Tesla Production Continues To Outpace Demand In First Quarter Of 2023

Tesla (NASDAQ: TSLA) yesterday reported record vehicle and production data for 1Q 2023. Production reached 440,808 units in the first quarter of 2023, up 44.3% year-over-year and 0.3% from 4Q 2022. Deliveries in 1Q 2023 were 422,875 units, up 36.4% from 1Q 2022 and 4.3% sequentially.

Tesla’s results seem to show no marked ill effects of reduced demand for electric vehicles (EVs); however, the results likewise don’t reflect a significant step-up in demand from the EV price war Tesla initiated in January 2023. 

More specifically, the first quarter of 2023 marked the fourth successive quarter in which the company produced more cars than it sold, suggesting something less than extremely robust demand. This cumulative gap totals 78,000 units over the last four quarters. Conversely, in four of the five quarters over the period 1Q 2021 through 1Q 2022, Tesla delivered more cars than it produced, a healthier supply-demand situation for the company.

TESLA, INC. – Production and Delivery Statistics

Twelve Months Ended 3-31-231Q 20234Q 20223Q 20222Q 20221Q 2022
    Y-O-Y % change42.6%44.3%43.8%53.8%25.3%69.4%
    Sequential Q-O-Q % Change0.3%20.2%41.5%-15.3%-0.1%
    Y-O-Y % change34.4%36.4%31.3%42.5%26.6%67.8%
    Sequential Q-O-Q % Change4.3%17.9%35.0%-17.9%0.5%

Tesla does not seem to be experiencing the extraordinary demand that CEO Elon Musk described on the company’s 4Q 2022 earnings conference call in late January 2023. At that time, he said, “thus far in January, we’ve seen the strongest orders, year to date, in our history. We currently are seeing orders at almost twice the rate of production.” 

Tesla expects to produce 1.8 million vehicles in 2023, up from 1.37 million units, and the data from 1Q 2023 seems to suggest such a rate is possible. Annualizing the 1Q 2023 manufacturing pace would equate to a 1.763 million yearly production rate.

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However, headline delivery news is not unambiguously positive for Tesla, particularly in China. Chinese EV maker BYD, which produces lower priced cars, sold 552,076 vehicles, up 93% from 1Q 2022 but down 19% from a 4Q 2022 total of 683,440. Tesla’s moves to cut prices in China have not been especially effective in that country. According to the Financial Times, BYD’s EV market share in China reached 40% in January and February, up from 34% a year ago. At the same, Tesla’s market share fell slightly to 7.8%.  

Tesla has been one of the best performing stocks so far in 2023, rising nearly 70%. Because of this, the stock looks quite expensive. Based on its net cash position of about US$19 billion, and its full-year 2022 adjusted EBITDA of US$19.2 billion, Tesla trades at about 33 times 2022 adjusted cash flow. For a capital-intensive business which faces much more EV production competition than it did just a few years ago, such a multiple is extraordinarily high.

Tesla, Inc. last traded at US$207.46 on the NASDAQ.

Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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