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In addition to the high valuation and CEO Musk's continuous selling of Tesla stock, Tesla (TSLA. The series of problems posed by the US) energy business have also caused investors to panic.
The U.S. Securities and Exchange Commission (SEC) is checking whistleblowers' allegations that Tesla covered up defects in solar panels, one of whom was a device safety administrator for Tesla's energy division.
If the SEC finds through an investigation that Tesla is hiding the problems and risks of solar panels from customers and investors, it could face hefty fines.
In addition, due to the continuous fermentation of supply chain problems, Tesla could not obtain the raw materials and resources it needed, and the company's previously planned projects could not be carried out as scheduled.
solar panel
According to Electronek, due to the global supply crisis, Tesla was unable to obtain some of the panel components from China in time. As a result, the company suspended registration for new devices and tentatively reopened them by the end of 2021.
The supply crisis is widely expected to intensify in the first quarter of 2022, which could lead Tesla to further cut the number of solar panel modules.
Analysts expect the supply crisis to cause solar panel installations to shrink by 3-4 MW, accounting for about 4% to 5% of Tesla's total solar panel installations in the third quarter of 2021. According to statistics, Tesla has installed an average of about 87 MW of solar panels per quarter in the past year.
According to estimates, due to short-term supply shortages, Tesla's revenue will decline by about 0.2% in the short term, but this is insignificant for Tesla's long-term performance.
In terms of business scale, Tesla attaches great importance to the solar panel and battery business. Tesla began aggressively entering the solar panel market after acquiring SolarCity in 2016.
According to estimates, Tesla's battery business generates much less revenue per megawatt of energy than the solar panel business. According to the calculations of investment research institute Invest Heroes, the battery business brings about $330,000 in revenue per 1 MW, and the solar panel segment brings in as much as $4.64 million per 1 MW.
According to statistics, in the past two quarters, electric vehicle charging pile revenue accounted for more than 50% of the total revenue of Tesla's energy division:
According to estimates, Tesla's solar panel revenue in the fourth quarter of 2021 and the first quarter of 2022 fell by 4-5%, which will lead to a 2-2.5% decline in the division's revenue. In the third quarter of 2021, Tesla's energy division had a 5.8% share of total revenue. That is to say, the overall impact on the company's revenue will be close to 0.2%, and will not have a significant impact on Tesla's long-term revenue.
The SEC findings are critical
According to media reports on December 6, the SEC is investigating the reports of whistleblowers, one of whom was a former equipment safety administrator for Tesla's energy department, saying that Tesla concealed defects in solar panels. For Tesla, this could be a big problem.
Overall, the SEC is ramping up its oversight of Tesla, which was previously an important regulatory target for the SEC when it comes to self-driving systems.
The SEC has investigated the wording of former Tesla employee Stephen Henkes, a former quality manager for Tesla's energy division.
According to the report, Tesla did not disclose to customers the risk that a defective electrical connector could lead to a fire.
Henkes said the problem affects about 60,000 customers as well as 500 government and private companies. Meanwhile, the legal action Tesla faces over solar panels has dragged on for years. In 2019, Walmart (WMT. US) filed a lawsuit against Tesla, saying tesla's solar system has caused seven fires in Walmart's stores, and Tesla has denied those allegations.
Regardless of the outcome, such investigations expose potential business problems that hurt Tesla's business revenue. In addition, if the SEC finds that Tesla is hiding the problems and risks of solar panels from customers and investors, it could face hefty fines.
The cost side has improved significantly
Tesla is constantly making technical improvements to its products to alleviate the pressure on the cost side, which will also directly affect the final purchase price of users.
According to Invest Heroes' estimates, the cost of a 1 MW solar panel was $5.26 million in the first quarter of 2020, but in the third quarter of 2021, its price fell to $4.64 million, a 12% drop. In the first quarter of 2020, the cost of a 1 MW battery was $420,000, and in the third quarter of 2021, its price fell to $330,000, a decrease of 21%.
In addition, Tesla is constantly launching new products, and Tesla recently released a 420W solar panel. Tesla is currently offering Tesla a full suite of energy ecosystems to third-party installers to accelerate the penetration of solar panels and batteries.
Electric vehicles are the foundation of the foundation
One thing that must be made clear is that, at the end of the day, Tesla is an electric car manufacturer. The company's future development mainly depends on the foundation of the foundation - electric vehicles, the energy sector in Tesla's total revenue share of only 5%-6%.
Invest Heroes expects Tesla's revenue to reach $340 billion by 2025, with electric vehicles accounting for 87 percent of revenue.
According to Elon Musk's plan, Tesla will increase its efforts to increase the scale of electric vehicle production in China and Germany and expand its product line. Invest Heroes expects Tesla EBITDA to reach a level of about $85 billion by 2025. Of the $85 billion, the energy business will account for only about $3 billion, or only 3.5 percent.
Invest Heroes uses a 13% discount factor to value Tesla stock in the FTM valuation system based on average EV/EBITDA multiples and 2025 FCF yields.
According to the valuation calculation of Invest Heroes, Tesla's reasonable valuation is $828 per share. At the current trading price of $958.51, it is above a reasonable valuation, which means that Tesla is overvalued by the market, and the market is generally overly optimistic about the company's business development.
When to return to trillions of dollars
In general, the impact of the supply chain crisis on Tesla is most likely temporary and will not have a significant negative impact on the company's operations. Among the many concerns of investors, the SEC's findings are probably the most important ones for investors and may also have the greatest impact on Tesla's stock price.
First, the findings could have a negative impact on Tesla's brand value. Second, in the event that Henkes' claims are confirmed, Tesla will face hefty fines for failing to comply with disclosure and related risk laws.
However, it should be noted that Tesla has been working hard to improve all of its products and vigorously develop the Tesla ecosystem. In the long run, this will bring huge returns to the company, and there is no doubt that Tesla is still far ahead of its competitors in the electric vehicle industry.
However, high valuations carry uncertainty, and the market tends to have a low tolerance for them under high valuations. Keeping valuations high means Tesla needs to prove itself with good enough performance or certainty expectations.
In terms of solar business, although Tesla's solar business has been controversial recently, if Tesla's energy ecosystem develops smoothly, it will further expand its significant share of the U.S. and even global solar panel market.
In addition, investors need to keep in mind that the energy business is only a small part of Tesla's many businesses. It is more important to pay attention to the development process of Tesla's electric vehicles and new product sales, as well as the future construction of a gigafactory in Germany, and how the sales of its electric vehicles will be in the European market.
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