Tesla, Inc. (TSLA) CEO Elon Musk on Q1 2022 Results - Earnings Call Transcript

Tesla, Inc. (NASDAQ:TSLA) Q1 2022 Results Conference Call April 20, 2022 5:30 PM ET

Company Participants

Martin Viecha - VP, IR

Elon Musk - CEO

Zachary Kirkhorn - CFO

Andrew Baglino - SVP, Powertrain and Energy Engineering

Lars Moravy - VP, Vehicle Engineering

Conference Call Participants

Dan Levy - CSFB

Rod Lache - Wolfe Research

Pierre Ferragu - New Street Research

Trip Chowdhry - Global Equities Research

Alex Potter - Piper Sandler

Colin Langan - Wells Fargo

Mark Delaney - Goldman Sachs

Martin Viecha

Good afternoon, everyone, and welcome to Tesla’s First Quarter 2022 Q&A Webcast. My name is Martin Viecha, VP of Investor Relations, and I’m joined today by Elon Musk, Zachary Kirkhorn and a number of other executives. Our Q1 results were announced at about 3 p.m. Central Time in the update deck we published at the same link as this webcast.

During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events and results could differ materially due to a number of risks and uncertainties, including those mentioned in our most recent filings with the SEC.

During the question-and-answer portion of today’s call, please limit yourself to one question and one follow-up. Please use the Raise Hand button to join the question queue. Before we jump into Q&A, Zach will have some opening remarks. Zach

Zachary Kirkhorn

Yes. Thanks, Martin. Just to start off here, Q1 was a challenging but extremely successful quarter for the Company. Despite numerous supply interruptions, including shuts at our Shanghai factory and nearby suppliers due to COVID, we’ve continued making progress and achieved our best-ever vehicle deliveries.

Last quarter, we demonstrated a series of new financial records, including revenue, gross margins, operating margin and bottom line profitability. GAAP automotive gross margin reached 32.9% and first time exceeded 30% when excluding regulatory credits. Higher pricing continues to positively impact our financials as we make progress delivering cars and our growing backlog. Note that, for most vehicles, our delivery wait times are quite long. Thus, cars delivered in Q1 generally carried pricing set in prior quarters and at levels lower than cars being ordered today.

Our per unit vehicle cost increased as well. Inflation, raw material prices, expedite and logistics costs continues to impact our cost structure. Factory shutdowns also occurred with little to no notice. Hence, we are unable to take action to plan those interruptions in a cost-efficient manner. Additionally, we saw a slight mix shift towards more profitable vehicles, including the Model Y. We also recognized a onetime benefit of $288 million from credit revenue relating to a regulatory change in the U.S. CAFE penalty, without of which credit revenue would have declined compared to the same period last year.