A few people in the comments have been strongly requesting some anti Musk and Tesla article. Here is a summary of the problems that Musk, Tesla, Space X and Twitter have had in 2022 and problems they can have in 2023. Full disclosure, I own shares in Tesla and SpaceX. So this will be a summary of problems from someone who is very pro-Musk and pro-Tesla. However, I am thorough. I am giving what some people have been asking.
Tesla share price dropped to 30% of the post-split high of $400 down to $123. This is despite increasing trailing 12 month net income in Q3 2021 from $3.5 billion to $11.2 billion in Q3 2022. The Nasdaq dropped 33% from its highest peak price in 2022. Amazon shares dropped to 50% from its 2022 peak. Tesla shares have been cratering sharply for 7 weeks. Many believe it is the Twitter noise and what they believe is Elon being erratic. A larger contribution is the concerns about major demand issues in China.
Over half of Tesla’s global cars are made in at Tesla Shanghai. The covid lockdown in Shanghai in about April-May 2022 reduced cars produced by about 100,000 and delayed an expansion. Delaying the to Q3 reduced total cars produced by another 100,000.
China has struggled with a real estate and lending crisis for 2021 and 2022. China just released a bailout package package for the property sector. Along with other policies announced earlier this year, they are injecting 1 trillion yuan ($142 billion) into real estate. The sector has not turned around yet but real estate stocks have strongly bounced.
China is currently experiencing a massive surge of Covid. Perhaps 25% or more of the population is currently infected. There are reports hospitals and cremation facilities are overwhelmed. China has a low ratio of emergency rooms and hospital beds for population. China also did not used the more effective COVID vaccines from Pfizer and Moderna. 3rd parties are forecasting there will be about 2 million deaths in this COVID surge in China.
Various parts of the world have experienced an economic slowdown in 2022 and some parts of the world are in recession. It is expected that there will be a recession or deepening recession in 2023.
The global recession and China economic problems is softening (reducing) demand for Tesla cars in China and Europe. There are concerns that Tesla will not cut prices and reduce margins in 2023 to sell cars. There are concerns that even with those actions they will need to reduce production of cars from their potential capacity in 2023.
Elon Musk bought Twitter and had to sell about $40 billion in Tesla stock to buy Twitter and to provide liquidity to cover operating losses and debt financing. The Tesla stock sales, Twitter problems and drama around Twitter have contributed to Tesla shares to lower in price.
It is highly another major holder or multiple large investment funds sold in the recent crash in Tesla shares.
Elon has said he will not be selling Tesla shares in 2023 and may not until 2025. Many people do not do believe his assurances.
Tesla has had delays and slower production ramps for the Berlin and Texas car factories. Both factories are each just now reaching 3000 cars per week. It was previously believed that both factories could easily reach 5000 cars per week by the end of 2022.
Tesla has had delays and slower production ramps with their own 4680 batteries. On Tesla battery day in September 2020, they announced a goal of 100 GWh of 4680 batteriesin 2022. The 4680 production just reached 1000 packs per week which is 0.08 GWh per week or 0.3 GWh per month. This is just over 1 GWh for 2022. If Tesla triples 4680 production every quarter then they would reach 2 GWh in Q1, 6 GWh Q2, 18 GWh Q3, 54 Gwh Q4 which would 70 GWh for 2023. Tesla would be more than a year behind the 2020 battery day ramp goal.
Tesla has been able to get abundant battery supplies from CATL and other suppliers.
After Twitter was purchased about two months ago, Elon has fired about 70% of the staff to reduce a $3.5 billion per year burnrate to less than $1 billion per year. Elon has announced he expects Twitter to breakeven in 2023.
There have also been delays introducing products like the Tesla Semi. The Tesla Semi is now released and about 100 will made in December of 2022. The Tesla Semi was about 3 years later than originally targeted. The Tesla Semi has vastly superior specs to other electric Semis from Freightliner, Volvo and others.
Electric cars are ramping up around the world. Tesla still has over 60% market share in the USA. Tesla has less market share in China as the China market has a lot of very cheap cars and cheap EVs. For the over US$40,000 EV market segments, Tesla has over 40% market share for those segments.
The war in Ukraine and COVID have disrupted supply chains and sent prices and inflation soaring. The war and COVID could continue to cause financial problems in 2023. Inflation could remain out of control or too high in 2023.
Tesla is targeting over 50% production growth in 2023. Tesla will likely miss the 50% delivery growth target in 2022. We will see what they report Jan 2, 2023 for Q4 volume production figures.
The Cybertruck should be released mid-2023. The Cybertruck release is about one year late. We will see how fast the Cybertruck production ramp is and if it is released on the new target date. The Semi technology should help the performance of versions of the Cybertruck. The Cybertruck should have the 1000 volt technology and engines for more powerful and efficient towing.
We will see if Tesla can deliver the Cybertruck and ramp the 4680 and new factories in 2023 and how they manage the economic slowdowns and manage demand weakness in different regions.
Tesla will have a boost from the US Inflation Reduction Act which provides tax incentives that reduce the effective price of most Tesla Model 3 and Tesla Model Y by $7500. There is also $45 per kWh of support for US battery production. There are also incentives for Energy products like Tesla Powerwalls and Megapacks.
2022 has been a challenging year and 2023 will also have big challenges.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.