- This is dolphin research research's 362nd original article -
Tesla (TSLA. O) In the early morning of April 21, Beijing time, The Longbridge US stock market released a comprehensive and unexpected first quarter report for 2022 after hours, with the following key points:
1. A quarterly report that exceeds expectations in an all-round way. After the company's intermission in the previous quarter, this first quarter is a good start to 2022. The first quarterly report exceeded expectations, including revenue, gross margin, expense control, attributable net profit in all aspects, the price increase is an important reason for the company's revenue exceeding expectations, gross profit margin and then rising to a higher level, the cost of expenses exceeded expectations of savings because of the reduction of stock-based compensation expenses, the final result is to achieve a net profit attributable to the mother of 3.3 billion US dollars in the first quarter, significantly exceeding the consensus expectation of 2.1 billion US dollars.
2. Automobile sales business: The price increase fully reflects the company's product strength and pricing power, and strengthens the company's excellent recognition of profitability. In the case of the bottleneck of upstream resources of new energy vehicles, subsidy decline and cost pressure have promoted the price increase in the first quarter of 2022, and Tesla's price increase frequency and amplitude are ranked first in the industry, but the price increase has not inhibited the company's delivery, but on the node where the gross profit margin improvement trend is moving towards intermission, the potential for the company's gross margin improvement has been stimulated again, and the increase in gross profit margin has shifted from the cost side to the price side. Further deduction, when the pressure on the cost side eases and the company's demand is still strong, the company's pricing will not follow the downward movement, and the gross profit margin will be another round of strong pull-up. Product power and pricing power are ultimately the root of a company's profitability.
3. Cost savings, further assist profitability improvement. In the first quarter, the company's R&D investment remained stable, with the R&D expense ratio remaining around 4.5%, while sales and management expenses shrank significantly, mainly due to a decrease in stock-based compensation expenses (only the CEO Performance Award decreased by $200 million from the fourth quarter). The operating expense ratio in the first quarter was reduced to less than 10% for the first time (2.5 PCTs lower than in the fourth quarter of the quarter), and the gross profit margin and expense ratio jointly promoted the company's profit side to exceed expectations.
4. New factories will be put into operation one after another, and will move to a production capacity of 2 million in 2022. The opening of the new factory is the most lively thing for the company in the first quarter, the Texas factory in the United States and the German Berlin factory that is difficult to produce have been officially put into operation in the first quarter, and the production capacity of the difficult Berlin factory still needs to be conservative, but the capacity climb of the Texas factory does not need to be worried. The Shanghai factory has been affected by the epidemic in the short term, and the resumption of work and production is being promoted in an orderly manner, and the short-term disturbance will not change the general trend. The start of construction of the new plant alleviates the company's production capacity bottleneck and ensures the company's delivery in 2022.
5, 4680 battery progress. Germany Berlin factory and the United States Texas factory are equipped with 4680 battery production line, Berlin factory plans to start production in 2023, Texas factory is more advanced, in April the company's self-produced 4680 battery pack Model Y model in the United States Texas factory debuted and for employees small batch delivery, it is expected that the Texas plant this year can achieve 4680 battery version of the model mass production, which is a major positive for the company's product competitiveness, cost control is a major benefit.
6. The performance of energy storage and service business is mediocre. Energy storage business limited production capacity, growth rate and gross margin are poor performance, energy storage business is the same as the automobile business can grow up business, but still need time; service business with the increase of the company's stock of vehicles, with a larger revenue base, revenue is increasing quarter by quarter, while the gross profit margin hovers near the turnaround, profitability in the quarterly stabilization and improvement. However, at present, the company's biggest performance support is still in automobile sales, and other businesses are only icing on the cake.
Holistic view: This is a report card that reinforces faith, and price increases are the root cause. The price increase did not inhibit demand, but drove the revenue and gross profit margin to exceed expectations, and strengthened the market's cognition of the company's strong market discourse power and excellent profitability.
In 2022, the baton of the company's production capacity shifted from China to the United States and Europe, and although there were no new models in terms of products, the 4680 battery became an assist. The driving force for the company's growth is still continuous, and the pace of growth is still orderly.
In terms of stock price, although the company's market value follows the macro environment and industry adjustment, compared with its peers, it is still the most resistant and rebounding target, and it is the target with the highest performance certainty when the industry faces challenges, as the world's best quality new energy vehicle asset, it is worth accompanying for a long time.
Longbridge Dolphin Jun will then share the minutes of the conference call with the dolphin user group through the Long Bridge App, and interested users are welcome to add WeChat "dolphinR123" to join the Long Bridge Dolphin Research Group to get the minutes of the call at the first time.
The core focus of this quarterly report is as follows:
1. How is the company's overall revenue, profit, gross profit margin, expense ratio, etc. performing? Was it more than expected or less than expected?
2, in the case of known car delivery, the revenue side performance should not be a large expected difference. What is our core focus on changes in gross margins on auto sales?
3. Production capacity is still one of the key factors affecting the company's delivery volume, especially the impact of the Berlin plant in Germany on the European market delivery volume, so we continue to pay attention to the production situation of the company's super factories and the promotion of new models.
4. The changes in the automotive business model and the imagination of the capital market, we continue to pay attention to the progress of the company's autonomous driving technology and the changes in the business model.
5. In addition to the automotive business, the marginal improvement of the energy storage business and other service businesses and the contribution to the overall performance of the company?
The following is a detailed analysis of the financial report:
One
Overall performance: Exceeded expectations across the board
1.1 The main business of automobile sales continued to exert force, and the revenue exceeded expectations. In the first quarter of 2022, Tesla achieved a revenue of $18.756 billion, an increase of 80.5% year-on-year and 6% quarter-on-quarter, better than Bloomberg's consensus expectations ($17.9 billion), and the main contribution to revenue growth is still the automobile sales business, and the energy storage and service business is relatively stable. The reason for the higher than expected is mainly due to the increase in asps in automobile sales and regulatory points.
Data source: company financial report, dolphin investment research collation
1.2 Net profit exceeded expectations, revenue, gross margin and expense control worked together. GaAP attributable net profit was $3.32 billion in the first quarter of 2022, significantly exceeding Bloomberg's consensus estimate (Bloomberg consensus expected GAAP net profit to be $2.1 billion), up 658% year-on-year and 43% from the fourth quarter. The large over-expectation of attributable net profit can be decomposed into revenue, gross margin and expenses that exceed expectations across the board.
Data source: company financial report, dolphin investment research collation
1.3 The gross margin of the core focus indicator continues to rise after a one-quarter break. In the first quarter of 2022, the company as a whole achieved a gross profit margin of 29.1%, an increase of 7.8/1.7 percentage points year-on-year/quarter, respectively, exceeding Bloomberg's consensus expectation of 26%.
In the fourth quarter of 2021, the company's automobile sales gross margin (including regulatory points) after standing 30% showed a stable trend, in the Longbridge Dolphin Jun believes that the company's automotive business gross margin to achieve a high level, upward room is limited, the company's gross profit margin continued to rise rapidly in this quarter, which has a greater relationship with the company's strong market demand and super product pricing power.
The rapid increase in the company's previous gross profit margin is mainly related to the scale effect and the Shanghai factory, and the continued increase in gross profit margin after the intermission in this quarter has a greater relationship with the increase in product prices.
Data source: company financial report, dolphin investment research collation
1.4 Stock-based compensation expenses will be reduced and operating expense ratios will be reduced to less than 10%. In the first quarter of 2022, the company's R&D expenses were 870 million yuan, accounting for 4.6% of revenue; sales and management expenses were 990 million yuan, accounting for 5.3% of revenue, of which the CEO performance award contributed about 40 million yuan; the overall operating expenses were 1.857 billion US dollars, with an operating expense ratio of 9.9%, and the quarterly operating expense ratio was reduced to less than 10% for the first time.
During the quarter, the company's expenses were significantly reduced, and R&D investment remained stable, mainly in sales and management expenses, while the decrease in sales and management expenses was mainly related to stock-based compensation expenses (the CEO Performance Award was reduced from $245 million in the previous quarter to $0.4 billion in the quarter).
In addition, the further prominence of the scale effect is also continuing to reduce the company's operating expense ratio and improve the company's profitability.
Data source: company financial report, dolphin investment research collation
1.5 Cash reserves remain abundant. As of the end of the first quarter of 2022, the company's cash balance at the end of the period was $17.5 billion, and its cash reserves remained abundant. The first quarter generated a net cash flow from operating activities of $4 billion and a free cash flow of $2.23 billion, due to seasonal factors, the first quarter has always been a relatively poor quarter for the company's cash flow, but with the expansion of the company's business scale, the overall cash flow performance has improved year by year.
Data source: company financial report, dolphin investment research collation
Two
Automotive Business:
Demand is still strong,
Price increases stimulate gross margin potential
2.1 Deliveries stabilized at 300,000 units in the first quarter and are expected to deliver 1.5 million units in 2022: The company delivered a total of 310,000 vehicles in the first quarter, an increase of 68% year-on-year, which was basically flat compared with the fourth quarter, but slightly higher than the fourth quarter, continuing to refresh the quarterly delivery record.
According to the contribution of the first quarter to the annual delivery volume, Tesla is expected to deliver 1.55 million vehicles in 2022;
Price increases have not dampened demand. The price increase is the main tone of Tesla in the first quarter, first to make up for the gap in subsidies, and then to make up for the cost pressure brought about by the battery price increase, and in terms of the company's sales volume, the price increase did not inhibit consumers' enthusiasm for the purchase of electric vehicles, and did not inhibit Tesla's market demand;
Model 3 and Y deliveries were basically flat from the fourth quarter and remained the main model delivered by the company, and the lithium iron phosphate version lowered the purchase threshold and played a key role in the strengthening of the company's delivery volume.
In 2021, the Model S/X has undergone major changes, the new Model S/X began to be delivered in the second and fourth quarters of 2021, the company's high-end models in the third and fourth quarters of the delivery volume increased quarter by quarter, and the total delivery of the Model S/X in the first quarter of 2022 was about 15,000 units.
Inventory is only 3 days, tight. In the context of supply constraints, Tesla's global order delivery waiting period has been extended, and inventory refresh is low, as low as 3 days.
Data source: company financial report, dolphin investment research collation
2.2 The company became the king of price increases in the first quarter, and the bicycle ASP rose. In the first quarter of 2022, Tesla's overall price increase, including the Chinese market and the United States market, the price increase in the Chinese market exceeded the subsidy decline, and in terms of model structure, the high-end model Model S/X delivery volume recovered, the Model Y was more popular than the Model 3, which had a positive impact on the overall average price performance. Finally, the asP in the first quarter increased by about $2,500 sequentially (ASP increased by $1,300 sequentially excluding the impact of points), and we calculated tesla bike sales revenue of $52,200 (ASP excluding points was $50,000).
Considering that the company's price increases continued at the end of the first quarter, Longbridge Dolphin Jun expects the company's ASP to continue to improve in the second quarter.
Data source: company financial report, dolphin investment research collation
2.3 Revenue: The volume and price push together the income, and the car rental business is booming. In the first quarter, the overall sales of automobiles and their points revenue totaled US$16.2 billion, an increase of 86% year-on-year. The car rental business also boomed, generating $670 million in revenue for the quarter, up 125% year-over-year.
Regulatory credits revenue of $680 million for the quarter, contributing 4% of total revenue and 19% of pre-tax profit, was one of the most important sources of the company's revenue and attributable net profit for the quarter.
Data source: company financial report, dolphin investment research collation
2.4 Under the pressure of cost, the price increase brought about a continuous increase in gross profit margin: the gross profit margin of automobile sales in the first quarter was 32.6% (the gross profit margin of automobile sales excluding the impact of points was 29.7%), which was significantly increased by 2 pcts from the fourth quarter. In the case of stable gross profit margin in the last quarter, Longbridge Dolphin Jun believes that the gross profit margin pulls up the trend of intermission, and there is not much room for pulling up, the gross profit margin performance in this quarter can be described as eye-catching. The gross profit margin in the current quarter continued to rise in the face of high cost pressure, mainly related to the increase in product prices.
The company's automobile sales gross profit margin remained at a high level of more than 30%, which has a greater relationship with the scale effect and the Shanghai plant. In the first quarter, the wholesale volume of Tesla's Shanghai factory (domestic retail + exports) increased from 58% in the fourth quarter to 59% of global deliveries.
Battery price increases in 2022 are hot topics, musk has also publicly stated that "Tesla is facing significant inflationary pressures, mainly raw materials and logistics", but Tesla's strong market discourse makes the company can transfer cost pressure to consumers, and the gross profit margin has achieved further increases.
Data source: company financial report, dolphin investment research collation
Data source: company financial report, dolphin investment research collation
Three
Production side:
Mass production is imminent at the Berlin and Texas plants
The Shanghai plant sprints to a 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 2020, Tesla's Shanghai factory began to deliver, in the first quarter of 2022, the Berlin factory in Germany was difficult to complete, to achieve mass production, at the same time the Texas factory in the United States was also officially put into operation, the company's total production capacity is expected to achieve a leap of 1 million to 2 million in 2022.
3.1 German factory: mass production will be achieved at the end of March, with a planned production capacity of 500,000 vehicles, and the climb will be slower
The Berlin plant in Germany repeatedly postponed mass production due to environmental issues, and on March 22, it finally "chewed up the glass" and achieved mass production. 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.
Planning annual production capacity of 500,000 vehicles, the current capacity climbing stage, Tesla's output target at the end of April is 1,000 vehicles / week (50,000 vehicles / year), all model Y models, 2021 Tesla in Europe to sell Model Y a total of less than 30,000 vehicles, Model Y localization production supply and demand gap should not be large, and Model 3 is still dependent on imports at this stage;
The first model Y will be equipped with 2170 batteries, 4680 batteries are expected to be mass production in 2023: 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;
Source: Carsales, Dolphin Research Collation
3.2 Shanghai plant: 500,000 units are planned to have a production capacity, but it is expected to sprint to one million production capacity in 2022
In December 2021, Tesla's Shanghai factory had more than 70,000 units of wholesale data, and linear conversion already had a production capacity of 850,000 vehicles per year, and it was not impossible to impact millions of production capacity in 2022.
In the first quarter of 2022, the production of the Shanghai plant peaked, and the total wholesale volume of the Shanghai plant exceeded 180,000 units, accounting for 59% of the company's global delivery, and the Shanghai factory 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.
Since the middle and late March, the epidemic in Shanghai has spread seriously, factory production is limited, logistics affect the transportation of parts, and the production delivery and export of Shanghai factories have a phased impact, and at present, automakers are actively promoting the resumption of work and production, but the situation in the later period is still unclear, and it is expected to have a greater impact on the company's delivery in the second quarter.
3.3 U.S. Plant: A new plant in Texas starts operations with a planned capacity of 1.1 million units in the U.S
The Texas plant opened in the first quarter of 2022, achieving the delivery of the first Model Y, and this year's capacity will be mainly used to produce the Model Y, with a target annual production capacity of 500,000 units, and plans to start production of Cyberruck in 2023;
Texas factory and Berlin factory, planned the battery production area, the production of 4680 batteries, according to the plan of the Texas factory will become Tesla's world's largest battery factory, the current 4680 battery has achieved integration with the chassis, All Model Y produced in the Texas factory will be equipped with 4680 batteries;
The Fremont plant has a production capacity of 600,000 units per year, model S/X allocates 100,000 units, Model 3/Y allocates 500,000 units, and has the potential to overload operation in 2022;
Source: Tesla earnings
Four
technology:
FSD has been prophesied
4680 battery delayed
4.1 Autonomous driving has always been a core technology promoted by Tesla, but its progress has always been predicted
Tesla has always attached great importance to the value of FSD, FSD can not only promote the world's energy transformation, but also enhance the safety of electric vehicles, for the company can also improve profitability, in one fell swoop; but the actual progress has not reached the real FSD, the market has become accustomed to Tesla's self-proclaimed "next year will achieve FSD" prediction;
The business model has taken a step forward, and the subscription model of intelligent driving FSD has been launched, which is more in line with the imagination of the capital market for Tesla's business model, but at present, its effect of increasing the FSD loading rate is very small.
4.2 Power batteries are another core competitive advantage of Tesla
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 the 4680 battery, with an effective gain of 16%, and the 4680 battery is also the key to the company's further cost reduction;
In April 2022, Tesla's new plant in Texas debuted the Model Y model equipped with a 4680 battery pack and delivered a small batch to some employees, and its subsequent large-scale mass production remains to be tracked. Previously, the market expected that the 4680 battery would be mass-produced by 2023. In addition to the Planned Production of 4680 batteries at the Texas plant in the United States, the 4680 battery production line at the German factory is still under construction, while Panasonic invested 700 million US dollars in a factory in Japan to produce 4680 batteries for the company;
Five
Energy storage and service business
There is still a long way to go
5.1 Mediocre 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-scale customers, achieving revenue of $620 million in the first quarter of 2022, and the first quarter of the energy storage business, down 10% from the fourth quarter, gross margin of -11.7% (lower gross margin in the fourth quarter of the previous quarter), after a short period of two quarters of positive gross margin in 2021, it returned to a state of loss of money.
Capacity is the bottleneck of performance growth. The company released its Megapack plant with a capacity of 40 GWh in 2021, which has a significant positive effect on the release of backlog 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.
Data source: company financial report, dolphin investment research collation
5.2 Service business revenue booming, gross margin once again to the vicinity of regularization: in the first quarter of 2022, Tesla achieved service business revenue of $1.28 billion, an increase of 43% year-on-year, gross margin of -0.5%, once again to the edge of positive gross margin. 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.
Data source: company financial report, dolphin investment research collation
Longbridge Dolphin Jun historical article, please refer to:
2021-05-21 In-depth "10 years 300 times, how long can "magic" Tesla be magic? 》
2021-06-03 in-depth "Tesla (Part 2): Wrong killing or overestimation, where is the story of Tesla told? 》
April 27, 2021 earnings report review "Tesla no surprises and no fright after a quarterly report, what else to look forward to?" 》
On July 27, 2021, the financial report commented "Tesla: there is no most cattle, only more cattle!" 》
October 21, 2021 earnings report review "Tesla: Wooden sister shouted $3,000, the sky is the limit? 》
January 27, 2022 financial report comments "A Tesla riding the dust, will usher in the intermission?" 》
Risk Warning: This article is for the purpose of transmitting more information, the content of the article is for reference only, only represents the personal views of the author, and does not constitute investment advice.
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