Tesla had a great 2021; deliveries were up 80%+, profits up 666%, revenues up 50%+, and demand for their products and services is at an all time high. In the Q4 2021 earnings report Tesla said; “While 2021 was a defining year for our company, we believe we are just at the very early stages of our journey. Thank you for being part of it.” With that said, I also believe that 2022 is still early for Tesla in the grand scheme of things; here’s 4 reasons why 2022 will be huge.
1) Gigafactory Texas Opening
Tesla has been quietly building a mile long factory in Austin Texas; the initial production is for the Model Y. The factory is producing cars today, but isn’t officially open yet, hopefully in the next month deliveries will begin. The Model Y is cheaper to make than the Model 3, and yet it’s more expensive; what does this mean? It means Tesla’s profit margins for the Model Y are going to be quite large. The Model Y wait time in the United States is 6 months for the long range version; this new factory will alleviate some of the production constraints. Elon musk has said repeatedly; “Tesla doesn’t have a demand issue.” He has told investors Tesla has production constraints not demand constraints. Tesla is aiming for 5k cars a week for the the start; than 10k cars a week & beyond. It’s likely this factory will ramp to millions of cars a year, and 2022 is just the start.
2) Gigafactory Berlin Opening
Tesla’s will now be “Made in Germany.” Tesla’s mission is to “accelerate the transition to sustainable energy,” and to do so they need to compete directly with the German brands. This state of the art factory is set to delivery the Model Y in the first quarter of 2022; hoping the red tape doesn’t cause any more delays. Europe is a huge market for the Model Y; customers have been waiting for a made in Germany Model Y for years. 2022 is the year Europeans will finally get their wish; the first cars coming off the line are likely performance models which are the most profitable. Once this factory is fully ramped; I believe it will produce 1-2M vehicles per year.
3) Gigafactory Shanghai Expansion
Giga-Shanghai is the most efficient factory Tesla has open today; producing 450k Model 3/Y cars a year at its current production rate. A couple years back I remember hearing someone say the factory could one day produce 2M units a year. One of the latest production figures shows Shanghai at a 600k car production run rate. I believe that Giga Shanghai will continue its expansion & be at 1M units a year by the end of 2022; which will help Tesla’s profits significantly.
4) Model S/X
The Model S/X was refreshed in 2021; but production constraints due to the chip shortage made it so Tesla couldn’t produce them very quickly. Now that the chip shortage is becoming less of an issue; Tesla is delivering lots of model S/X. These low volume but expensive vehicles are high profit for Tesla; & the backlog for these vehicles is quite long. The Plaid versions of these vehicles are getting lots of attention on social media for their rapid acceleration, state of the art tech, yoke steering wheel, and much more. These high margin vehicles will definitely help Tesla grow their profits this year; and for a long time to come. 2022 will be a huge hear for Tesla; and I look forward to watching this rising star of a company continue its hyper-growth.
Business in the Modern World 