TESLA (TSLA) Q1 2022 Q&A Session Transcript

Q&A(Question-and-Answer Session)is a session after the company's prepared remarks where institutional investors and analysts ask management questions. In this dialogue, you may find some valuable information that might affect the stock price in the following weeks.

Now let's look at some key points from TESLA (TSLA) Q1 2022 Q&A Session Transcript $Tesla Motors(TSLA)$

Question-and-Answer Session

Q:Thank you very much. Let’s go to first investor question. And the first investor question is, Elon has historically provided FSD time lines with not optimal accuracy. We love his optimism for 2022 release, but is there any data Tesla can share with investors to help them make their own conclusions on progress being made? Interventions per mile driven, or any other data?

A:Sure. Well, with respect to full self-driving, of any technology development I’ve ever been involved in, I’ve never really seen more kind of false dawns or where it seems like we’re going to break through, but we don’t, as I’ve seen in full self-driving. And ultimately, what it comes down to is that to solve full self-driving, you actually have to solve real-world artificial intelligence, which is -- which nobody has solved. The whole road system is made for biological neural nets and eyes. And so, actually, when you think about it, in order to solve for full self-driving, we have to solve neural nets and cameras to a degree of capability that is on par with or really exceeds humans.

And I think we will achieve that this year. The best way to reach your own assessment is to join the Tesla full self-driving beta program where we have over 100,000 people right now enrolled in that program, and we expect to broaden that significantly this year. So, that’s my recommendation, is join the full self-driving beta program and experience it for yourself and take note of the rate of improvement with every release. And we put out a new release roughly every two weeks. And you’ll see a little bit of two steps forward, one step back. But overall, the rate of improvement is incredibly quick. So, that’s my recommendation for reaching your own assessment is literally try it.

Q:Thank you. The second question is, how much of an impact will the production shutdown in Shanghai have in Q2? What is the time line for localizing the Model 3 in Europe, or will newer models be prioritized in Berlin?

A:Well, we did lose a lot of important days of production. And because there are sort of upstream supplier challenges where a lot of suppliers also have lost many days of production. But Tesla Shanghai -- Giga Shanghai is coming back with a vengeance. So, I think notwithstanding new issues that arise, I think we will see record output per week from Giga Shanghai this quarter, albeit we are missing a couple of weeks. So, that means the most likely vehicle production in Q2 will be similar to Q1, maybe slightly lower, but it’s also possible we may pull a rabbit out of the hat and be slightly higher. But it’s really, call it, roughly on par. But then, Q3 and Q4 will be substantially higher. So, it seems likely that we’ll be able to produce over 1.5 million cars this year is my -- that’s my best guess.

And then, Model 3. It’s important for new factories to be focused on -- and have the least amount of complexity and variation, which is why Giga Berlin and Giga Texas are focused on the Model Y. It’s -- from the point in which you have a factory complete and you’re making a small number of units to the point where it’s producing high-quality vehicles in volume is sort of 9 to 12 months from start of production. So, now hopefully, we’re getting better at that ramp, so maybe it’s a little less. But to get to sort of the 5,000 a week level has typically taken us around 12 months from start of production.

Q:Thank you. The next question is, how much raw material exposure do you have, measured roughly in percentage of cost of goods sold for example, in a given quarter versus one to two years out, both direct and indirect? Separately, how do you think about price increases versus prioritizing higher mix vehicles going forward?

A:Actually, on the price increase front, I should mention that it may seem like maybe we’re being unreasonable about increasing the prices of our vehicles, given that we had record profitability this quarter, but the wait list for our vehicles is quite long. And some of the vehicles that people will order, the wait list extends into next year. So, our prices of vehicles ordered now are really anticipating supplier and logistics cost growth that we’re aware of and believe will happen over the next 6 to 12 months. So, that’s why we have the price increases today because the car ordered today will arrive, in some cases, a year from now. So, we have a very long wait list, and we’re obviously not demand-limited. We are production-limited by -- very much production-limited.

The above Q&A are highlights that are edited for brevity.Click here for the full TESLA (TSLA) Q1 2022 Earnings Call Transcript.​​​

If you want to know more details, you can click here to re-watch the TESLA (TSLA) Q1 2022 Earnings Conference Call​

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