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LIVE BLOG: Tesla (TSLA) Q3 2022 earnings call

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Tesla’s (NASDAQ:TSLA) third-quarter 2022 earnings call comes on the heels of the company’s Q3 2022 Update Letter. Tesla’s Q3 numbers were quite impressive, with the company posting record revenue, operating profit, and free cash flow (FCF).

Tesla’s FCF also exceeded $8.9 billion in the last 12 months, and operating margins reached 17.2% in the third quarter. Similar to previous quarters, Tesla’s war chest grew by $2.2 billion in the third quarter, providing the company with cash and marketable securities of $21.1 billion. 

Impressively enough, Tesla posted some key updates on its vehicle projects in the Q3 2022 Update Letter. The Tesla Cybertruck, for example, is already listed as a vehicle under “Tooling” in Gigafactory Texas, while the Tesla Semi has been listed as a vehicle under “Early Production” in Nevada. Tesla’s Optimus is not yet listed in the Q3 2022 Update Letter, though it won’t be surprising if the humanoid robot gets included in the document in the near future. 

The following are live updates from Tesla’s Q3 2022 Earnings Call. I will be updating this article in real time, so please keep refreshing the page to view the latest updates on this story. The first entry starts at the bottom of the page.

17:33 CDT – And that wraps up Tesla’s Q3 2022 earnings call. Elon was grounded the entire time, and he did not go off tangent at all. Looks like the fourth quarter will be an exciting time for Tesla, though, so it would be pretty cool to see everything unfold. 

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We’ll see you in the next Live Blog, everyone! Cheers!

17:30 CDT – William Stein from Truist asked a question about FSD and Optimus. Elon reiterated his belief that Tesla can achieve full self-driving 100%. Elon noted that FSD is almost there, so Tesla just has to show regulators what the system can really do. 

As for Dojo, Tesla would need to show that it’s better than today’s top tech companies like NVIDIA. “The jury’s still out on Dojo,” Musk said, though he also stated that Tesla believes the architecture of Dojo is the right architecture to win.

The CEO also noted that Optimus’ probability of success is “extremely high.”

17:28 CDT – Toni Sacchogani of Bernstein asked where Tesla’s 4680 cells being deployed today. Are they in the Semi, Model Y, and will it restrain Cybertruck? Elon noted that the Semi does not use 4680 cells right now. Tesla is making Model Ys from Giga Texas with 4680 cells, however. 

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That being said, Elon noted that Tesla does not expect the 4680 cells to be a gating factor in the Cybertruck’s ramp. 

17:25 CDT – Pierre Ferragu from News Street Research asked about Tesla’s products and its efforts to scale. Executives noted that Tesla is viewing its growth target in years. It takes time, but Tesla is working hard on specifics like costs. Tesla’s 4680 cells are a good example of this as its timeline is all the way to 2026. Tesla is considering all the steps from costs to productions, from mine to cell.

On the 4680 ramp, “No ramp is ever easy. It’s still very challenging to get to the end,” Tesla executives said.

17:21 CDT – Kirkhorn noted that while commodity increases peaked the most in Q3, Tesla sees a small amount of reduction in commodity prices for production. Elon also noted that he expects to see reductions in 2023. 

When asked about Twitter and a potential umbrella company, Musk noted that he is more of a technologist or engineer than he is an investor. “I’m excited about the Twitter situation,” Musk said, adding that the social media company’s value could be an order of magnitude than its current valuation today. 

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17:18 CDT – Canaccord Genuity analyst George Gianarikas asked about Tesla’s prices. Elon notes that things like battery components like lithium are increasing even as some costs such as shipping are decreasing. Musk highlighted that there are varying commodities with different price trends to consider. 

17:14 CDT – Colin Rusch from Oppenheimer asks about Tesla’s operating expenses and where Tesla can invest. Kirkhorn noted that Tesla’s operating leverage suggests that the company can optimize its operations even more. It’s hard to keep it flat since Tesla is growing so fast, but it should normalize. “Operating leverage has improved quite a bit. It’s the lowest this quarter,” Kirkhorn said. 

“We’re investing in everything we can think of to possibly invest in, and we’re still generating cash,” Musk said. Tesla executives also noted that Optimus would definitely change things.

17:11 CDT – Colin Langan from Wells Fargo asked about any updates on FSD. Musk noted that Tesla intends to bring FSD Beta to FSD customers by the end of the year. The CEO reiterated that FSD should be able to provide customers with a generally hands-free solution for driving. Musk also noted that customers would probably have to intervene or stop FSD very little.

17:07 CDT – Analyst questions begin. Adam Jonas of Morgan Stanley asks if Tesla will be going into mining. Elon explains that Tesla can, but if the company could find a reliable supplier, the company will make a deal instead. “We’ll do whatever we have to… but if we have to mine, we will mine,” Musk said. 

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The CEO also spoke on government permits or requirements for mining. He highlighted that some materials

17:05 CDT – A question about Tesla’s third platform is asked. Musk responded that while Tesla does not talk exact dates, the primary focus of the company’s vehicle development team is this next generation of cars. Musk estimates that it will be half the cost of the Model 3 and Model X, and its production will probably be higher than all of the company’s current products combined. 

Think Tesla producing two cars for the same amount of effort and time to produce one Model 3. That will be a game-changer. 

Musk also noted that when he earlier said that he believes Tesla could be bigger than Apple and Saudi Aramco combined, he was not talking about Optimus at all. 

17:02 CDT – A question about how Tesla can adjust to a potential prolonged recession was asked. “To be frank, we’re very pedal to the metal, rain or shine,” Musk said, explaining that Tesla is not reducing production recession or no recession. After all, electric cars are now inevitable.

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“I wouldn’t say it’s recession-proof but it’s certainly recession-resilient,” Musk said. He also stated that Tesla sees its Energy business growing faster than the company’s electric vehicle business.

“We can withstand a lot of down trends,” Kirkhorn said.

16:57 CDT – A question about the progress of the 4680 battery cell production ramp was asked. Tesla executives noted that the battery ramp is actually going well. The focus now is cost and further expanding production in North America. “It’s looking good,” Musk said. 

“Our goal is to reach 1000 GW a year in North America,” the CEO added.

16:56 CDT – A question about Germany’s energy crisis and potential delays to Giga Berlin was asked. Kirkhorn answered that Tesla does not believe that such a crisis will be affecting Giga Berlin. “We’ll see how this plays out,” Kirkhorn said. 

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A question on the Cybertruck’s pricing and final design was also asked. Elon jokingly also asked when he could get his Cybertruck Beta unit, though Tesla executives noted that the preparations are ongoing at Giga Texas. “There are preparations here at Giga Texas for Cybertruck,” Tesla execs noted. 

Tesla Semi deliveries could also happen around December 1st, Elon noted. Also, to the naysayers, the Semi will not sacrifice any cargo-carrying capacity. It will have 500 miles of range with cargo. Tesla is aiming for 50,000 units of the Semi to be built in North America.

And of course, Elon made a hydrogen joke. “You obviously don’t need hydrogen for heavy trucking,” the CEO joked. 

16:52 CDT – A question was asked about Tesla’s 50% annualized growth was asked. Musk answered that ”To the best of our knowledge that Tesla will continue to grow,” Musk said. When asked about future products, Musk flatly joked that nope, he won’t talk about them. He technically can, but he won’t.

“At Tesla, we’re always committed to continuous improvement,” Musk said. 

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16:49 CDT – A question about China’s backlog and recent order intake trends is asked. Elon notes that Tesla is confident of a strong Q4, with the company growing in production every year by 50%, but not delivery because there aren not enough transportation vehicles to move the cars. There’s quite a bit of logistics to think about, after all. 

16:47 CDT – Shareholder questions begin with a question about the Inflation Reduction Act. Elon notes that Tesla believes that it can meet the requirements of the IRA, both on its vehicles and energy products. “We do expect to meet IRS requirements,” Musk said. 

16:45 CDT – Zach Kirkhorn takes the floor, noting that Tesla’s margins were weighed down a bit due to the costs of Giga Berlin and Texas. He also highlighted that every car built in Giga Berlin and Texas contributes greatly to Tesla’s numbers. 

Tesla Energy also achieved its best gross profit yet, driven largely by the Megapack. With this in mind, and despite supply chain risks, Tesla is still looking to achieve 50% growth this year. 

16:41 CDT – Elon noted that it is possible for Tesla to do a buyback in the range of about $5-$10 billion. “It is certainly possible to do a buyback in the order of $5-$10 million. It’s likely that we’ll do some meaningful buyback,” Musk said. 

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Musk, however, highlighted that it’s important to look at Tesla’s long-term trend. This makes sense. Even if the company encounters short-term headwinds, the company’s long-term prospects are extremely bright. Elon noted that he believes Tesla can far exceed Apple’s current market cap. 

Musk even hinted that he sees a path where Tesla can become larger than Apple. “Now throughout the opinion we can far exceed Apple’s current market cap. I can see a path that Tesla can be worth more than Apple and Saudi Aramco combined.”

“It’s an incredibly exciting future, an unprecedented future,” Musk said, adding that credit for Tesla’s success is due to the company’s team. “You guys rock. You’re the one making everything possible.”

16:38 CDT – Elon reiterates Tesla’s target of achieving a wide release of FSD Beta by the end of the year. “At this quarter, we expect to go to a wide-release of FSD in North America,” Musk noted, stating that FSD’s wide release is scheduled about a month from now. He also highlighted that safety with FSD is a lot better compared to when it is not on, according to Tesla’s data. 

Musk also reiterates that Tesla has huge demand, debunking concerns that the company is seeing a demand problem of sorts. According to Musk, Tesla is delivering every vehicle its makes and keeping operation margins strong.

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16:36 CDT – Elon notes that the Fremont team achieved record production in Q3, and it will continue to improve. This is pretty cool since the Fremont Factory is already one of the most productive car plants in the United States. 

Looks like AI Day 2022 was successful. AI day was a recruiting event, and it did its job. “We’ve seen a massive influx of world-class resumes,” Elon said. 

16:35 CDT – Elon takes the floor. Q3 was another record quarter for Tesla. He reviews the company’s numbers in Q3. Elon also noted that Tesla is looking forward to a record-breaking Q4. “Knock on wood, it looks like we’ll have an epic end of year,” he said. 

Tesla is finally growing some traction in its 4680 battery production as well. Structural packs, here we go. 

16:32 CDT – Martin Viecha formally starts the Q3 2022 earnings call. Elon, Zach Kirkhorn, and other execs are present. 

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16:30 CDT – Any minute now. For the last few earnings calls, Tesla has actually started on time. Let’s see if this is the case today as well. 

16:25 CDT – Last five minutes, everyone. Unless Elon time of course. 

16:15 CDT – Hi everyone, and welcome to another Tesla earnings call live blog! Tesla’s third-quarter results were quite impressive. This was despite Tesla missing analyst expectations on some metrics, such as revenue. This has caused Tesla stock to feel some pressure on Wednesday’s after hours. Longtime Tesla bull Gene Munster, managing partner of Loup Ventures, noted that the market’s reaction might be due to the fact that Tesla typically beats expectations. 

“Tesla is a company that typically has been beating numbers. The reaction you’re seeing is that people are a bit taken aback by the fact that they missed,” Munster said

Not gonna lie. Gene Munster has a point.

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Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Investor's Corner

Tesla bear turns bullish for two reasons as stock continues boost

“I think from a trading perspective, it looks very interesting,” Nathan said, citing numerous signs of strength, such as holding its 200-day moving average and holding against its resistance level.

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Credit: Tesla Manufacturing

A Tesla bear is changing his tune, turning bullish for two reasons as the company’s stock has continued to get a boost over the past month.

Dan Nathan, a notorious skeptic of Tesla shares, said he is changing his tune, at least in the short term, on the company’s stock because of “technicals and sentiment,” believing the company is on track for a strong Q3, but also an investment story that will slowly veer away from its automotive business.

“I think from a trading perspective, it looks very interesting,” Nathan said, citing numerous signs of strength, such as holding its 200-day moving average and holding against its resistance level.

He also said he believes a rally for the stock could continue as it heads into the end of the quarter, especially as the $7,500 electric vehicle tax credit is coming to an end at the end of the month.

With that being said, he believes the consensus for Q3 deliveries is “probably low,” as he believes Wall Street is likely underestimating what Tesla will bring to the table on October 1 or 2 when it reports numbers for the quarter.

Tesla shares are already up over five percent today, with gains exceeding nine percent over the past five trading days, and more than fourteen percent in the past month.

While some analysts are looking at the performance of other Mag 7 stocks, movement on rates from the Federal Reserve, and other broader market factors as reasoning for Tesla’s strong performance, it appears some movement could be related to the company’s recent developments instead.

Over the past week, Tesla has made some strides in its Robotaxi program, including a new license to test the platform in the State of Nevada, which we reported on.

Tesla lands regulatory green light for Robotaxi testing in new state

Additionally, the company is riding the tails of the end of the EV tax credit, as inventory, both new and used, is running extremely low, generally speaking. Many markets do not have any vehicles to purchase as of right now, making delivery by September 30 extremely difficult.

However, there has been some adjustments to the guidelines by the IRS, which can be read here:

Tesla set to win big after IRS adjusts EV tax credit rules

Tesla is trading at around $389 at 10:56 a.m. on the East Coast.

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Elon Musk

Analyst: Elon Musk’s $1 trillion Tesla pay deal modest against robot market potential

Jonas highlighted Tesla’s longer-term ambitions in robotics as a key factor in his assessment.

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Credit: Tesla

Morgan Stanley analyst Adam Jonas, one of Wall Street’s most ardent Tesla (NASDAQ:TSLA) bulls today, has described Elon Musk’s newly proposed $1 trillion performance-based compensation package as a “good deal” for investors. 

In a note shared this week, Jonas argued that the package helps align the interests of Musk and Tesla’s minority shareholders, despite its shockingly high headline number.

Future market opportunities

Jonas highlighted Tesla’s longer-term ambitions in robotics as a key factor in his assessment. “Yes, a trillion bucks is a big number, but (it) is rather modest compared to the size of the market opportunity,” Jonas wrote. He added that the humanoid robot market could ultimately surpass the size of today’s global labor market “by a significant multiple.”

“We have entertained scenarios where the humanoid robot market can exceed the size of today’s global labor market… by a significant multiple,” Jonas wrote, as shared on X by Tesla watcher Sawyer Merritt.

The analyst likened the arrival of AI-powered robotics to the transformative effect of electricity, noting that “contemplating future global GDP before AI robots is like contemplating global GDP before electricity.” The Morgan Stanley analyst’s insights align with the idea that as much as 80% of Tesla’s future valuation could be tied to its Optimus humanoid robot program.

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Elon Musk’s pay package

Tesla’s board has tied Elon Musk’s proposed compensation package to some of the most ambitious targets in corporate history. The 2025 CEO Performance Award requires the automaker’s valuation to soar from roughly $1.1 trillion today to $8.5 trillion over the next decade, a level that would make Tesla the most valuable company in existence.

The plan also demands a leap in Tesla’s operating profit, from $17 billion in 2024 to $400 billion annually. It also ties the CEO’s compensation to a number of product milestones, including the delivery of 20 million vehicles in total, 10 million active Full Self-Driving subscriptions, 1 million Tesla Bots, and 1 million Robotaxis in operation. Tesla’s board emphasized that Musk’s leadership was fundamental to achieving such ambitious goals, with Chair Robyn Denholm noting the award would align the CEO’s incentives with long-term shareholder value.

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Elon Musk

Tesla board reveals reasoning for CEO Elon Musk’s new $1 trillion pay package

“Yes, you read that correctly: in 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award.”

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tesla
(Credit: Tesla)

Tesla’s Board of Directors has proposed a new pay package for company CEO Elon Musk that would result in $1 trillion in stock offerings if he is able to meet several lofty performance targets.

Musk, who has not been meaningfully compensated since 2017, completed his last pay package by delivering billions in shareholder value through a variety of performance-based “tranches,” which were met and resulted in the award of billions in stock.

Elon Musk’s new pay plan ties trillionaire status to Tesla’s $8.5 trillion valuation

However, Musk was unable to claim this award due to a ruling by the Delaware Chancery Court, which deemed the payout an “unfathomable sum.”

Now, the company is taking steps to ensure Musk gets paid, as the Board feels that it is crucial to retain its CEO, who has been responsible for much of the company’s success.

This is not a statement to undermine the work of all of Tesla’s terrific employees, but a ship needs to be captained by someone, and Musk has proven he is the right person for the job.

The Board also believes that, based on a statement made by the company in its proxy, various issues will be discussed during the upcoming Shareholder Meeting.

Robyn Denholm and Kathleen Wilson-Thompson recognized Musk’s contributions in a statement, which encouraged shareholders to vote to approve the payout:

“We’re asking you to approve the 2025 CEO Performance Award. In designing the new performance award, we explored numerous alternatives. Ultimately, the new award aims to build upon the success of the 2018 CEO Performance Award framework, which ensure that Elon was only paid for the performance delivered and incentivized to guide Tesla through a period of meteoric growth. The 2025 CEO Performance Award similarly challegnes Elon to again meet a series of even more aspirational goals, including operational milestones focused on reaching Adjusted EBITDA targets (thresholds that are up to 28 times higher than the 2108 CEO Performance Award’s top Adjusted EBITDA milestone) and rolling out new or expanded product offerings (including 1 million Robotaxis in commercial operation and delivery of 1 million AI Bots), all while growing the company’s market capitalization by trillions of dollars.

Yes, you read that correctly: in 2018, Elon had to grow Tesla by billions; in 2025, he has to grow Tesla by trillions — to be exact, he must create nearly $7.5 trillion in value for shareholders for him to receive the full award.

In addition to these unprecedented performance milestones, the 2025 CEO Performance Award also includes innovative structural features, born out of the special committee’s considered analysis and extensive shareholder feedback. These features include supercharged retention (at least seven and a half years and up to 10 years to vest in the full award), structural protections to minimize stock price volatility due to administration of this award and, thereafter, incentives for Elon to participate in the Board’s continued development of a framework for long-term CEO Succession. If Elon achieves all the performance milestones under this principle-based 2025 CEO Performance Award, his leadership will propel Tesla to become the most valuable company in history.”

Musk will have a lot of things to accomplish to receive the 423,743,904 shares, which are divided into 12 tranches.

However, the Board feels he is the right person for the job, and they want him to remain the CEO. This package should ensure that he stays with Tesla, as long as shareholders feel the same way.

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