- Tesla posted another impressive quarter despite Elon Musk’s distraction of acquiring Twitter. Production continues to ramp with Freemont adding another 50K in capacity, Shanghai in full action, and Austin/Berlin ramping (2K units per week and running towards 5K per week). Expectedly, Musk reiterated his goal for +50% production growth for years to come and doesn’t expect any diminution in demand for that term as well (although there was no update on where the next U.S. manufacturing plant will be located). Per our estimates, the next plant needs to be in production mode in 2025 to achieve Musk's production and sales goals, meaning that construction needs to begin before the end of 2023.
- Another feature of Tesla’s results that caught our eye was the increase of 312 Supercharger stations QoQ to 4,283. What if a movie theatre or fitness club installed Supercharger connectors at their location and these have dedicated 2.5-hour reservation slots as part of the pre-bought movie admission or spin class? For a company like Cinemark, this could drive incremental visits of more affluent households to their concession stands and theater seats. Assuming that Cinemark outsources the charging equipment and power, and collects no margin on the service, it may yield a bump to profits as we show in the table below. What if the service drove serious market share capture and the utilization rate was 75% versus 33%? Then things start to get interesting (imagine Cinemark’s Movie Club Platinum plus charging reservations all within its app). Increased frequency and better Club member insights may even allow for further elevating the theater seating to in-the-theater concession service of premium concession products.
- The past few weeks also brought Porsche’s initial public offering, which gives an opportunity to compare the unit economics between the two companies. (The IPO valued Porsche at about $75B compared to Tesla’s $700B.)
- As the table below shows, the consumer pays a far higher price for a Porsche Cayenne (on average) than for a Tesla Model Y. That higher price reflects both a dealership margin (versus none for a Tesla) and a higher make of product (the wholesale average selling price).
- In reviewing unit economics between the two companies, it's worth noting that the Cayenne has a far lower price than the Porsche average (the 911 starts at $110K). Also, Tesla produces nearly 5X the volume of Porsche and has a clean-sheet product line that lacks legacy costs. In addition, it has less "make" and a simpler manufacturing process (more automation and fewer parts). As a consequence of these differences, the cost to produce a Tesla (on average) is less than half of Porsche’s cost. Tesla also does little advertising, doesn’t sponsor a racing team, and has few legacy costs in its G&A expense. These differences result in Tesla having less than half the marketing, sales, and overhead cost per unit delivered as Porsche’s. However, what will be interesting to watch is Porsche’s margins as they drive towards electric. The current goal is 80% of deliveries being electric by 2030. Should it achieve Tesla’s manufacturing cost advantages and some of the dealership margin while maintaining its price premium, that would be very interesting in terms of its profitability. As a reminder, as OEMs transition to EVs, all are also looking to restructure distribution to recapture dealership margins.
