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Sunday, July 9, 2023

Tesla's 2 Million Year

In January, we predicted that 2023 would be the year that Tesla produced over 2 million vehicles in a year for the first time. Now that we're halfway through the year let's see how that's progressing. 

Tesla recently reported their Q2 2023 production and delivery results. They produced 479,700 vehicles in the quarter. That's a run rate of 1.9 million annual units, and it brings Tesla's production up to 880,000 for the first half of the year. That's less than halfway to the 2 million unit target, but (absent force majeure) you can expect them to increase the production rate in Q3 and again in Q4 as Giga Austin and Giga Berlin continue to find their footing and take longer strides. 

With that increase in the second half of the year, will they hit the 2 million mark?

Tesla's guidance is merely 1.8 million units for the year. Given the first-half results, let's plug in the numbers and see if 2 million is still a possibility. 

Here's a chart of recent production with simple growth trend estimates to complete the year.

Q1 Actuals: 439,701
Q2 Actuals: 479,700
Q3 Estimate: 545,000
Q4 Estimate: 610,000

If these estimates are correct, that's a total of ~2,074,000 for the year.

That's not a lot of margin for error, but 2 million is still a possibility, assuming Tesla can continue to scale production in the 2nd half of this year. Giga Berlin and Giga Austin are both ramping up and have hit significant milestones in the first half of this year. 

2 million units this year is no guarantee, but it is still a possibility for this year. With such a small margin of error, another Covid variant shutdown, supply-chain issues, or the like and we'll have to wait until 2024 to cross this big milestone. See you after Q3 to see how we're trending. 

It will be exciting to see how this plays out. 

disclaimer: I'm long TSLA.

Update: July 22nd, 2023
Tesla recently held their Q2'23 financial update and they reported that Q3 production will be down due to production line upgrades. The 2-million milestone had very little margin, so with this scheduled downtime, it seems unlikely that this will be the 2-million vehicle year. This will still be a historic year for Tesla with the first Cybertrucks rolling off the line.  

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