What You Missed About Tesla's Q2, 2022
Tesla had a surprising Q2, 2022, with the Giga Shanghai factory being shut down for about a month and a continued battle with supply chain issues and ramping two new factories, Giga Berlin and Giga Texas. Here are some surprising things about the quarter.
Generally, media has covered Tesla's Q2, 2022 as a "miss" and that Tesla is falling behind. The narrative is that Tesla's deliveries are less and that they are in trouble. If you take a closer look though, you can see that Tesla had a great quarter despite the challenges and that production levels are actually pretty good.
Many analysts and organizations have reduced their price targets for Tesla, citing weakness in deliveries. We knew this quarter was going to be a tough quarter, due to the shut down in Giga Shanghai. You can see that according to most analysts, deliveries were off by a couple % and production was ahead by about 5%. As far as estimates go, that is pretty good.
This isn't disappointing as far as earnings go. Smart investors will back out the shut down and Bitcoin impairment charge as one time deals that aren't significant for the long term future of the company.
Critical Details Missed
Critical details have been missed for the future, especially when it comes to Q2, 2022. Tesla's demand has always been strong, regardless of the economy and some of the mainstream news channels seem to think that Tesla is going down in demand. But this just isn't true.
Tesla had its largest production month EVER, in June of 2022. The production ramp is just beginning. The worry that the economy is going to affect Tesla's demand is just false. Tesla has been increasing the price of its vehicles based on material costs and inflation. Things just cost more.
There is another positive for the price raises. For the last few years, Tesla hasn't been able to meet demand for its cars. Many vehicles are at least a 6 month wait. This is a supply and demand issue and the market place demands a price raise. With the several months of wait, there is a lag between the price locked in and the delivery of the car. Raising price just makes plain sense.
It is in Tesla's best interest to raise prices and continues to do so as long as demand stays strong. I think price raises will happen for the next few years at least - until the electric vehicle adoption curve starts to level off. I truly think we're going to see continued price raises through this transition.
Tesla's Giga Berlin and Giga Texas are burning through a lot of money as well and Elon Musk was very honest about them burning through money. Even this won't matter in a years time once both factories are at volume production. The biggest takeaway from Q2, 2022, is that the future is going to be very bright for Tesla.
What do you think about Q2, 2022 for Tesla? Is the future bright?
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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.