April 28, 2023
Summary:
SpaceKnow indices can track production and inventory rises for electric vehicle companies such as Tesla. Look at the final graph and table to understand how SpaceKnow uses its data to understand inventory build-ups.
In more detail:
Tesla, one of the key electric vehicle makers in the world, recently announced record vehicle deliveries for the first quarter of 2023. However, it seems that the company’s efforts to boost sales through price cuts have not yielded the desired results. In this article, we link Tesla’s production with Spaceknow’s satellite imagery analytics to show their predictive power and usefulness to those interested in the core parts of Tesla’s business.
Spaceknow provides a range of daily indices based on satellite imagery. We divide Tesla’s production facilities into several types of locations, including employee parking lots, areas where finished cars are located, and several indices on logistics and distribution. We also provide a regional breakdown, including US, EU, and Chinese locations. We’ve touched on Tesla’s Shanghai Megafactory in one of our previous newsletters, where we reported on the impact of the COVID lockdowns. Figure 1 below shows the COVID lockdowns in the context of Tesla’s global operations. Our Employee Parking Index, which tracks employee parking lots across all Tesla facilities globally, indicates that while the suspension of production in the Fremont factory in 2020 significantly impacted the company’s overall performance, the lockdowns in Shanghai two years later had a comparatively lesser impact. This observation demonstrates the extensive growth that Tesla has undergone in recent years.
Tesla’s Q1 2023 earnings report shows a drop in net income of 24% from the previous year. The company cites underutilization of new factories, higher raw material, commodity, logistics and warranty costs, and lower revenue from environmental credits as reasons for the decline. Despite the drop in earnings, Tesla’s total revenue rose 24% and its core segment, automotive revenue, increased by 18%. CEO Elon Musk emphasized the impact of the uncertain macroeconomic environment on car-shopping plans and warned of the equivalent effect of interest rate hikes on car prices. He expects Tesla vehicles to generate significant profits through autonomy and stated that the company is pushing for higher volumes and a larger fleet, rather than a lower volume and higher margin.
The company has big plans for the future. It plans to establish a factory in Monterrey, Mexico, and to build Megapacks, large lithium-ion battery-based energy storage systems, in Shanghai. CEO Musk is confident in the company’s ability to scale up production to meet demand; he expects Tesla to produce 1.8 million vehicles in 2023, with the possibility of producing an “upside” volume of 2 million vehicles this year. The company’s stock has rebounded from its 2022 losses, gaining 48% this year. However, Tesla faces challenges such as reduced environmental credit revenue, increased costs, and an uncertain macroeconomic environment that may impact its future earnings.
Analyzing Tesla’s global production, we see a comparison of Tesla’s quarterly production with Spaceknow’s logistics index that tracks trucks bringing supplies used for building the cars in Tesla’s factories. We can see that our index and Tesla’s figures are strongly correlated. Our index rises strongly especially after 2020, illustrating the rise of the company and the EV business as a whole.
Despite record numbers in Q1 2023, there has been a growing concern about Tesla’s increasing stock of inventories. Tesla, known for its strict no-discount policy, has been offering discounts on its electric vehicles in several markets, including Australia, South Korea, and Japan, which is unusual for the company at the start of a new quarter. Tesla’s inventory is usually low in most markets early in a quarter, but due to a 50,000-vehicle discrepancy between vehicles produced and vehicles delivered over the last two quarters, Tesla has had some inventory build-ups.
Figure 3 below provides further insights into Tesla’s growing inventories using Spaceknow indices. The Product index, which monitors finished cars before delivery, continues to rise despite production leveling off in the last quarter, indicating a growing inventory of unsold cars. Additionally, a comparison of the Product Distribution index and Product index shows that while these indices typically go hand-in-hand, the product has been growing faster than distribution. The Product Distribution index, which tracks activity in areas where the cars are loaded onto trucks and transported away, rose by around 6 percent in the last quarter, while the Product index shot up by more than 60 percent. This suggests that distribution is lagging, and finished cars are piling up in Tesla’s parking lots.
| Product Distribution QoQ Percentage | Product QoQ Percentage | |
| 2022-03-31 | -18.33 | -6.63 |
| 2022-06-30 | -10.66 | 1.13 |
| 2022-09-30 | -6.23 | 4.55 |
| 2022-12-31 | 15.96 | 7.95 |
| 2023-03-31 | 6.44 | 64.76 |
Tesla is a dynamic company that catches a lot of attention and has been undergoing rapid expansion. Spaceknow continues to develop and improve our Tesla indices on Tesla to deliver better insights into the company’s operations.
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