Neil Cybart 7/25/23 Neil Cybart 7/25/23

Tesla Earnings, Tesla's Cost Reductions, Apple’s Project Titan Implications

We kick things off with Neil’s thoughts on Tesla earnings. The discussion covers two themes that are beginning to appear in both Tesla’s results and the broader EV space. We conclude with how these trends stand to impact Apple’s transportation goals.

Happy Tuesday.

Before we get to today’s stories, a little follow-up to yesterday’s "Barbie" discussion. The $150M marketing budget for the film was an estimated figure. There is little to no disclosure regarding how much is spent marketing films.

While it would not be unprecedented for a film’s marketing budget to exceed its production costs, the thing that truly stands out about "Barbie’s" marketing budget is how unique the dollars were used. Warner Bros. was able to leverage its marketing budget. On Twitter, Aakash Gupta shared 50 Barbie marketing examples including building a Barbie house in Malibu, a Barbie-themed hotel, catchy billboards, and plenty of other websites, interviews, and licensing deals. The marketing wasn’t really about a movie, but rather about the Barbie brand.

As we see with other shows like "Ted Lasso," it is possible for other films and shows to play in the zeitgeist. In some ways, that is the goal every streamer is going for: to have some shows become part of culture. Warner Bros. succeeded in that goal with "Barbie." However, the question still remains, what would alternative methods have looked like for "Barbie" distribution? What if David Zaslav had introduced an ultra-premium tier to Max that allowed fans to watch "Barbie" at home, at the same time as the theatrical release?

Tesla Earnings

In a sea of change and evolution, we are starting to get glimmers of a trend materializing in the auto sector. This trend was seen with Tesla’s latest earnings release that came out last week.

A few weeks ago, Tesla reported 2Q23 delivery and production volume. The numbers were good. However, we needed to wait for earnings to see how profitable those vehicle sales were.

Not surprisingly, Tesla’s auto margins are falling. Higher sales volume has not offset the negative impact on margin from substantial price cuts.

The following comment from Elon Musk on Tesla’s earnings Q&A jumped out at me:

An Above Avalon membership is required to continue reading this update. Members can read the full update here . An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.

(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)

Above Avalon Membership

Subscribe $20/month

Subscribe $200/year

Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.

More information about Above Avalon membership, including the full list of benefits and privileges, is available here.

Neil Cybart 7/6/23 Neil Cybart 7/6/23

Tesla 2Q23 Deliveries, Ford’s EV Strategy, Doug Field’s Odd Interview With the AP

Hello everyone. For today’s update, we will take a spin through the EV space. While headsets have grabbed the attention in recent months, the EV industry continues to evolve in an effort to find itself. We begin with Neil’s thoughts on Tesla’s latest deliveries numbers. The discussion then turns to Ford’s EV strategy, including quite the odd interview from Doug Field regarding Ford’s transition to EVs.

Let’s jump right in.

Tesla 2Q23 Deliveries

In a press release issued on Sunday, here’s Tesla:

“In the second quarter, we produced nearly 480,000 vehicles and delivered over 466,000 vehicles.”

Here are Tesla's 2Q23 deliveries broken out by model:

Analysts were expecting Tesla to report 445,000 deliveries in 2Q23 so 466,000 is a 5% beat to consensus. In 2Q22, Tesla deliveries were constrained due to COVID lockdowns in China. Backing out that one-time impact, Tesla deliveries were up around 45%. Given recent questions surrounding demand, that will be considered a good growth number.

The following chart shows delivery growth on a year-over-year basis (using a trailing twelve months basis).