Behind the video
Tesla Q4 Earnings - Key Takeaways
Overall Thesis
Dave Lee reviews Tesla's Q4 2023 earnings, grading Optimus progress very highly, FSD v12 as promising but unproven to him personally, and energy storage growth positively, while flagging a challenging 'limbo' period between Model Y's ramp finishing and the next-gen low-cost vehicle's delayed H2 2025 start. He frames near-term margin pressure and unclear guidance as the key investor concern, with long-term optimism resting on Optimus, FSD/robotaxis, and the next-gen vehicle.
Narratives
TSLATeslaTesla's Q4 2023 report shows strong long-term potential in Optimus, FSD, and energy storage, but a near-term growth and margin 'limbo' as Model 3/Y demand matures while the next-gen low-cost vehicle slips to H2 2025. The host views this as a manageable transition rather than a fundamental problem, contingent on how management balances volume growth against margin stability.
Key Arguments
- Optimus development execution is graded very highly, with Elon suggesting possible unit sales as early as next year
- FSD v12's end-to-end/neural net approach could meaningfully help sales in the second half of 2024 if it impresses
- Energy storage business continues to grow and should contribute more significantly to financials over time, graded A-minus
- Next-gen low-cost vehicle delayed to H2 2025 creates an extended limbo period with limited unit growth catalysts for 2024-2025
- Model 3/Y have largely saturated demand at current price points, risking further price cuts and margin pressure if volumes are pushed higher
- Cybertruck ramp will be slow (management guidance), likely around 50,000 units in 2024 versus a longer-term potential of 250,000/year
- Cost of goods sold has fallen over $3,000 per vehicle year-over-year, which could help margins if the trend continues
- Tesla has about $29 billion cash and $4.4 billion free cash flow, while increasing capex to over $10 billion for AI/compute investment
- Point-of-sale federal tax credit and improved FSD are potential wildcards that could help 2024 demand
Risks acknowledged
- Some people think there won't be meaningful humanoid robot demand for another 10 years
- Some investors want Tesla to be a better car company rather than an AI/robotics company, viewing rising capex as a negative for cash flow
- Falling gross margins concern investors not just in the present but regarding whether and how much margins can improve going forward
Hedges & Caveats
- I need to try it out myself, it's just not enough hearing about it from others
- I'll reserve my judgment until I can try out version 12 for myself
- there's a large diversion of opinions on humanoid robot demand
- all of them who knows could be wrong, but nevertheless here are some ideas
- I'm not sure if they're really seeing the demand increase they might have expected
- we'll see how much this helps demand
- it might not matter much in the first half of 2024