Tesla’s 2022 shareholder meeting was held recently at the Austin, Texas super factory. Musk’s response at the shareholder’s meeting can be described as “full-blown”. In addition to announcing the stock split and the “ambition” to continue expanding production capacity, Musk responded to self-driving, batteries, robotics, and sustainable energy one by one. He introduced that Tesla will have more actions in many areas of sustainable development in the future.
Doubling production capacity is not a dream?
For the 2022 production capacity target, this time Musk gave a clear answer – 1.5 million cars. And in the first half of the year, Tesla’s cumulative deliveries were 564,000 units, which means Tesla needs to nearly double its deliveries in the second half of the year.
According to Musk’s plan, Tesla’s global annualized production capacity will exceed 2 million vehicles by the end of this year. He said that 10 years ago, Tesla produced only about 3,000 cars; today, 10 years later, the number has exceeded 3 million; in another 10 years, Tesla will achieve the production goal of more than 100 million.
To expand production capacity, later this year, Tesla will announce the results of a site selection for its newest factory. In Musk’s plan, Tesla will build 10 to 12 mega-factories around the world in the future, each of which is expected to have an annual capacity of 1.5 to 2 million units.
In the current situation, the Shanghai super factory’s capacity status is “untouchable”. Tesla’s second-quarter earnings report shows that the Shanghai factory recovered quickly after the epidemic, and after the production line upgrade, the annual capacity scale has been raised to 750,000 units, much higher than other factories, according to Musk’s words “Shanghai super factory is difficult to be surpassed”.
At the shareholder meeting, Musk also announced that Tesla has become the highest operating margin among global automakers. Tesla’s operating margin in the second quarter was 14.6%, compared to 8.97% and 10.3% for Daimler, BMW and other head companies in 2021. If we compare the auto business alone, Tesla’s gross margin is higher, with 27.9% in the second quarter data, while BMW, Toyota and other brands have gross margins of 17.6% and 6.5% respectively in 2021.
The first signs of price reduction have appeared?
As early as the second quarter earnings meeting, Musk has said that the car price may be slightly lower at the end of this year, because “the car price is now at an awkward level”. He tweeted that he would lower Tesla’s price if U.S. inflation could be eased.
The information from the shareholders meeting shows that there is real potential for Tesla to control costs. On the one hand, the increase in production capacity itself will bring down the cost, on the other hand, Tesla seems to have a breakthrough in new technology.
First, Tesla’s one-piece die-casting technology has been further improved, which allows for more streamlined manufacturing. In the case of the model y produced in the Austin, Texas factory, for example, the previously 171 individual parts have been simplified into 2 large die-cast monobloc parts, reducing the number of solder joints by over 1,600. At the same time, the number of robots needed to produce model y in the Austin, Texas and Berlin mega-factories will be reduced to about half that of the Fremont, California plant, and the robots needed to produce model y in the Fremont, California plant will be about half that of model 3.
Second, Musk said Tesla’s self-developed 4680 battery, which will likely begin mass production at the end of the year, becomes important in next year’s production schedule. 4680 battery has been the focus of the industry since its announcement in 2020, with its higher energy density and higher output power, ideally to both improve electric vehicle range and reduce costs.
Currently, two Tesla factories in Berlin and Texas have started producing model y cars with 4680 batteries, but the testing effect remains to be seen. But in any case, the promotion of one-piece die-casting technology and 4680 batteries are the two most important sources of cost control for Tesla, and once realized, will effectively combat the problem of inflation.
What else does Musk have planned?
Through this shareholder meeting, it is clear to see that Musk’s definition of Tesla is not only a car company, but he has no less than a layout of hardware and software, energy and other businesses.
All along, Tesla has a huge solar business. According to official data, in 2021, Tesla sold the equivalent of 4gwh of energy storage products, accounting for more than 15% of the global market. Statistically, the amount of electricity generated by its solar business has exceeded the total electricity consumption of its factories, production facilities and Tesla vehicles worldwide.
Another example is that Tesla’s fully automated driving software (fsd), which has been marketed for a long time, is finally confirmed to be launched in a non-test version in 2022. He said the large-scale public test of fsd is accelerating this year. In April, more than 100,000 users in the U.S. have been using the beta version of the fsd software, and the vehicles have now accumulated 40 million miles and are expected to exceed 100 million miles (160 million kilometers) by the end of the year. He expects that within a few weeks the beta version of fsd can be updated to version 10.13, and some problems such as left turns on complex roads will be improved.
In addition, Musk also mentioned the recent market focus on humanoid robots. He believes that the upcoming Optimus (“Optimus” robot) will be more valuable than the car, because the robot will be a key product to solve the labor shortage and promote economic development in the future. It is understood that Tesla will announce the latest progress of humanoid robots, fsd and many other products and technologies at the Artificial Intelligence Day to be held at the end of September, and it will be clear how big Musk’s ambitions are.
