Elon Musk is accustomed to making spectacular declarations.
The serial entrepreneur is never stingy with promises that keep the flame alive around the premium electric vehicle manufacturer Tesla (TSLA). He remained faithful to this tradition during the company's third-quarter earnings' call.
Indeed, the chief executive officer announced that Tesla was going to have an "epic" end of the year despite third quarter results which somewhat disappointed the markets.
"We're looking forward to a record breaking Q4," Musk told analysts in his opening remarks. "It looks like we'll have an epic end of year."
He added that: "Q4 is looking extremely good."
'Excellent Demand'
"I can't emphasize enough [that] we have excellent demand for Q4. We expect to sell every car that we make for as far as the future as we can see. So the factories are running at full speed and we're delivering every car we make and keeping operating margins strong."
Tesla posted third-quarter net profit of $3.3 billion on revenue of $21.45 billion, the company said on Oct. 19. Despite a 56% increase in revenues, these came below the $21.96 billion anticipated by analysts.
Musk's upbeat tone, however, was out of step with Chief Financial Officer Zach Kirkhorn's caution.
Kirkhorn insisted that Tesla was having difficulties getting the vehicles to customers. And these are problems, he said, that the group had not anticipated. The company has seen an increase in cars in transit at the end of the quarter, which, it said, "has a negative impact on working capital.
"This issue is particularly precedent for ships from Shanghai to Europe, and local trucking within certain parts of the U.S. and Europe. Our historical operating pattern of that building by delivery region leads to extreme concentrations of outbound logistics needs in the final weeks of each quarter," Kirkhorn said.
Careful with Goals
He continued:
"Just to put this in perspective, roughly two thirds of our Q3 deliveries occurred in September and one-third in the final two weeks. As a result, we've begun to smooth regional builds throughout the quarter to reduce our peak needs for outbound logistics. We expect this to simplify our operations, reduce costs, and improve the experience of our customers."
"As we look ahead, our plans show that we're on track for the 50% annual growth in production this year. Although we are tracking supply chain risks, which are beyond our control. On the delivery side, we do expect to be just under 50% growth due to an increase in the cars in transit at the end of the year as noted just above. This means that again, you should expect a gap between production and deliveries in Q4. And those cars in transit will be delivered shortly to their customers upon arrival to their destination and Q1 [of 2023]."
If we stick to Kirkhorn's statements, Tesla should therefore produce nearly 1.4 million vehicles in 2022 and deliver over 1.4 million units.
It would be a record in both cases, but the firm had hoped to deliver 1.5 million vehicles in 2022.
In the third quarter, Tesla produced 365,923 vehicles, up 54% year-on-year. The Model Y and Model 3 constituted 94.6% of total production. Over three quarters, the company produced almost the same number of vehicles manufactured in 2021 -- 929,910 units currently compared to 930,422 vehicles in 2021.
As for deliveries, the company has delivered 908,573 units over three quarters in 2022, including 343,830 vehicles in the third quarter.
