Tesla earns 100 million yuan a day, and electric vehicles wave a "butcher knife" to fuel vehicles

This article is reproduced from: China News Weekly

Text/Shanshan Liu

In 2021, electric vehicles have really begun to encroach on the fuel vehicle market.

On the other side of the ocean, the "hairy boy" Tesla staged the story of "Detroit"; in China, the new forces of head car manufacturing also began to grab the market share of fuel vehicles with a huge sales growth rate.

The data shows that in 2021, Tesla delivered more than 936,000 vehicles, an increase of 87.4% year-on-year. According to Tesla's earnings report, its operating income in 2021 was $53.823 billion, an increase of 71% year-on-year; and the net profit attributable to the mother was $7.64 billion, an increase of 211% year-on-year. At current exchange rates, $7.64 billion is equivalent to 48.57 billion yuan, and Tesla made an average of more than 100 million yuan per day last year.

The new domestic leading car-making forces also handed over a beautiful report card: Xiaopeng Automobile delivered a total of 98,155 new cars in 2021, an increase of 262.98% year-on-year; Nio has delivered 91,429 new cars in 2021, an increase of 109.1% year-on-year, doubling sales for two consecutive years; ideal for 2021 to deliver 90,491 new cars, an increase of 177.37%.

Driven by the head of the enterprise, new energy vehicles and fuel vehicles show two completely different growth curves. According to the passenger car retail data of the Association of Passenger Vehicles, the sales of traditional fuel vehicles decreased by 1.02 million units in 2021, down 6% year-on-year; while the increase in new energy vehicles was 1.88 million units, an increase of 169% year-on-year, and the retail sales of passenger cars increased by 860,000 units year-on-year. New energy vehicles contributed 9 percentage points to the year-on-year growth rate of passenger cars.

In the global market, the development trend of fuel vehicles and new energy vehicles is also very different. Although the current market size of new energy vehicles is still far less than that of fuel vehicles, its rapid growth seems to have foreshadowed the future direction.

How profitable is Tesla?

In 2021, although the aftermath of the epidemic is still over, there is still a shortage of chips, and the price of raw materials is still soaring, but it has not affected Tesla's ability to make money.

Tesla earnings

Due to battery cost considerations, electric vehicles used to be considered to have poor overall profitability. But Tesla's earnings report proves that electric cars can have strong profitability.

In the third quarter of 2021, Tesla no longer made money by selling points and created the highest operating margins beyond all mass-produced automakers. In the third and fourth quarters of 2021, Tesla's bicycle cost has fallen to around $36,000. Tesla's fourth-quarter financial report shows that its total gross profit reached $4.847 billion, the overall gross profit margin was 27.4%, and the gross profit margin of the bicycle was as high as 30.6%.

What is this concept? In the past, Toyota has always been the most profitable car brand, and its gross profit margin can reach about 20%; in addition, some traditional luxury brands also have good profitability, such as Porsche bicycle gross profit margin of 16.7%, Ferrari is 18%; while the domestic high-end new energy vehicles Niolai and ideal bicycle gross profit margin are 18.6% and 18.9% respectively; in 2021, the gross profit margin of Xiaopeng Bicycle, which ranks first in the list of new car-making forces, is about 11%.

Li Xiang, founder, chairman and CEO of Ideal Automobile, once said: "Gross profit margin is related to whether the company can continue to invest a lot in research and development. If the enterprise only has a single-digit gross profit margin, its investment can only do product-level research and development, and cannot invest more research and development expenses at the technical level. ”

For tesla's overall gross profit margin and single-car gross profit margin are far more than other car companies, industry insiders believe that this is not only related to Tesla's operation model as a pure electric car enterprise, but also related to its profit model such as "software charging".

Tesla is known as the "price butcher", and its profitability has not been affected in the slightest after several price cuts in the past few years. The reason is that Tesla models not only boldly remove redundant functions, redundant parts, complicated processes and middleman price differences, but also greatly reduce daily expenses, sales and marketing expenses. In addition, Tesla believes that the current inclusion of large castings, structural battery packs, 4680 batteries and many more projects will help it continue to reduce product costs.

In a executive conference call after the earnings report, Tesla's chief financial officer said that Tesla's profit margin can rise sharply this year, and the model Y's large-scale delivery is key, and its profit margin is much higher than that of the Model 3.

It is worth noting that as deliveries continue to climb, the contribution of Tesla software revenue to overall profitability will continue to climb. Tesla founder and CEO Musk also said that FSD (Tesla's fully autonomous driving capability) will be Tesla's most profitable "product". FSD will make the car itself more valuable than any other product in history. And this part of the revenue is not currently available in fuel vehicles.

"We will continue to innovate to reduce manufacturing and operating costs, and over time we expect hardware-related profits to accelerate alongside software-related profits." Tesla said. Currently, the FSD Beta software has been released seven times. Musk said on the earnings call that "the FSD stack will undergo deep refinements in the coming months" and predicted that "the supercomputer Dojo will begin to come in handy this summer."

Simplifying the complex and making money in a muffled voice is the true portrayal of Tesla's rapid expansion and development at present.

Electric vehicles instead of fuel vehicles?

Tesla believes that new energy vehicles have achieved a partial substitution effect on the fuel vehicle market and accelerated the pace of the transformation of the car market to new energy.

At present, Tesla is the world's highest-selling new energy vehicle company. Tesla's Shanghai Gigafactory has contributed significantly to Tesla's performance throughout the year. According to a February 7 tesla filing with the U.S. Securities and Exchange Commission, the company's revenue in the Chinese market reached $13.844 billion in 2021, a sharp increase of 107.8% year-on-year, mainly due to the increase in production and deliveries of the Shanghai Gigafactory.

At the same time, the catfish effect brought by Tesla has not only activated the domestic new energy vehicle market, but also led to the rapid rise of domestic new energy automobile enterprises. China is currently the world's largest new energy vehicle market. In 2021, among the top 20 new energy vehicle companies in the world, Chinese companies will occupy 8 seats, ranking first in number.

On February 6, Cui Dongshu, Secretary General of the Association, released a report on the pattern of the global new energy vehicle market, showing that the global sales of generalized new energy passenger vehicles in 2021 will reach 9.37 million. Global sales of plug-in hybrid, pure electric, and fuel cell narrow new energy vehicles reached 6.23 million units, an increase of 118% year-on-year. In the past year, the mainland retailed 2.989 million new energy vehicles, an increase of 169.1% year-on-year. China's world share of new energy passenger cars reached 53%. From the trend point of view, China's new energy vehicle market will continue to be strong in 2021, and the upward trend will continue to accelerate in the 3-4 quarters.

The report shows that the penetration rate of new energy vehicles in the world has shown a rapid upward trend, and has reached the level of 7% this year. Among them, the penetration rate of new energy vehicles in China reached 12%, Germany reached 22%, Norway reached 69%, the United States was 4%, and Japan was only 0.8%.

It is expected that the sales volume of new energy passenger vehicles will exceed 5.5 million units in 2022, and the penetration rate of new energy passenger cars will reach about 25%. New energy vehicles are expected to exceed 6 million, and the penetration rate of new energy vehicles is about 22%.

With the rise of the mainland new energy vehicle market, many independent brands have actively laid out and also achieved rapid development. For example, in 2021, the cumulative sales volume of the Hongguang MINIEV car reached 426,452 units. BYD's annual sales of new energy passenger cars were 593,745 units, up 231.6% year-on-year. In addition, the new forces of head car manufacturing have also achieved exponential sales growth.

In January 2022, the new car-making forces continued their previous development trend and once again handed over a beautiful delivery report card. Among them, Xiaopeng Automobile delivered a total of 12,922 new cars in January, an increase of 115% year-on-year, and its monthly sales exceeded 10,000 for five consecutive months; ideal January delivered 12,268 ideal ONE, an increase of 128%; Nezha Automobile delivered 11,009 units in January, an increase of 402% year-on-year; WEILAI delivered 9,652 new cars in January, an increase of 33.6% year-on-year.

Although in the short term, new energy vehicles will not completely replace fuel vehicles, it is foreseeable that in the future, new energy vehicles will continue to divide the market share of fuel vehicles, and enterprises that lay out in the new energy vehicle market and launch reliable products in the early stage will win a greater voice.