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Monday, October 3, 2022

Will Tesla Hit 2 Million Cars in 2022?

2 Million in 2022 has a nice ring to it, but is it possible?

Tesla just released the Q3 production and sales numbers. Sales rose 35% compared to Q2. Giga Shanghai has moved past COVID restrictions and supply chain issues. Even with the significant sales increase, the numbers fell short of some Wall Street estimates. 

Year-to-date Tesla has manufactured 929,910 vehicles; nearly matching 2021's 930,422 (with 3 months still left to go). Tesla has given guidance of 50% annual growth. They will need a strong finish to the year to hit this forecast. 

A 50% increase over 2021's production is 1.4 million vehicles. To reach this mark, Tesla will need to manufacture 466 thousand vehicles in the remainder of the year. That would be 100 thousand more vehicles than they have ever produced in a single quarter; challenging, but not impossible.

As you can see in the chart above, Tesla's production has been growing exponentially. Q1 and Q2 of this year are outliers in that they are flat and down respectively. Q3'22 brings production back inline with the trend. However, Q1 & 2 will still be a drag on the annual production that will be difficult for Q4 to overcome. 

The titular question of this article is "Will Tesla produce 2 million vehicles in 2022?" To achieve this, they would need to produce 1 million cars in Q4. That's more than Q1, 2, and 3 of this year combined. I have no doubt that Tesla will (at some point) be producing one million vehicles per quarter, but that will not be this year. So the answer to the titular question is sadly 'no.' 

On the positive side, Giga Austin and Giga Berlin are both ramping production and should be able to contribute more than 60 thousand vehicles in Q4. Adding this to ~400 thousand that Fremont and Shanghai will produce and Tesla's goal of 1.4 million vehicles this year is within grasp, barring any force majeure events. 

Disclosure: I am long Tesla

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