Tesla has revealed that it focused intensely on its Gigafactories during the second quarter of 2022 — to the tune of about $1 billion in capital expenditures.
The announcement came in a Securities and Exchange Commission (SEC) filing. Tesla intends to continue to accentuate its battery development, among other projects, to solidify its corporate plan and mission. “The long-term success of this business,” Tesla explained in the filing, “is dependent upon increasing margins through greater volumes.”
Compared with Q2 2021, Tesla profit nearly doubled as well as exceeded analyst estimates for earnings. The SEC filing detailed how Tesla’s April forecast of $5 billion to $7 billion for capital expenditures has increased to levels around $6 billion to $8 billion. It was one of many declarations contained in a July 25, 2022, quarterly report.
In 2022, through Q2, Tesla produced 563,987 vehicles and delivered 564,743 vehicles. To support such positive vehicle trends, the company has identified several areas of focus:
- increasing vehicle production and capacity;
- improving and developing battery technologies;
- improving FSD capabilities;
- increasing the affordability and efficiency of its vehicles;
- expanding its global infrastructure.
During the second quarter, the Gigafactory Texas site began delivering Model Ys with Tesla-made 4680 cells used in structural battery packs. This factory’s goals include improving vehicle performance, decreasing production costs, and increasing affordability. Consistent with the company’s approach of innovating manufacturing techniques at its new factories, Tesla says it expects to pioneer novel methods related to the mass production of these cells and the company’s unique structural battery pack concept.
Tesla indicates successful capital growth is contingent on its ability to add to its available sources of battery cell supply. Manufacturing its own cells, which are being developed to have high volume output, lower capital and production costs, and longer range, are key to these longer term goals.
In 2022, through Q2, Tesla deployed 1.98 GWh of energy storage products and 154 megawatts of solar energy systems. Current areas of priority include:
- ramping production of energy storage products;
- improving solar roof installation capability and efficiency;
- increasing market share of retrofit and new build solar energy systems.
Capital Challenges that Tesla Confronted in Q2 2022
Identifying COVID-19 as having widespread global impact, the Tesla report to the SEC acknowledged that increasing availability and administration of vaccines and easing restrictions helped businesses. Yet infection rates and regulations continue to challenge business models and to increase costs for logistics and supply chains in several ways:
- increased port congestion;
- intermittent supplier delays;
- a shortfall of semiconductor supply;
- temporary manufacturing closures;
- employment and compensation adjustments;
- impediments to product deliveries and deployments.
“We are dependent on our suppliers, including single source suppliers,” the filing elaborated, “and the inability of these suppliers to deliver necessary components of our products in a timely manner at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components from these suppliers, could have a material adverse effect on our business, prospects, financial condition, and operating results.”
The report also noted how varying levels of inflation have affected the electric vehicle, solar energy generation, and energy storage arms of the company through:
- various supply chain disruptions;
- increased shipping and transportation costs;
- increased raw material and labor costs.