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Sunday, July 7, 2024

Tesla Vehicle Production (Q2'24)

We've been anticipating the year Tesla breaks through the two million vehicle annual production mark for some time.

We first asked the question in 2022. At that time, Giga-Austin and Giga-Berlin were newly opened and had a long way to go to ramp their production to high volume, so the answer was clearly 'No' for that year.   

2023 had a chance of being that milestone 2M year. Our estimates for 2023 ranged from 1.86M to 2.18M. Tesla's actual 2023 production was 1,845,985. This was very close to the low-end of our estimate, but again below the big 2M mark. Macro economic, specifically high interest rates, depressed sales in the second half of 2023 and continued to pull-down the first half of 2024. This is still an open issue for the second half of 2024. 

Tesla has reported production and sales for Q2'24, so now we've got the numbers for the 1H'24 and it looks a lot like 2023. 

Production 2023 2024 Y/Y Delta
Q1 440,808 433,371 -2%
Q2 479,700 410,831 -14%

So far, 2024 is not looking like it will be the magic 2M year either; however, it still has a chance. Giga-Berlin is expanding (despite the astroturf protests) and there are signs that interest rates will be reduced. I want to add a little context around this Q2 result. Yes, it is lower than Q2 last year, but Q2 last year was their best quarter ever and this Q2 is their 3rd best sales quarter ever, so it's far from a failure. In fact, it beat the street's estimates and this is one of the reasons the stock has rallied.  

When we initially estimated 2024 production (here), we had a range of 2.0M to 2.7M. The high end of that range is now off the table. If we stick with the Q3 and Q4 estimates that we currently have, that brings the year in at 1.91 million, just 90 thousand shy of the big 2M milestone.

However, our current estimates for Q3 and Q4'24 are now the more conservative 466k and 490k, respectively (shown in the graph below). That brings a total of 1.83M for this year, about flat to the 1.85 of last year. This result of flat to 2023 would be inline with the "between two growth waves" description that Musk used in the Q2 investors call. 

I must admit that I'd be highly disappointed if Tesla produced or delivered fewer vehicles in 2024 compared to 2023 and I think many other investors would be too. So, I expect Tesla to pull a few demand levers in Q4 to make sure they exceed last year's results, coming in at 1.9M for 2024, but I still have my fingers crossed that maybe, just maybe, they hit 2 million.

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