Tesla: Aiming to become a global volume manufacturer through increased production

Production to increase 47% to 1.37M units in 2022, struggle to balance sales expansion and profit



Cybertruck undergoing road tests with the aim of launching by the end of 2023. (Source: Tesla)

  Tesla Inc. (Tesla) announced in March 2023 that it will build its fifth global production plant (Gigafactory) in Mexico. The global production scale has been consistently expanding, and by 2022, production reached 1.37 million units, up 47% from the year before, solidifying the company's position as the leading manufacturer in the rapidly growing EV (electric vehicle) market.

  The company is introducing new production methods that will cut costs in half, starting with the Mexican plant, and is preparing to expand its product lineup to include pickup trucks and additional high volume models, and to enter emerging markets, which it is now ready to execute. At the same time, the company has shown a willingness to aggressively expand sales by continuously adjusting prices to meet demand trends and suggesting the start of advertising, which it had refrained from until now, and has clearly stated its policy of making the leap from a premium brand focused on specific customers and markets to a global high volume manufacturer.

  In addition, the company has positioned automotive batteries as the key to growth, and will develop the highly efficient 4680 type in-house and move forward with mass production, as well as expand and secure a stable supply chain by investing in production expansion in the U.S. and constructing the first lithium refining facility among major OEMs. Tesla will also work to strengthen the production of chargers and expand the charging infrastructure.

  The driving data collected and accumulated from vehicles equipped with the Full Self-Driving (FSD) driver assistance system has already reached 150 million miles, and will be used to further improve FSD performance through AI learning.

  Financial report results showed a significant increase in sales to USD 81.5 billion in 2022 (up 51% from the previous year) and operating income grew to USD 13.7 billion (up 109% from the previous year), both record highs. However, in the Q1 (Jan-Mar) FY2023 results report, profits took a turn for the worse due to the significant price reductions of core models implemented at the beginning of the year, resulting in a sharp decline in operating margins (19.2% ⇒ 11.4%) compared to the same period of 2022.

  EVs, in which Tesla had an overwhelming advantage over its predecessors, are entering a period of widespread adoption. As impacts from the market environment and threats from major OEMs and emerging manufacturers intensify, Tesla is reaching a major milestone as it works to maintain its high profitability and continue to grow toward its ambitious sales expansion goals.

  LMC Automotive's mid- to long-term sales forecast for Tesla is included at the end of this report.


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