9 things we learned about Tesla’s plans for 2022 after a blowout year with $5.5 billion in profit
When Tesla’s polarizing CEO, Elon Musk, also known as the world’s richest man, finally lifted the veil on his plans for this year, there was plenty of red meat for hungry bulls and bears alike.
After the close of markets on Wednesday, Tesla reported solid if unimpressive results for a company trading with a price/earnings ratio in the triple digits. Earnings were weighed down in part by a one-off tax bill of $340 million related to Musk’s compensation package, and the stock is currently set to marginally lower.
Gene Munster, managing partner at tech-heavy Loup Funds, said investors long on the stock shouldn’t worry. “The long-term investment thesis is on track,” he posted to Twitter.
The headline figure was $5.5 billion in net profit for the past year—a record for Tesla and a near eightfold increase. This meant the automaker had finally recouped cumulative historic losses incurred since its founding in 2003, and it prompted Musk to say that Tesla was now a “real company” during the Q4 earnings call with investors.
Below are nine key takeaways from the updated product road map Musk unveiled, starting with the bullish trends before getting more bearish.
Keep on growing
The best news for bulls is that management expressed their conviction volumes would increase this year at a rate “comfortably” exceeding 50%, ensuring Tesla’s growth story remains intact despite mounting competition and persistent chip shortages.
This seems highly plausible given global EV sales are expanding at a broadly similar speed, meaning the carmaker can hit its targets simply by continuing to grow along with the overall market. To maintain this over the longer term, Tesla may announce a new production site toward the end of this year, according to Musk.
New capacity not needed
Finance chief Zach Kirkhorn said this year’s volume growth, equivalent to more than 1.4 million vehicles in 2022, was not dependent on new plants in Texas and Germany coming on line this year. He argued it could be achieved solely from higher output in Fremont, Calif., and Shanghai.
This suggests the two existing sites would be capable of building roughly 700,000 cars each —placing them among the largest manufacturing plants in the auto industry. Unlikely? Not necessarily. Production in Q4 demonstrated the duo can already operate at a combined annual run rate of 1.2 million cars.
Made in Texas
First revealed at Battery Day in September 2020, Tesla’s more powerful 4680 battery cells are poised for market launch. Senior vice president and project head Drew Baglino confirmed Model Y crossovers running off the assembly line in Austin this quarter would feature a new structural battery pack equipped with the improved nickel-based cells designed to also be easier and cheaper to produce.
This has implications for consumers. Buyers in New York could get one version with the most advanced engineering out of Texas, while those in California supplied with SUVs built in Fremont do not. Customers will want to check their vehicle identification number (VIN) assigned by Tesla to see where their Model Y will be made.
Robotaxis coming (and this time he’s serious)
Musk said he would be “shocked” if his team didn’t achieve full self-driving in the course of this year. This would enable Tesla overnight to turn most of its cars already on the road into automated robotaxis using nothing more than an over-the-air update. “It’s like the most profound software upgrade maybe in history,” said the CEO, who recently hiked the price to an eye-watering $12,000 per car.
Granted, Musk’s track record on FSD has proved wildly unrealistic in the past, and many experts doubt existing Teslas can attain that level of autonomy without serious hardware upgrades. Yet there was a shred more substance behind this claim. According to the company, there were now 60,000 vehicles on U.S. roads utilizing the latest FSD beta software as of the reporting date, up from a couple of thousand in Q3.
Alongside the bullish comments from management, there was plenty of news to nourish Tesla bears as well.
No new models for 2022
Musk confirmed reports that Tesla would now go into its second year running without launching an all-new car, with the most recent being the Model Y from March 2020. Reservation holders that put in a $100 deposit for the Cybertruck can expect the pickup sometime next year at the earliest.
The Tesla CEO said his fundamental focus this year is scaling up output. “Both last year and this year, if we were to introduce new vehicles, our total vehicle output would decrease,” he told investors on Wednesday, defending his decision.
While this proved not to be a hindrance to growth in 2021, the trickle of new EVs from competitors is starting to hit a steady flow. New models like the Lyriq, Cadillac’s first EV built off GM’s bespoke Ultium EV platform, and the Nissan Ariya are both expected to hit the U.S. market later this year.
Questions around Cybertruck
The electric pickup, which Musk praises for looking like it was designed by “aliens from the future,” remains mired in development. Despite recent images indicating it may be coming close to its series production version, Musk said the economics of the vehicle were proving challenging.
“I worry more about, like, how do we make the Cybertruck affordable,“ he told investors during the call. “There’s a lot of new technology in the Cybertruck that will take some time to work through.“ Even a possible launch in the first quarter of 2023 is starting to sound ambitious.
Model 2 mothballed
When asked about progress on what many fans call the “Model 2,” a smaller $25,000 Tesla first flagged at the company’s Battery Day over a year ago, Musk admitted his team hadn’t even begun to work on its development. “We have too much on our plate right now, frankly,” he countered.
It’s unclear how Musk wants to hit his annual sales target of 20 million vehicles in 2030 without a low-cost entry model that can be competitive in emerging economies. Not even the two largest carmakers in the world, Toyota Motor Corp. and Volkswagen Group, sell that many cars combined, and they have been deeply entrenched in markets like Brazil for decades.
The centerpiece of Tesla’s AI Day in August was its upcoming artificial intelligence supercomputer dubbed Dojo, designed as a deep neural net that would continuously train and improve the company’s FSD software on its own. But Musk warned that the earliest Dojo might add value above and beyond that of Tesla’s existing 1.8 exaflop GPU cluster was next year.
“We’re not saying, for sure, Dojo would succeed. We think it will,“ said the otherwise normally confident Tesla CEO. Fortunately, he claimed the A.I.’s abilities were not needed to achieve full self-driving this year. At most, he said it would help further refine the software so the safety of his vehicles would be closer to 99.9999% rather than just 99.9%—what Musk likes to call the March of Nines.
Musk said the “most important product development“ undertaken by his team this year will not be one of the many vehicles he’s unveiled onstage but has thus far failed to build. Instead, it is the humanoid robot Optimus, a change in priorities that came as a surprise to many.
With customers now waiting three years for the Semi, two years for the Roadster, and one year for the Cybertruck, diverting engineering resources to Optimus seems a distraction to its core strategy of decarbonizing transport. Moreover, other companies like Hyundai’s Boston Dynamics have been focusing their entire effort on this market for years.
At the time plans for Optimus were first revealed, Tesla didn’t have more than a PowerPoint presentation with an image that could have taken less than a day to render on a computer.
The robot onstage dancing awkwardly next to Musk that day was merely a human in a leotard.
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