total amount of electricity deployed, energy storage will undoubtedly be larger than the automotive business. This means that its income may also be higher than that of automobiles. As the world moves towards a sustainable energy economy, there will be a greater need for stationary energy storage, which is expected to drive the growth rate higher than that of cars.

Key Takeaways From Call

Tesla’s 4680 battery factory in Texas is currently under construction, commissioning, sales, and operation. The capital expenditure per gigawatt-hour is expected to be 70% lower than that of a typical battery factory when it is fully ramped, as previously mentioned on the battery day unanimous. This reduction in cost is a significant milestone for Tesla, as it will make electric cars even more affordable for consumers.

Tesla’s Corpus Christi lithium refinery, which broke ground in May of this year, is set to adopt the sulfate-free spodumene refining process. This process has low process cost, no acid and alkali reagents, and low embodied energy. It even creates a beneficial by-product that can be reused as a building material. The goal is to start commissioning some of the facilities before the end of the year, which is an exciting development for the company.

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Tesla has seen a significant improvement in manufacturing using 4680 cells and structural battery packs, with a 50% reduction in capital expenditure and a 66% reduction in factory size. The output of 4680 batteries has increased by 50% month-on-month, and the cathode peak rate has increased by 20%. The company is expected to achieve the steady-state cost target in the next 12 months. Reducing the cost of the 4680 as they ramp up production ahead of the Cybertruck launch next year is one of the company’s top priorities for the rest of the year.

Tesla hopes to open up new markets around the world and plans to bring its cars to the rest of the world. While these markets may not be individually huge, they add up to a whole bunch of markets, summing up some important things.

The value of self-driving cars is huge, and the current price can be understood as the option value of self-driving cars. The value it can eventually cash out will be very high.

Elon Musk has been saying for a long time that all cars in the future will be electric. Assuming civilization still exists 20 years from now, we’ll look back on internal combustion engine vehicles as much as we look back on external combustion engine vehicles, just like steam engines.

Tesla is expected to reach 2 million vehicle production this year and is continuously improving its charging network. The company opened the first V4 supercharger in Europe in the first quarter and opened the Magic Dock interface in North America, which shows that Tesla is moving in the direction of universal compatibility for all vehicles.

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