Tesla notes limits in logistics capacity as delivery grows big

Yusin Hu, DIGITIMES Asia, Taipei 0

Credit: AFP

For the third quarter of 2022, Tesla reported 54% and 42% on-year growth in production and delivery and another record revenue of US$21.5 billion, logging a 56% on-year increase.

Tesla 3Q22 earnings highlights

• Component shortages have eased

• Logistics for vehicle delivery have become more challenging

• Production ramps of both vehicle and 4680-battery continue despite energy crisis in Germany

• Shanghai production capacity surpassed 750,000 units annually

• Quarterly revenue hit new record at US$21.5 billion; automotive revenue grew 55% on-year to US$18.7 billion

• Gross margin remains at 25%, unchanged from the previous quarter

• Tesla operation is recession-resilient given the EV transition, said Musk.

• IRA will help boost solar and EV supply chain in the US

Tesla's latest earnings call was held on Oct 19. During the conference, the company announced another record revenue and record production of vehicle. CEO Elon Musk said demand remains strong not only in the fourth quarter this year but also in the foreseeable future, given that the world is transitioning to electric vehicle at a firm pace and gasoline vehicles will have less and less value.

Despite that China and Europe are experiencing economic recessions, respectively due to property bubble bursts and energy crisis, Tesla does not see them impacting Berlin production in the long-term. The company said the US is in pretty good health compared to Europe and China, and the passage of the Inflation Reduction Act (IRA) will significantly boost accelerating automation and scaling supply chain in the US, especially in the solar sector and the EV sector.

In the wake of the energy crisis in Europe, the company said it "has backup plans and nearly all suppliers are well prepared for that."

Notably, Tesla continues experiencing difficulties in logistics.

As the carmaker ramps up production in China, Germany, and Texas, US, delivery has becoming increasingly difficult to handle. Musk pointed out that so far deliveries are concentrated at the end of each quarter and in the last two weeks.

For this quarter, "roughly two-thirds of the deliveries occurred in September and one-third in the final two weeks," said Musk.

Outbound logistics needs rise drastically as production increases and there are no enough boats, trains, or trucks to satisfy such demand pattern. The company said it will need to smooth out delivery batches throughout the quarter more evenly to reduce stress on logistics.

Tesla revenue and margin 3Q21-3Q22

Source: Tesla

Tesla quarterly production and delivery

Source: Tesla