Tesla’s Annual Meeting Is Done. Here’s What Happened.

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Tesla
’s
huge base of retail investors always likes to hear from management and CEO Elon Musk. They got another chance on Thursday, when the company hosted its 2022 annual meeting of shareholders.

Investors heard about production, demand and pricing. Musk also mentioned other interesting tidbits, including comments about self-driving cars.

Tesla said in early July it produced a record number of vehicles in June. Musk told the assembled crowd that he hopes his company will be producing cars at an annualized pace of 2 million units by the end of 2022.

Tesla is ramping up production at its new plants in Germany and Texas. How those ramp-ups proceed and how Tesla deals with supply-chain issues—such as delays caused by Covid-19 lockdowns in China and a shortage of semiconductors—will impact the actual number achieved.

Tesla, when fully ramped up at its four assembly plants—California, Texas, Shanghai and Berlin—will probably be able to produce 2.1 million units annually. There is likely room to expand to roughly 2.4 million units with incremental improvements. Wall Street expects Tesla to deliver about 2.1 million vehicles in 2023. The company wants to grow production volumes at 50% a year on average for the foreseeable future. There might have to be another plant, or a significant expansion of an existing facility, by the middle of next year.

“We might be able to announce another factory location later this year,” said Musk. That generated cheers, but he didn’t go further than that statement. Many in the crowd suggested Canada. “I’m half Canadian, so maybe I should.”

Regarding demand, Musk said that 1.5 million units are possible for 2022. That is a ahead of the Street estimate of 1.37 million units.

Musk, in the months before the annual meeting, said that Tesla can sell all the vehicles it can make. In addition, he has also said that lead times to purchase a Tesla—which can stretch to 8 months or 9 months depending on the model ordered—are too long. Investors didn’t get an update about lead times or changes in ordering patterns caused by rising prices and rising interest rates.

Prices might not rise for much longer, however. Musk noted commodity prices are falling. “My guess is we are past peak inflation.”

That could presage a pricing peak, or even a price cut. Investors would like to know the direction of pricing heading into 2023. Bears will likely argue any price cuts signal weak demand, while bulls might predict that falling prices will boost sales and ordering rates.

Regarding price, one disappointing thing for investors, and car buyers, is that the original prices suggested for Cybertruck can’t be maintained. That product was introduced in 2019. Costs have risen too far since then, said Musk. That, however, isn’t really a surprise. Cybertruck production is due to begin in 2023.

At the meeting, Tesla investors also voted to authorize more shares outstanding. The vote paves the way for a 3:1 stock split. Approval, which is preliminary until all votes are tallied, wasn’t really in question. Investors tend to like stock splits, believing they signal management’s optimism about the future, among other things.

Musk also teased himself about missing his timelines for achieving truly self-driving cars. “This year I swear,” said Musk to laughter. He is talking about the year level four self-driving technology will be available. Level four means drivers don’t have to pay attention in some situations, that the car will do it all safely. Reaching level four is harder than Musk expected. He is still very positive on the potential for self-driving cars. “Solving autonomy will be an amplification of free cash flow to a degree that is…wow,” added Musk.

Annual meetings can be dry affairs, but Tesla’s tend to be a little more interesting. Tesla stock is heavily owned among retail investors. That tends to make shareholder engagement—at events such as analyst conference calls and annual meetings—higher than other firms. Tesla, for instance, takes calls from investors along with Wall Street analysts each quarter. That isn’t typical.

Tesla stock is down about 12% year to date. That is better than the 19% comparable decline of the

Nasdaq Composite
and similar to the 13% decline of the

S&P 500.

Write to Al Root at [email protected]