Thread by @TeslaLarry

In 2020 Tesla delivered 353 cars short of the 500,000 goal they had set for themselves in 2014, a goal considered impossible by critics and analysts alike. With this milestone behind them, they set themselves a new, and equally challenging goal 🧵

January ‘21 Tesla guidance: “over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries. In some years we may grow faster…The rate…will depend on our equipment capacity, operational efficiency and capacity and stability of the supply chain.”

In 8 consecutive quarterly guidance since, Tesla reiterated, adding in Q4-21 and Q1-22 the following rider: “Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through...2022”

We can construct a table comparing the consistent company guidance with the 2021 actual, 2022 estimated and 2023 consensus expectations. The table shows that Tesla are way ahead of their guidance:

Here is a graphical view of the guidance vs actual and anticipated deliveries:

So why are many, including highly respected industry and investment analysts, and even knowledgeable Tesla community members, saying that the current expectation of about 1.31m cars would represent a miss, when the numbers clearly show it as beat of 200,000 vehicles (>15%)?

It is because of a simplistic, but very flawed understanding of the clear guidance that Tesla has given repeatedly, most recently in the 3rd Q earnings report. It seems that the pundits re-set the baseline for the 50% growth with each beat of the target!

In 2021 Tesla beat the 50% by 37%. Suddenly, the 2022 count became the “new” baseline, so now the 50% is applied to 936K instead of the correct 750K (50% above 2021) per guidance. Result: in 2022 the 50% expectation has become 1,400K, instead of the correct 1,125K (750K + 50%).

If deliveries hit, say 1,300K in 2022 (current expectations), then in 2023 the expectation will suddenly become 1,950K in 2023, instead of the 1,686K which properly represent an average of 50% growth as provided by the consistent Tesla guidance.

Some pundits point to Zach Kirkhorn and Elon Musk’s statements during the ’22 Q3 Earnings Call, claiming that they affirmed guidance of 50% above 2021 deliveries. But a careful listening to the call shows that they instead confirmed the standard guidance.

Zach stated “we're on track for the 50% annual growth…” clearly referencing the standard guidance. Elon was at pains to stress the average rate of 50% of compound growth, and fluctuations from one year to the next.

Looking to 2023, Tesla faces a stern test with the uncertainty of renewed pandemic in China, war in Eastern Europe, and apparent global recession. Auto sales retreat dramatically in uncertain times, But I remain confident that yet again Tesla will outperform guidance. By a lot.