Muskspeak on Cybertruck, Price Cuts, FSD Timing as Tesla Hits New Records in Q2

  • The US remains the top market for Tesla followed by China and Europe.
  • Aiming to develop an in-house AI ecosystem, Tesla has started building its own Dojo training supercomputer.
  • With this growth trajectory, Tesla is expected to achieve sales of around 1.9 million units by the end of 2023.

Tesla achieved remarkable results in Q2 2023, with its revenue growing 47% YoY to reach the record-breaking figure of nearly $25 billion. The company’s vehicle deliveries too hit a record at 466,915, growing 83% YoY. The US retained its position as Tesla’s largest market, contributing to 37.6% of the total sales, while China and Europe followed closely behind. Global price cuts for the Model Y and Model 3, along with tax subsidies in the US and China, were two of the biggest drivers for Tesla’s Q2 sales.

Tesla CEO Elon Musk, during the earnings call, discussed a few key things like the long-awaited Cybertruck deliveries, Tesla’s advantage in competitive pricing of vehicles and the possibilities of attaining complete FSD:

Cybertruck delivery outlook

CEO:  “Demand is so – so far, off the hook, you can’t even see the hook. So, that’s really not an issue. I do want to emphasize that the Cybertruck has a lot of new technology in it. Like a lot… So, always very difficult to predict the – the ramp initially, but I think we’ll be making them in high volume next year, and we will be delivering the car this year.”

Soumen Mandal’s analyst take: “Musk is certainly hyping the Cybertruck, not that it needs to anymore, but there is also significant expectation setting with discussions on internal production and supply chain hurdles. Is this another Model Y? That’s a tough act to follow, but the Cybertruck does bring a slew of unique parts and processes. So, longer term, we expect to see another products flywheel off from it.

Tesla’s price cuts for its vehicles

CEO:  “And we, you know — we just — we just course according to what the mood of the of the public is, you know. Buying a new car is a — it’s a big decision for vast majority of people. So, you know, anytime there’s economic uncertainty, people generally pause on new car buying, at least to see to see what happens.

And, you know — and then, obviously, another challenge is the — the interest rate environment. As interest rates rise, the affordability of anything bought with that decreases, so effectively increasing the price of the car. So, when interest rates rise dramatically, we actually have to reduce the price of the car because the — the interest payments increase the price of the car. So — and this is at least — at least up until recently was to believe the sharpest interest rate rise in history. So, we had to do something about that. And if someone’s got a crystal ball for the global economy, I really appreciate it. If I could borrow that crystal ball.”

Soumen Mandal’s analyst take: “Tesla’s strong supply chain and reduced cost of production due to low raw material cost, especially for lithium, has encouraged the company to reduce prices of its vehicles. Alongside what Musk described as ‘interest rate rises’, Tesla’s price reduction has made all variants of the Model 3 and Model Y eligible for IRA tax credit in the US, where it will benefit in the long term. So, macroeconomic policies and geopolitical relations play a crucial role in deciding such price reductions, incentives or discounts.”

Autonomy (FSD): Timing

CEO:…the reason I’ve been optimistic [on achieving full self-driving] is what it tends to look like is the — we’ll make rapid progress with the new version of — of FSD. But — but then, it will curve over logarithmically. So — so, at first, like, a logarithmic curve looks like, you know, just sort of fairly straight upward line, diagonally up. And so, if you extrapolate that, then you — you have a great thing. But then because it’s actually logarithmic, it curves over. And then, there have been a series of logarithmic curves. Now, I know I’m the boy who cried FSD, but man, I think — I think we’ll be better than human by the end of this year.”

Abhik Mukherjee’s analyst take: “Almost every auto OEMs are spending on autonomy. Tesla is also walking in the same direction and is building an in-house AI service that includes in-house real-time data sets, neural Net training, vehicle hardware and software. Tesla is expecting to reach perfect FSD soon and for this, it is also building a Dojo supercomputer. Early development of FSD will give Tesla a massive first-mover advantage over its competitors. We assume Tesla FSD might also get adopted by other automakers, like Tesla NACS is being adopted.”

Autonomy (FSD): Disruption

CEO:  “It’s not about getting more share. It’s just that you can think of every car that we — that we sell or produce that — that — that has a full Autonomy capability as actually something that, in the future, may be worth as much as five times what it is today…If you’ve got an autonomous — if that vehicle is able to operate autonomously and — and use — be used in either dedicated or autonomous or partially autonomous like — like, Airbnb, like maybe sometimes you allow your car to be used by others, sometimes you want to use it exclusively, just like, you know, Airbnb, you know, doing Airbnb with a room in your house… So, I think it’s sort of it would be — I think it — it does make sense to sacrifice margins in favor of making more vehicles because we think, in the not-too-distant future, they will have a dramatic valuation increase. I think the Tesla fleet value increase to the point at which we can upload full self — you know, full self-driving and it’s approved by regulators, will be the single biggest step change in asset value maybe in history.”

Abhik Mukherjee’s analyst take: “Although we are excited about autonomous vehicles, Tesla currently is a bit far from achieving perfect FSD. Incidents involving Tesla vehicles are frequently reported. Currently, Tesla FSD is only available in the US and it will need a lot of approvals from regulators to ensure 100% safety before it can be rolled out to other regions, especially in Europe where regulations are much stricter. Though achieving complete FSD could disrupt the market in future, currently Tesla must work to make its FSD software incident-free.”

Tesla Q2 2023 revenue by segment

Financial highlights

  • In the automotive segment, Tesla achieved revenue of $21.26 billion, an annual growth of 7%. Around 4% of this revenue was derived from sales of regulatory credits and automotive leasing.
  • In addition to the automotive segment, Tesla experienced significant growth in its other businesses, such as energy generation and services, with revenues surging by 57% YoY to reach $3.65 billion in Q2 2023. Tesla deployed 7 GWh of energy storage and 66 MWh of solar panels during the quarter.
  • Tesla achieved a gross profit of $4.53 billion, a 7.1% YoY increase. High vehicle deliveries, low cost of production due to lower raw material costs and IRA tax credits for EVs in the US contributed to this result. But the low ASP of vehicles due to the voluntary global price cuts also hurt Q2 profitability.
  • Tesla’s Q2 operating profit was 62%, a decline of 1.8 percentage points sequentially. The reduction can be attributed primarily to the significant expenses incurred in ramping up the production for Cybertruck, Tesla’s in-house 4680 cells and the development of AI through its Dojo training computer. Other additional costs were associated with a new ‘Get to Know Your Tesla’ UI and facelifts for the Model 3 and Model Y.

Tesla Q2 2023 production and deliveries


With the current growth trajectory, we expect Tesla deliveries will reach around 1.9 million by the end of 2023. Its robust supply chain and vertically integrated production have given Tesla a competitive advantage.

Other growth opportunities are arising from the adoption of Tesla’s NACS charging standard by several OEMs including Ford, GM, Rivian, Volvo, Polestar and Nissan for the North American market. This allows these auto companies to leverage Tesla’s extensive network of charging stations across North America, enhancing the convenience and accessibility of electric vehicle charging for their customers. But it also gives Tesla the option to increase its revenue by charging licensing fees from OEMs adopting its proprietary NACS ports.

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Tesla Reports Record Revenue, Deliveries in Q4 2022

  • Tesla’s total revenue stood at $24.3 billion in Q4 2022 with 37% YoY growth.
  • Tesla deployed 2.46 GWh of energy storage during Q4, a growth of almost 152% YoY.
  • Tesla’s vehicle deliveries are expected to exceed 1.7 million units globally in 2023.

Riding on record 405,278 vehicle deliveries in Q4 2022, Tesla registered a record total revenue of $24.3 billion during the quarter, an increase of 37% YoY. Deliveries rose 31.3% YoY in Q4, bringing the 2022 annual total to 1.3 million units. The US was the leading market in Q4, followed by China and Europe. The annual deliveries of Tesla’s premium Model X and Model S grew 167% YoY to reach 66,000 units.

Tesla’s sales in China fell short of expectations again due to the COVID-19 outbreak. Production at the Shanghai factory, which exported more than 106,000 units in Q4, was halted during the last week of December. Although no specific reason was stated officially, rising COVID-19 cases among workers were a likely cause for the unexpected production halt. On the other hand, the weekly Model Y production in the Berlin factory touched 3,000 units. The rising production in Germany has helped Tesla gain a strong grip on Europe’s EV market. The Model Y remained Europe’s top-selling car model during November and December. Tesla’s in-house 4680 cell production rate also reached 1,000 cars per week.

Tesla Revenue by segment Q4 2021 - Q4 2022 Counterpoint Research

Financial summary

  • Tesla’s total revenue during Q4 2022 stood at $24.3 billion, an increase of 37% YoY. The company generated more than $20 billion from automotive sales. During Q4, the widespread release of Tesla’s full self-driving (FSD) feature generated $0.32 billion in revenue, indicating that the company is striving to increase the proportion of software revenue in its overall product mix.
  • Revenue from Tesla’s other businesses like energy storage, solar panel deployment, charging and vehicle servicing grew by almost 72% YoY to exceed $3 billion. Other businesses contributed 12% of Tesla’s Q4 revenue.
  • Tesla deployed 2.46 GWh of energy storage during Q4. At 151.7%, it saw the highest YoY growth till now.
  • Tesla’s total revenue for 2022 exceeded $81.4 billion, a 51% YoY growth.
  • During Q4, gross profit also increased by 19% YoY and stood at $5.7 billion. In October, Tesla reduced vehicle prices in China after increasing them a couple of times during H1 2022. Initially, it was thought the increase in demand would make up for the price cut but the negative foreign exchange impact restricted further gross profit growth.
  • Tesla’s inventory in Q4 stood at 34,423 units, bringing the annual total to 55,760 units. The COVID-19 outbreak in China and the increased production in the Berlin factory are probable causes of the higher inventory. In addition, Tesla is facing stiff competition as legacy automakers and new players are offering more affordable EVs. In January 2023, Tesla lowered prices globally, which may help in clearing out inventories and achieving economies of scale.

Tesla production and deliveries, Q4 2021-Q4 2022 Counterpoint Research


Tesla’s strong fundamentals are expected to keep the company ahead of most other electric vehicle brands globally. Tesla announced price cuts in January 2023, which has resulted in the demand ballooning to twice the production. Besides, pilot production of the Tesla Semi began in 2022 and the vehicle is expected to hit the road soon. The company also plans to start production of the Cybertruck in mid-2023. Furthermore, Tesla recently announced an investment of $3.6 billion to set up a 100GW capacity cell factory and a high-volume semi factory. Tesla’s 2023 vehicle deliveries are projected to exceed 1.7 million units, with a 31% YoY growth. This seems attainable if the company’s recent price cuts remain in effect for most of the year.

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Tesla’s stellar Q3 performance

  • Tesla delivered nearly 343,900 vehicles during Q3 2022, an increase of 42.4% YoY
  • Logistics remains a major bottleneck for Tesla deliveries
  • Tesla can exceed 1.3 million unit deliveries by year end with current trajectory

Tesla rebounded during Q3, after experiencing a relatively weak second quarter. During Q3, Tesla delivered nearly 343,900 vehicles, a 42.4% annual increase and a sequential increase of 35%. The combined deliveries of Model S and Model X grew by more than 100% YoY, reaching 18,670 units, while the combined deliveries of Model 3 and Model Y increased by 40% YoY. China is the leading market for Tesla followed by the USA and Europe.

Tesla’s Shanghai Gigafactory surpassed the previous quarterly production rate and remains the main export hub supplying to most markets outside North America. The gigafactory updated its production ramp in July this year. The Berlin Gigafactory is also producing more than 2,000 units of Model Y, weekly. A lot of work is left to bring the Berlin plant to full capacity as it is only slowly reaching its planned output. As winter approaches, and it is feared that Europe will experience an energy crisis, Musk somehow remains optimistic about vehicle production in the Berlin plant and expects that no production cuts will happen.

Tesla Revenue by segment-Q3 2022_Counterpoint

Q3 financial summary:

During Q3, Tesla’s total revenue grew by almost 56% YoY, reaching $21.4 billion. Tesla generated $18.6 billion from the vehicle segment, an increase of 55% YoY. This is largely due to increased global deliveries and higher vehicle ASPs.

Although revenue from vehicle leasing during Q3 has increased significantly by 61% YoY, revenue from the sale of automotive credits grew by just 2.5% YoY.

Revenue generated from the company’s other businesses like energy storage, solar panel deployment, charging and vehicle servicing also grew by 62.5% YoY, exceeding $2.7 billion.

Gross profit, was $5.3 billion an increase of 47% YoY. But below expectation due to the high cost of raw materials, upgrading the production ramps (Berlin, Texas and 4680 cell factories) and increased logistic costs.

Tesla has been facing a serious issue with vehicle deliveries. There weren’t enough transport vehicles available with its logistic partners to handle the volume of Tesla deliveries. This increases the logistic cost which, in turn, is affecting the per-vehicle cost.

3.4% of the total revenue has been diverted towards R&D expenditure during Q3 2022. R&D spending stood at $0.73 billion, an increase of 20% YoY and sequentially growth of 10%. This is apparently due to the development of Tesla’s Optimus Robot and full-self driving (FSD) capability. This year Tesla postponed its AI Day to showcase a working prototype of its humanoid Optimus Robot whose software is very similar to the FSD system.

The FSD beta users reached 160,000 in Q3, up from 100,000 in Q2. Tesla is also going for a wider release of its FSD beta during Q4 2022. Hence, new Tesla owners will have the option to avail FSD beta immediately. Currently, there is an eligibility criteria to avail the FSD beta. With the resignation of Andrej Karpathy, Tesla’s AI and Autopilot director, it was perceived that the company’s FSD development is likely to stall, but it seems Tesla has made good progress and is confident of its path toward full autonomy, despite some alarming failures among beta testers.


Tesla Pdn and deliveries-Q3 2022_Counterpoint


Despite a weak second quarter, Tesla’s yearly deliveries may cross 1.3 million units by the end of 2022. Tesla is expected to make its first delivery of the Tesla Semi truck to Pepsi on December 1st this year. The Semi is claimed to have a range of 500 miles with cargo at ground level. We are also expecting to see the company’s long-advertised Cybertrucks becoming available by mid-2023. Alongside these, Tesla has also increased the production of its in-house designed 4680 cells. The constant production ramp upgrade in its gigafactories around the globe is likely to keep Tesla the market leader in the battery electric vehicle segment.

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China Cloud on Tesla’s Q2 2022 Numbers; Fundamentals Remain Strong

  • Tesla sold more than 254,000 vehicles in Q2 2022, an increase of 27% YoY, which was below general expectations.
  • This was the first time since the COVID-19-hit 2020 that the automaker experienced a sequential decline in sales.

After achieving phenomenal growth in Q1 2022, Tesla’s global sales during Q2 2022 grew by just 27% YoY to over 254,000 units, falling short of expectations. In QoQ terms, the sales fell 18%. Business during Q2 2022 was affected by COIVD-19-related shutdowns in China. Production units in and around Shanghai were closed temporarily due to strict lockdown measures. As a result, Tesla sold just 89,000 cars across China during Q2 2022. Cumulative sales in China during April and May fell by more than 66% YoY. The situation improved only after the production returned to full capacity in June.

It was expected that the Berlin Gigafactory would boost Tesla’s sales in Europe after becoming operational in March 2022. But the production was lower than expected. A few rumored reasons for the low production are litigation with the German government and a shortage of human resources. The Berlin factory is currently focusing on the production and deliveries of the Model Y across Europe.

Tesla bets on in-house battery cell manufacturing

Tesla delivered its first batch of cars equipped with the in-house 4680 battery cells and structural battery packs during this quarter. These cells use a little amount of lithium. With lithium prices soaring worldwide, 4680 cells will help lower the vehicle manufacturing cost. The cells will power the Model Ys coming out of the Berlin Gigafactory. However, Tesla will shut the Berlin Gigafactory for a couple of weeks during autumn to upgrade the production system of 4680 cells.

Other businesses see 33% YoY growth

Although Tesla’s vehicle sales in Q2 2022 failed to meet expectations, its other businesses like energy deployment and storage, charging and other services grew more than its vehicle segment. Energy deployment, energy storage, charging and other services grew by 33% YoY. Tesla deployed 106 MW of solar panels and 1.13 GWh of energy storage during Q2 2022. It installed 247 new superchargers worldwide, bringing its global supercharger number to 3,971 units with more than 36,000 connectors.

Tesla converts 75% of its Bitcoins to fiat currency

During Q2 2022, Tesla also converted 75% of its Bitcoins to fiat currency. This was done to have a better cash position against the backdrop of COIVD-19-related uncertainties. This conversion reduced Tesla’s digital assets to $218 million and added $936 million in cash to Tesla’s balance sheet.


Tesla Revenue by Segment, Q2 2021-Q2 2022_Counterpoint
Source: Tesla Q2 2022 Financials and Counterpoint Analysis

Q2 2022 Financial Results

  • During Q2 2022, Tesla sold more than 254,000 vehicles at 27% YoY growth. The Model 3 and Model Y comprised more than 93% of these sales.
  • Revenue from vehicle sales stood at $14.6 billion. Total revenue grew by almost 42% YoY, with the COVID-19 impact on China reducing the QoQ number by about 10%. Revenue generated from automotive credit also declined slightly compared to Q2 2021.
  • The company’s other services, like energy storage, charging and insurance, contributed to 14% of its total revenue. Revenue from insurance and vehicle services saw a 54.2% YoY growth, while the energy storage and charging segment grew by just 8% YoY. The energy storage business was expected to perform better but was restricted due to semiconductor-related supply issues.
  • Tesla’s gross profit during Q2 2022 reached $4.2 billion and stood at 25%. Though the shutdown in China adversely affected the business, increase in US deliveries along with the higher average vehicle price helped Tesla earn 47% more profit YoY.
  • R&D costs grew 16% YoY during Q2 2022. Tesla is trying to achieve complete autonomy by 2024 by perfecting Full-Self Driving (FSD) software. But the resignation of Andrej Karpathy, the director of artificial intelligence and autopilot system at Tesla, in mid-July is likely to stall the progress of this project, which is expected to get delayed by a year.
Tesla Production and Deliveries, Q2 2021-Q2 2022_Counterpoint
Source: Tesla Q2 2022 Financials and Counterpoint Analysis

Market Outlook

Despite experiencing a dip during the second quarter of 2022, Tesla’s future outlook seems strong and promising with strong fundamentals. Tesla has secured the supply of LFP batteries for its Shanghai Gigafactory by signing a deal with BYD. Transitioning to LFP batteries and 4680 battery cells will help Tesla reduce vehicle manufacturing costs. Moreover, Tesla expects the Berlin Gigafactory production capacity to cross 100,000 units by the end of 2022. With all these developments, Tesla is expected to cross more than 1.2 million units of vehicle deliveries by the end of 2022.

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