Tesla (TSLA. O) In the early morning of January 27, Beijing time, the US stock market released its fourth quarter 2021 financial report after hours, with the results first:
1. The performance exceeded expectations, but the momentum of exceeding expectations slowed down. The revenue side exceeds expectations is the result of the overall development of automobile sales (ASP improvement exceeds expectations), car rental, automobile services and other businesses, profitability is in a state of small exceeding expectations, the space for high-level profitability to rise is limited, and the logic of double rise of volume and profit has begun to be slightly weak.
2. The gross profit margin of the automobile business is stable. The company's inventory innovation at the end of the year was as low as 4 days, the PRICE of the US market continued to rise, and the price of the Chinese market in the style of price reduction also ushered in a sharp increase, Tesla's demand is still not to worry, although there is no specific delivery guidance, but the company believes that the 50% growth (1.4 million vehicles sold in the whole year) is very easy, from the perspective of production capacity, it is also capable of achieving.
However, the process of rapidly climbing the gross profit margin of automobile sales may come to an end. The gross profit margin of automobile sales in the fourth quarter was flat compared with the third quarter, and the momentum of climbing was no longer there, while considering that the gross profit margin of 30% was already at a high level of hardware manufacturing gross margin, and the battery price increase was also an important topic in 2022, so before the FSD, 4680 battery, other software services and other factors landed, the company's gross profit margin continued to climb rapidly Lack of motivation, perhaps should adjust expectations to stability.
3. Capacity can guarantee 50% delivery growth in 2022. The Berlin and Texas plants are new capacity increases, both of which are currently in the commissioning phase, and the Berlin plant, which has been frequently blocked from production, is already producing test vehicles. The Shanghai plant maintained the production rhythm in December, with a full-year production capacity of 850,000 units, and the Fremont plant with 600,000 production capacity is in operation. Capacity guarantees easy 50% growth for the company by 2022.
4, 4680 batteries and Cybertruck are both postponed to 2023 mass production. The 4680 battery is not only the company's confidence to improve product performance, but also the company's cost reduction weapon, but at present, the 4680 self-built battery factory and supplier production capacity are in the process of construction. The Cybertruck giant die casting machine is in operation, but serial production of the Cybertruck will also be in 2023.
5. The performance of the energy storage business is not good, and the service business breaks through the breakeven. The energy storage business has limited production capacity, growth rate and gross margin are poor performance, energy storage business is as long as the automotive business, but it still takes time; the service business has achieved the first positive gross profit margin in nearly five years, but the sustainability remains to be seen. At present, the company's biggest performance support is still in car sales, and other businesses are just icing on the cake.
Overall view: This is a financial report that exceeded expectations, but the degree of exceeding expectations is not large. Compared with the degree of exceeding expectations in the previous two quarters, the performance momentum reflected in this financial report is somewhat insufficient.
For 2022, Longbridge Dolphin Jun is optimistic about the release of the company's production capacity to open the company's delivery bottleneck, and the logic of volume increase will continue to be fulfilled, but the concern that new products and new technologies are not as expected also needs attention. The process of rapid improvement of profitability may come to an end, and the company can rely on strong market forces to transfer cost pressure and stabilize profits, but the motivation for profitability to continue to increase is slightly insufficient.
In terms of stock price, more of the company's market value support comes from valuation, even if the company's recent stock price has been corrected, but it is difficult to say that there is no premium on the current valuation, and the current macro environment is not friendly to highly valued stocks, and the risk of current participation is still large.
For details, see below:
First, about Tesla, what to know?
Tesla is the leader in the field of electric vehicles, the trend of the software-defined automotive industry is set off by Tesla, the market's imagination of the future business model of electric vehicle companies is mostly following the development of Tesla to find clues, Tesla's current business model is: electric vehicle hardware is the entry point, automatic driving and other software services are subversive directions, energy storage is an extension of the industrial chain. The short-term drive of Tesla's valuation looks at the delivery of electric vehicle hardware and the profits brought by it, and the long-term drive looks at software services such as autonomous driving and energy storage business.
According to Tesla's announced business split, its revenue source is close to that of traditional car companies but contains big plans.
Car sales and car rental is the income project of traditional car companies, and it is also the mainstay of Tesla's performance, the essence is to sell cars, but traditional car companies sell oil cars, Tesla sells electric vehicles, and Tesla's business revenue accounts for more than 80%.
Among them, unlike traditional car companies, Tesla's car sales also include revenue sources such as automatic driving and software function update fees, which are Tesla's subversion of the industry
Another place that is different from traditional car companies is the energy storage business, which currently accounts for less than 10% of the revenue. Energy storage business is essentially Tesla in the power industry chain upstream extension, it can be said that Tesla founded part of the original intention is to provide the world with clean solar power, in the context of the gradual tightening of global carbon emission policies, the energy revolution will be an important topic in the future.
Data source: company financial report, Longbridge Dolphin investment research collation
Regarding this financial report, Longbridge Dolphin Jun mainly pays attention to the following issues:
1. Overall performance vs Market expectations: How is the company's overall revenue, profit, gross margin, expense ratio, etc. performing? Was it more than expected or less than expected?
2. Changes in gross margins in the automotive business: In the case of known vehicle deliveries, the revenue side did not perform as expected. What is our core focus on changes in gross margins on auto sales?
3. Capacity: Capacity is still one of the key factors affecting the company's delivery volume, and the capacity bottleneck determines the delivery bottleneck. Therefore, we continue to pay attention to the production situation of the company's various super factories and the promotion of new models, especially the mass production situation of the Berlin plant in Germany and its impact on the delivery volume of the European market;
4, FSD, battery and other new technologies, Cybertruck and other new products: the change of the automobile business model and the imagination of the capital market, we continue to pay attention to the company's automatic driving technology progress and business model changes; 4680 battery is to enhance the company's product competitiveness and reduce costs of the weapon, we pay attention to its production and loading; new models are an important driving factor for the performance of OEM manufacturers, we pay attention to the company has been mentioning the mass production progress of Cybertruck;
5. Other businesses: In addition to the automotive business, the marginal improvement of energy storage business and other service businesses and the contribution to the overall performance of the company?
Second, the following is a detailed analysis of Dolphin Jun:
First, the overall performance: exceeded expectations, the revenue side exceeded expectations to lay the overall tone, and the profit side exceeded expectations
1.1 The revenue side exceeded expectations and set the performance tone. In the fourth quarter of 2021, Tesla achieved revenue of $17.7 billion, an increase of 29% sequentially, exceeding Bloomberg's consensus expectations ($16.6 billion), and the reason for the above expectations was mainly due to the joint efforts of automobile sales (ASP increase exceeded expectations), car rental, automotive services and other businesses, and the energy storage business limited production capacity and poor performance.
Data source: company financial report, dolphin investment research collation
1.2 Net profit exceeded expectations, and the operating profit margin was the highest among OEMs. Non-GAAP attributable net income for the fourth quarter of 2021 was $2.88 billion, exceeding Bloomberg's consensus estimate of $2.67 billion and corresponding to a Non-GAAP EPS of $2.54 per share.
Operating margin of 14.7%, basically flat from the third quarter of the previous quarter, the highest OME. In the context of the market still believing that electric vehicles have not yet been parity, and domestic car companies have deteriorated their profitability by doing electric vehicles, Tesla's operating profit margin has surpassed that of traditional car companies, leading a position to enter the next stage, proving that electric vehicles can have stronger profitability than fuel vehicles. The maturity and realization of FSD in the future will further open the ceiling of the company's profitability
1.3 Gross profit margin increased slightly sequentially, and the improvement speed was weak. In the fourth quarter of 2021, the company as a whole achieved gross profit margin of 27.4%, an increase of 8.2/0.8 percentage points year-on-year/quarter, slightly exceeding Bloomberg's consensus expectation of 26.8%.
The rapid increase in the company's previous gross profit margin was mainly brought about by the increase in the gross profit margin of automobile sales, which had a greater relationship with the scale effect and the Shanghai factory. However, with the gross profit margin of automobile sales reaching a high level of 30%, the upward pull space is limited, and the energy storage and service business has not yet entered the stage of rapid release of profitability, and the company's gross profit margin in the next stage is mainly stable.
1.4 Taxes bring additional administrative costs, and the future trend is still based on the reduction of expense rates based on scale effects. In the fourth quarter of 2021, the company's R&D expenses were 740 million yuan, accounting for 4.2% of revenue, which was stable; sales management and general expenses were 1.49 billion yuan, accounting for 8.4% of revenue, which was mainly due to the option incentive tax of 340 million yuan, while the CEO's performance award for the quarter was 245 million yuan; the overall operating expense was 2.2 billion US dollars, and the operating expense ratio was 12.6%, which was slightly improved sequentially.
1.5 Cash reserves remain abundant, laying the foundation for expansion. As of the end of the fourth quarter of 2021, the company's closing cash balance was $17.6 billion, and its cash reserves were abundant. Net cash flow from operating activities was $4.6 billion and free-flow cash flow of $2.8 billion in the fourth quarter, and better cash flow performance in the fourth quarter was normal due to seasonal factors.
Second, the automobile business: the demand is still strong, but the process of rapid gross profit margin climbing may come to an end
2.1 Fourth quarter deliveries continued to reach new highs: In the fourth quarter, the company produced and delivered 309,000 vehicles, continuing to set a new quarterly delivery high, up 28% sequentially.
Model 3 and Y sales continue to rise. Benefiting from the ramping production capacity of Model Y in the Chinese market, and the domestic Model Y introduced the lithium iron phosphate version, the price fell to less than 300,000 yuan.
The new Model S/X models were delivered back to more than 10,000 units. In 2021, Model S/X has undergone major changes, the new Model S/X began to be delivered in the second/fourth quarter of 2021, the company's high-end models in the third and fourth quarters of the delivery volume increased quarter by quarter, the total delivery of model S/X in the fourth quarter exceeded 10,000, about 12,000 units.
Stock is only 4 days and tight. Against the backdrop of supply constraints, Tesla's global order delivery waiting periods continue to extend and inventory refreshes are low, as low as 4 days.
2.2 Delivery of 940,000 units for the whole year. The company's actual delivery volume continued to exceed expectations, and market expectations continued to rise. In the context of the impact of new domestic forces on annual sales of 100,000 vehicles, the company has been impacting annual sales of millions of vehicles, from the absolute delivery data, only domestic BYD can be comparable, in 2021 BYD new energy vehicle sales of more than 600,000 vehicles, 2022 will be more than 1 million vehicles, and the company is expected to deliver 1.4 million.
2.3 The Chinese market accounts for nearly 40% of the company's global deliveries and nearly 60% of the shipments from the Shanghai factory. In the fourth quarter, the Chinese market retailed 116,000 vehicles, accounting for 38% of global deliveries, an increase of 7 PCTs from the third quarter, while the Shanghai plant played an important role in the company's global strategy, exporting 62,000 units in the third quarter, and the wholesale volume of the Shanghai factory accounted for 58% of the total global deliveries in the fourth quarter, nearly 60%.
2.4 ASP stabilized and rebounded, and 2022Q1 is expected to continue to improve. In terms of model structure, in the recovery of high-end model Model S/X deliveries, Model Y is more popular than Model 3, which has a positive impact on the overall average price performance. Finally, the fourth quarter ASP increased by about $1,300 from the third quarter, and we calculated the caliber of Tesla bicycle sales revenue of $49,700.
In 2022, the price of domestic Tesla increased, the price of Model 3 increased by 10,000 yuan, the price increase of Model Y was 21,088 yuan, and the price increase exceeded the subsidy decline, and it is expected that the company's ASP will continue to increase in the first quarter.
2.6 Revenue: Volume and price push revenue together, and the car rental business is booming. The overall automobile sales business revenue was 15.3 billion US dollars, an increase of 70% year-on-year, of which the sales points revenue generated 300 million US dollars, and the points revenue played steadily. In addition, the car rental business generated revenue of $630 million and the total revenue of the automotive business of $16 billion during the quarter.
2.6 Gross Margin: Maintain a high level of 30%.
The gross margin of automobile sales in the fourth quarter was 30.3%, which was basically flat from the previous quarter. Gross profit margin remained high, and the scale effect and the Shanghai factory contributed to it. Tesla's Shanghai factory wholesale volume (domestic retail + exports) increased to 58% of global deliveries in the fourth quarter from 55% in the third quarter
Battery price increases in 2022 are a hot topic, and while Tesla's strong market power will help the company shift cost pressures to consumers, the process of rapid gross margin climbing may come to an end.
Third, the production end: Berlin and Texas factories are about to mass production, Shanghai factory sprint million production capacity
At present, Tesla's delivery guidelines are based on production capacity, production efficiency and supply chain supply, of which capacity is a hard bottleneck. In 2019, Tesla China was completed and put into production, Tesla's third gigafactory in 2020 broke ground at the Berlin plant in Germany, while the production capacity of the Fremont factory in the United States was increased, and the Texas factory was expected to be put into operation in the first quarter of 2022.
3.1 Factory in Germany
The Berlin plant in Germany has repeatedly postponed the mass production schedule due to environmental protection issues, and the Berlin plant has the capacity to put into production and has begun to accept Model Y bookings, but the final license has not yet been obtained, and the cars that have previously been off the production line are 2,000 test vehicles allowed by the local government and cannot be sold.
Although the construction of European factories has been bumpy, the manufacturing level of the Berlin factory has once again made people believe in the rapid iteration of Tesla's car-making capabilities, and engineering capabilities are one of The insurmountable capabilities that Musk believes Tesla cannot overcome.
4680 Battery: The 4680 battery is the third generation of cylindrical batteries after the 1865 and 2170. The cell diameter is larger, the cost is reduced, the endurance gain is 16%, and the problem of overheating and slow charging speed is solved by the omnipolar ear electrode. At the same time, the Model Y produced by the Berlin factory plans to adopt an integrated chassis battery pack, with 4680 cells directly laid in the chassis, no modules, no excess middleware, and improve the volume profit margin of the battery pack;
4680 battery is expected to be mass production in 2023, the first batch of Model Y will be equipped with 2170 battery: Recently, foreign media said that Panasonic will invest 700 million US dollars to mass-produce 4680 batteries for Tesla in a factory in Japan in 2023. At present, Tesla's German factory that plans to produce 4680 batteries is still under construction, and will adopt the battery supply model of "self-supply + external supply" in the future;
Front-to-back integrated casting: more lightweight advantages, a significant reduction in the number of parts to provide production efficiency, production and manufacturing costs reduced;
3.2 Shanghai plant: it has an annual production capacity of 850,000 yuan, and is expected to sprint to one million production capacity in 2022
In the fourth quarter, the total wholesale volume of the Shanghai plant exceeded 170,000 units, accounting for 58% of the company's global deliveries, and the Shanghai plant played an important role as an export hub. Domestic factories have lower industrial chain costs and higher production efficiency, which helps to improve the overall profitability of the company.
In December 2021, Tesla's Shanghai factory wholesale data exceeded 70,000 units, linear conversion has a production capacity of 850,000 vehicles / year, and it is not impossible to impact millions of production capacity in 2022.
3.3 U.S. Plant: The new Texas plant is expected to start operations in the first quarter of 2022
The Texas plant has initial production capacity and is currently in equipment testing, and Tesla plans to lower the first batch of Model Y by the end of the first quarter of 2022;
The Fremont plant has a production capacity of 600,000/year and has the potential to overload in 2022;
Postpone production of semi trucks, Cybertruck and Roadster. Trial production of semi trucks has been postponed until 2022, cybertruck will be postponed to 2023, and the giant die casting machine for the production of Cybertruck is about to go into operation, Cybertruck under pressure from rival rivian and Ford pickup trucks seems to be in sight; production of the next generation Roadster has been postponed to 2023.
Source: Tesla earnings
Fourth, technology: FSD no major progress, 4680 battery delayed
4.1 Automatic driving has always been the core technology recommended by Tesla, and it is also the source of the company's strongest sense of technology attributes
In terms of technical routes, the company has always explicitly adopted a vision-only solution, and in July 2021, it launched the pure vision FSD VBeta 9.0 version based on cameras and AI intelligent algorithms, and began to gradually verify the solution of removing the radar.
A step forward in the business model, the launch of the subscription model of intelligent driving FSD, new users of 199 US dollars per month (equivalent to 1289 yuan), the subscription model is more in line with the capital market's imagination of Tesla's business model, but the pricing is slightly higher, from the perspective of improving the FSD loading rate, the effect is very small.
In the fourth quarter, a total of 7 updates were pushed, and the number of vehicles equipped with the FSD beta version of FSD in the United States exceeded 60,000;
FSD can not only promote the world's energy transition, but also enhance the safety of electric vehicles, and for companies, it can also improve profitability.
4.2 Power batteries are another core competitive advantage of Tesla
The 4680 battery enhances product competitiveness and reduces production costs. The company has successfully verified the performance of the 4680 battery, and said in the recent open display of the Berlin factory that the Model Y of the Berlin factory will use a 4680 battery, with an effective gain of 16%, and the 4680 battery is also the key to further reducing the company's cost;
Mass production is expected in 2023, self-built in Germany factory production, while Panasonic invested 700 million US dollars in a factory in Japan to produce 4680 batteries for the company;
Fifth, energy storage and service business, there is still a long way to go
5.1 Poor performance of the energy storage business: Tesla's energy storage business includes the sale of solar energy systems and energy storage systems to residential, small commercial and large commercial and utility-level customers, achieving revenue of $700 million in the fourth quarter of 2021, down year-on-year, and production capacity is the bottleneck of performance growth, gross margin of -7.4%, after a short period of two quarters of positive gross margin, back to the state of losing money.
Capacity is the bottleneck of performance growth. The company released a Megapack plant with 40GWh capacity in the third quarter, which has a significant positive effect on the release of the backlog of orders. The long-term success of the solar roof and energy storage business is similar to the logic of the automotive business, and it is also hoped to increase profit margins through greater transaction volumes and achieve a rise in volume.
5.2 Service business gross margin turned positive: In the fourth quarter of 2021, Tesla achieved service business revenue of $1.06 billion, gross profit margin of 1.5%, and turned a loss into a profit of the best level in the past five years. The service business is based on stock cars, and with the increase in Tesla's cumulative sales in the future, the scale effect of the business will also drive the repair of profitability.
The company has been trying to launch its own insurance business, and in the context of the sharp rise in the premium of new energy vehicles, it has become a trend for car companies to intervene in the insurance business at a deeper level.
Longbridge Dolphin Jun historical article, please refer to:
2021-05-21 In-depth "10 years 300 times, "magic" How long can Tesla be magic? 》
2021-06-03 in-depth "Tesla (Part 2): Wrong kill or overestimation, where is the story of Tesla told? 》
April 27, 2021 earnings review "Tesla no surprises and no shocks after a quarterly report, what else to look forward to?" 》
July 27, 2021 financial report review "Tesla: there is no most cattle, only more cattle!" 》
July 27, 2021 Call Minutes of Tesla's Q21 21 Results Call
October 21, 2021 earnings report review "Tesla: Wooden Sister shouted $3,000, the sky is the limit? 》
October 21, 2021 Conference Call "Tesla: Annual Sales of One Million is Just Around the Corner, Musk Let Go?" 》