About Tesla’s shareholder meeting in 2023

劉宸志 Kenny Liu 2023-05-23

On May 16, Tesla held its shareholder meeting at the Tesla Gigafactory 5 in Austin, Texas, USA, celebrating Austin Gigafactory’s increased weekly production capacity, which has now reached 5,000 vehicles. CEO Elon Musk also outlined several key points regarding the company's future operations, providing one of the most comprehensive explanations for Tesla's development in recent years. Musk's presentation primarily focused on the direction of green initiatives, and I would like to share the key points with you.

The main highlights are as follows:

  1. Model Y, benefiting from the full production capacity of Tesla's Gigafactories in Berlin, Germany, and Austin, Texas, is set to become the world's best-selling model. In terms of sales performance, the vehicle sold over 740,000 units globally in 2022, ranking behind the top-selling Toyota RAV4 with 1.016 million units and the second-place Toyota Corolla with 992,000 units. However, in 2023 Q1, Model Y showed impressive performance in the three major markets: it sold 71,683 units in the EU, 94,647 units in China, and approximately 85,000 units in the US, ranking first, second, and fourth, respectively. This demonstrates Musk's confidence and highlights the advantages of Tesla's unique production processes enabled by their Gigafactories. The widening cost gap in manufacturing compared to traditional automakers will be a crucial issue that needs to be addressed.
  2. During the shareholder meeting, Musk revealed that Cybertruck would begin production at the Gigafactory in Austin later this year and deliver before the end of the year. He emphasized that a reasonable estimate for annual sales would be 250,000 vehicles, but if the demand from customers exceeds that, it is not impossible to achieve sales of 500,000 units annually.
  3. During the shareholder meeting, Musk also disclosed plans for the next-gen Gigafactory in Mexico and shared concept images of two new products. He explained that these two new products would revolutionize the existing automobile production. Musk expressed high expectations for these new products, aiming to achieve a production scale of 5 million units annually. While Musk acknowledged that this is his estimate ("Elon's guess"), it reflects Tesla's ambition for high-volume production in its super factories.
  4. The financial reports from Tesla demonstrate significant growth in solar energy generation and storage. In Q1, solar energy installations reached 67 MW, a 40% growth compared to the same period last year. Energy storage installations reached nearly 3.9 GWh, a remarkable 360% increase compared to 846 MWh in the same period last year. Musk also emphasized two related perspectives: the widespread adoption of sustainable energy reduces resource depletion and the use of EVs can reduce CO2 emissions by 55 metric tons over their lifespan compared to ICE vehicles. These two perspectives have a definitive impact on achieving net-zero carbon emissions. There are significant business opportunities in the "sustainable energy" and "energy storage" markets, which are also focuses of Taiwan's green energy policy. By capitalizing on these trends and investing heavily in green energy, there may be substantial returns in the future.
  5. In addition, Musk showcased a video of the Optimus Robot, clearly demonstrating Tesla's advancements in AI and humanoid robotics. He hinted at the future use of these robots to enhance efficiency in production and maintenance processes at Tesla's Gigafactories, which is crucial in achieving Tesla's production goal of 20 million vehicles by 2030. Musk even mentioned that as the AI and responsiveness of these robots approach human levels, he believes everyone would want to have one or two robots similar to Terminators. Musk expects this market to present a massive opportunity worth billions of dollars. Taiwan, with its complete technology industry chain, can focus its efforts to seize these future business opportunities.
  6. In 2022, Tesla achieved the highest profit margin (17%) in the automotive industry, surpassing Daimler Group by over 3% and more than doubling Toyota Group's profit margin. Among all BEV companies worldwide, Tesla and BYD are the few profitable companies. This indicates that Tesla's recent actions to maximize sales through price reductions are financially viable. Tesla could even consider investing in advertising to strengthen its marketing effectiveness, which is necessary to outpace other EV manufacturers. With Tesla's dominant position in the EV market, Taiwan should focus on niche markets such as medium and large electric buses, electric bicycles, and mobility vehicles for individuals with disabilities while maintaining its position as a major supplier in the passenger car market, to seek better development opportunities.

From Tesla's Investor Day in late March, the release of the Q1 financial report in April, to the recent shareholder meeting, it is clear that Tesla is not only aiming to be a leading EV manufacturer but also intends to establish a presence in the global green energy market. Furthermore, the company has already made significant progress in this regard.

As mentioned in a previous article, Tesla has completed the installation of energy storage facilities in Hawaii, replacing the existing fossil fuel power plants. These energy storage systems help regulate energy demand during peak hours and enable more efficient storage and utilization of the produced energy. In addition to the stationary energy storage solutions, the development of a mobile energy network consisting of EVs will further increase the proportion of renewable energy in the overall electricity generation, benefiting industries with a high demand for green energy. It is an area that Taiwan’s industries must invest in and focus on.

Intelligent manufacturing and androids in Tesla's Gigafactories will have a disruptive and transformative impact on traditional automotive production. The introduction of the 6,000-ton stamping machine for Model Y production, which has been utilized in the Shanghai, Berlin, and Austin Gigafactories, has significantly improved production capacity. The upcoming use of a 9,000-ton stamping machine in the Austin factory for Cybertruck production is even more noteworthy, for this investment will enable Tesla to manufacture Cybertruck more cost-competitively.

In addition, during the shareholder meeting, Musk also announced plans to mass-produce more cost-effective motor gearboxes. Each gearbox will have a production cost reduction of $1,000 compared to the existing ones. With Tesla continuously accumulating cost advantages, this development will intensify competition for traditional automakers shifting towards EV production. The rise and fall of brands in the automotive market thereafter is a topic worth close attention for Taiwan’s industries.

About the author - Kenny Liu

Graduated from Dept. of Aeronautics and Astronautics, Cheng Kung University in 1988, started his auto industry career since July 1990 after two year military service. Starting as a service engineer and a temp technician, product marketing specialist in Peugeot/ Daihatsu, marketing and dealer channel specialist in VW LCV from March 1992, then field manager in GM Taiwan from Feb. 1994, sales and service / parts head in Ford Lio-Ho from Sep. 1998 till retirement in May 2019. Kenny then started to work for JLR Taiwan as sales/service head and consultant/ lecturer. After that, he was invited to work at a Suzuki dealer of Taipei as the general manager until April 2022.