Musk is somewhat pessimistic about the economy: even big ships face challenges in the storm

On October 19th, Tesla announced its third quarter financial report for 2023 on Wednesday. According to the financial report, the total revenue for the quarter was $23

On October 19th, Tesla announced its third quarter financial report for 2023 on Wednesday. According to the financial report, the total revenue for the quarter was $23.35 billion, a year-on-year increase of 9%. However, the net profit attributable to Tesla's common shareholders was $1.853 billion, a sharp decrease of 44% year-on-year.

Tesla disclosed important information in the third quarter performance update. Firstly, the electric pickup truck Cybertruck will be delivered for the first time on November 30, 2023, with a cumulative driving range of 845 million kilometers for the Tesla FSDBeta project. Tesla's energy department performed exceptionally well this quarter, with the deployment of energy storage equipment reaching a record high of 4 gigawatts per hour.

During the financial report conference call, executives such as Tesla CEO Elon Musk, CFO Vaibhav Taneja, and investor relations director Martin Viecha answered questions from investors and analysts.

Musk first discussed Tesla's progress in autonomous driving. He expressed confidence in FSDBetaV12 and will continue to invest heavily in artificial intelligence development.

Musk pointed out that Tesla's energy and services division achieved profits of over $500 million in the third quarter, making it one of the company's most profitable businesses and growing rapidly.

Musk stated that although Cyberrack will be released in the fourth quarter, reasonable expectations need to be set for its production speed. He acknowledges that achieving production and positive cash flow will face significant challenges, as Cybertruck is one of Tesla's best products in history. He hopes to lower people's expectations for Cyberrack and states that it will take 12 to 18 months to become an important cash flow contributor financially.

Musk also reiterated Tesla's goal of producing 1.8 million cars by 2023.

Subsequently, Tesla's new Chief Financial Officer, Taneja, discussed the company's financial situation. He mentioned that although some factories have closed, the cost per vehicle has decreased to approximately $37500. He also mentioned that Tesla will focus on reducing costs and investing in the future.

Tesla executives have stated that they are "preparing for the start of construction" for the planned new factory in Mexico. But Musk stated that before Tesla fully invested in the Mexican factory, the company was working hard to reduce vehicle prices.

In the end, Musk apologized for "sounding a bit paranoid" and believed that the ongoing global war could have an impact on the economy (implying conflicts between Israel and Gaza, Russia and Ukraine). He compared Tesla to a world-class ship and said, "Even big ships face challenges in storms

The following is the investor questioning session:

Question 1: What are Tesla's expectations for Cyberrack in 2024?

Musk replied that it is difficult to predict because Cybertruck is completely different from existing electric vehicles. He said that if Cybertruck were just a replica of another pickup truck, the situation would be different. He pointed out that the more unknown fields, the harder it is to predict the results.

Musk did indicate that Tesla will ultimately produce approximately 250000 Cybertrucks per year, which may be achieved at some point in 2025.

Question 2: What new progress has been made in the 4680 battery plan?

Musk stated that the scrap rate has decreased by 40% and production is increasing. The Texas Superfactory is now the main production facility for Tesla's 4680 batteries.

Question 3: What progress has been made in the super factories in Shanghai, Berlin, and Mexico?

Musk pointed out that in Mexico, Tesla is collaborating with factory designers to build a new generation of automotive production lines and lay the foundation for the construction of the Mexican factory. Before Tesla goes all out, they want to understand the global economic situation.

Musk stated that Tesla is indeed advertising. He acknowledges that advertising is useful, but if people cannot afford Tesla cars, advertising will not be of much use. Musk also expressed his concerns about interest rates and the importance of Tesla's focus on reducing monthly supply.

Question 4: Is Tesla growing fast enough?

Musk said that Tesla is already one of the fastest growing automakers today. For autonomous taxis, he stated that this car is definitely autonomous and emphasized that he is very excited about autonomous driving.

In addition, Tesla's efforts in autonomous driving will also lay the foundation for the humanoid robot Optimus Prime.

Question 5: When will Tesla take legal responsibility for accidents caused by FSD?

Musk joked that everyone seems to believe Tesla is legally responsible for this. He pointed out that L3 level assisted driving systems such as the Mercedes Benz DrivePilot have very limited functionality, while Tesla's FSD system is fully autonomous, and he described it as a "baby version AGI (General Artificial Intelligence)".

Question 6: Will FSD lower its price?

Musk stated that Tesla is just hoping to make the FSD system cheaper, and the current price is already at a recent low point.

Question 7: What improvements have been made to Optimus Prime? Can we deploy next year?

Musk replied that Tesla is currently not ready to discuss updates to the Optimus Prime project, but the project is progressing rapidly.

Question 8: Will FSD be released in more countries?

Musk pointed out that the availability of FSD outside the United States is limited by different national regulations. He also acknowledged that he may be overly optimistic about the progress of Tesla's FSD.

The following is the analyst questioning session:

Question 1: When can Cyberrack achieve mass production?

Musk stated that Cyberrack's production will significantly increase within 18 months, and although the production growth will last for three years, it will only take one and a half years in reality. He also pointed out that the unique complexity of Cyberrack may affect the growth of production.

Musk joked, "We dug our own grave with Cybertruck, and there are many fancy things on this car

Musk pointed out that Tesla's next generation electric vehicle platform is much more traditional, and the new generation of cars does not have so many new things. Tesla is doing everything possible to simplify the production of the next generation of cars to achieve the expected production capacity. He also stated that the next generation Tesla cars are not only more practical, but also cool and beautiful.

Question 2: Will FSD pricing change? Will Tesla adjust pricing based on system improvements?

Musk said that the full autonomous vehicle will bring huge economic benefits. The economic benefits of this system are very good. Tesla is a hardware company with high software profit margin.

Question 3: How does Tesla implement a price elasticity strategy?

Musk said that for ordinary consumers, payment issues are very important. He once again emphasized the importance of Tesla's focus on reducing monthly repayments.

He said, "I think Tesla has a very high price elasticity. To be honest, if our car costs the same as the Toyota Roewe, no one would buy the Roewe, or at least they are unlikely to do so. In fact, many electric vehicle incentives are difficult for ordinary people to obtain, and they may even have to wait for 6 months to receive a subsidy of $7500

Question 4: Will Tesla's cost per vehicle decrease in the next few quarters? Is some of China's Model Y equipped with radar?

Musk replied that Tesla did not install radar on the Model3 and ModelY produced at its Shanghai factory. Tesla is conducting radar testing on ModelS and ModelX, but currently has no plans to conduct testing on Model3 and ModelY.

Musk stated that Tesla is studying the availability of radar in accident prevention. He said that cars equipped with radar used to have a lot of noise, but in reality, they produced more noise than signals.

Musk also shared his evaluation of Tesla's radar design. He said, "The radar designed by Tesla is a high-resolution radar with certain practical potential

Question 5: Analysts asked Musk to explain his previous comment that unless the economy is strong and Tesla achieves growth without factories, Tesla will not fully build factories in Mexico.

Musk pointed out that Tesla will build a factory in Mexico, it is only a matter of time. Tesla is still operating in Mexico, but the company is closely monitoring changes in interest rates.

In addition, despite the large scale of the Texas factory, it still only occupies a small portion of Tesla's owned land. Therefore, technically speaking, if the situation changes, Tesla can focus on building a Texas factory and further expanding the facility.

Musk said, "Tesla is a capable ship, but even a giant ship will face challenges in the storm." He added that if interest rates drop, Tesla should accelerate.

Musk also said, "If I am too paranoid, I apologize to you because this may be the truth. I have had post-traumatic stress disorder from 2008 to 2017 to 2019, which is not perfect. It was a very difficult experience. So you know, the automotive industry also has cycles. This is because if there is economic uncertainty, people often hesitate to buy new cars; (Small)