TSLA Q3 2021 Earnings

Call Details

• Call Title: Tesla, Inc. Q3 2021 Earnings Call
• Date: October 20, 2021 at 9:30 PM UTC
• Management Team:
  • Martin Viecha (Senior Director of Investor Relations)
  • Zachary Kirkhorn (Chief Financial Officer)
  • Drew Baglino (Senior Vice President of Powertrain and Energy Engineering)
  • Lars Moravy (Senior Vice President of Vehicle Engineering)

Call Summary

Financial Performance

• Tesla delivered just over 240,000 cars in Q3 2021, which was 20% higher than last quarter and 70% higher than the same quarter last year.
• The company achieved an annualized production run rate of over 1M cars toward the end of the quarter.
• Auto gross margin reached 30.5% on a GAAP basis and was just under 29% excluding regulatory credits.
• Tesla reported an operating margin of just under 15%, exceeding prior long-term operating margin guidance.
• Tesla generated record operating cash flow of $3.1B during the quarter.
• The Model S returned to positive gross margin and Model X deliveries have recently started, with continued progress expected as ramps continue.
• Company stated backlogs are growing and average customer wait times are extending despite higher prices and volumes.
• Supply chain shortages and logistics variability continued to create cost headwinds, including expedite costs and FX impacts.

Guidance

• Tesla reiterated its long-term target to grow at an average pace of 50% per year but did not provide specific quarterly unit guidance.
• Q4 production was described as heavily dependent on parts availability and the company said it is driving for continued growth.
• The company expects initial production cars from Austin and Berlin before year-end but cautioned that ramp timing and pace are uncertain.
• No specific timeline was provided for recognizing revenue from the FSD beta program, and the company confirmed it is not currently recognizing that revenue.
• Tesla will continue to adjust pricing in response to cost movements but declined to provide forward-looking pricing commentary.
• Company reiterated that new factory ramps will partially weigh on margins while the factories move toward volume production.