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Tesla's Bullish Production Rate for 2023 and Huge Profit

Tesla continues to sell very car it makes, even in a down economy. For 2023, Tesla could have a very bullish year and upwards of 2.4 million vehicles produced and delivered.


Tesla's Bullish Production Rate for 2023 and Huge Profit

Tesla continues to sell every car it makes and continues to ramp production as fast as possible. What is a bullish production rate for Tesla in 2023?

From what we heard in Tesla's latest earnings call, Tesla is going to keep growing at around 50%. Even during a recession, Tesla will keep producing this much. Tesla could always lower prices if they absolutely had to and have slightly reduced margins for a while.

Giga Berlin and Giga Texas may get to 1 million Model Y vehicles a year run rate by the end of 2024. With 2.3 units of production, at current prices, Tesla would have a P/E ratio of 19, which means that Tesla is greatly suppressed, growing at near 50% a year.

Tesla continues to grow its production and improve its manufacturing processes. Tesla will have an end of the year run rate, at the end of the year, Q4, 2022, of around 50%. Tesla's earnings have increased $18 billion year over year. Earnings are increasing twice as much as production.

Tesla's Outstanding Operating Leverage

Tesla has an outstanding operating leverage. With economies of scale, operating expenses per vehicle will be smaller, which means higher operating margins for Tesla. Right now, Tesla has two factories beginning to ramp. However, as next year continues, those factories will start contributing greatly to profits, significantly raising gross margin.

Tesla had a month of 30,000 units this year of stopped production in Giga Shanghai. There's always going to be events that happen that are difficult to navigate through. In a bullish scenario for 2023, the numbers look a little ridiculous. This could happen by the end of 2023, or by mid 2024 at the latest. They will inevitably occur one day.

Tesla economist sees 681,000 total vehicles coming out of Fremont, CA, next year, 1,118,000 vehicles coming out of Giga Shanghai next year, 330,000 coming out of Giga Berlin next year, and about 325,000 coming out of Giga Texas next year. That equals a total of about 2,454,000 vehicles produced.

With an average selling price of around $55,639 and FSD included, Tesla could see a margin of about 33%. This may seem high, but Giga Berlin and Giga Texas will star to contribute to margins. If things don't go well in China, Tesla will simply move the supply in China to where the demand is around the world.

What does this mean for Tesla overall? A total auto revenue without credits of about $140 billion dollars. A gross profit of about $46 billion dollars. A total revenue with energy of about $164 billion dollars, a total cost of revenue of about $112 billion dollars and total gross profit of about $53 billion dollars.

This puts net income of about $11 billion for 2023, which starts to put the P/E ratio at a laughable ratio. Still, smooth sailing isn't likely due to the state of the world, but Tesla will eventually get to these numbers and continue to get larger.

What do you think of the upcoming year for Tesla, 2023. Will Tesla continue to grow and is it undervalued?

For more information, see this video from Tesla Economist:

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot