Tesla's retail ownership is around 44%, which is a high level.
On Wednesday (March 1), local time, Tesla (TSLA) held a closely watched investor day event in Austin, Texas, where Musk and other executives conveyed several key messages about Tesla's "Master Plan".
First, multiple executives made appearances at the event, which shows that Tesla is not just CEO Musk. Second, Tesla told investors that the company has the capacity to produce 20 million vehicles a year.
Tesla also said it would launch new businesses, including refined lithium and paid charging services.
The most important news of the day was that Tesla would build a new plant to produce the next generation of Tesla vehicles.
The company plans to build a plant in Mexico
During a question-and-answer session at the event, Musk confirmed that Tesla plans to build a "gigafactory" in Monterrey, Mexico, which will be Tesla's fifth car assembly plant.
The new plant, together with the expansion of existing facilities, may increase annual vehicle production to approximately 3.5 million units.
Management said the Mexican plant will produce the next Tesla vehicle, which will be a low-priced car, details to be announced at a later date.
Tesla did not announce a specific time frame for the new plant to come online, and it took more than a year for the company's other plants to come on stream from the date of the announcement, meaning the Mexican plant could produce the next model by the end of 2024.
Tesla mentioned "next-generation cars" for the first time at the event.
Investors are very much looking forward to hearing about a new car, hopefully a lower-priced electric car. Franz von Holzhausen, Tesla's design director, said Tesla will launch the next generation of cars at a later date and hinted that new cars will be available soon once they're ready.
Investors and analysts expect the next car to hit the road in 2025. Tesla has not yet revealed relevant details.
During a question-and-answer session with investors, Jefferies analyst Philippe Houchois asked a key question: How many models are needed to sell 20 million cars a year. Musk said 10 may be needed.
That equates to 2 million units sold per model, an ambitious goal with around 1 million of the world's current best-selling cars sold each year.
Musk said that demand is not a problem for Tesla's cars, and he believes that Tesla can sell all the cars that can be produced, and production is the problem.
Tesla isn't just Musk
In the past, some of Tesla's events have been dominated by Musk, with regular appearances by Chief Financial Officer Zachary Kirkhorn and Senior Vice President Drew Baglino. This time, investors saw more executives make their debuts.
Tesla Global Vice President Tom Zhu was credited with increasing production at Tesla's Shanghai plant and making it the company's highest-volume factory. In 2022, Tesla's Shanghai factory delivered about 711,000 vehicles, accounting for about 54% of Tesla's total vehicles sold last year. In 2022, sales at the Shanghai plant increased by 48%, and Tesla's total sales increased by about 40%.
Zhu Xiaotong said Tesla needs more factories. Before being appointed head of all of Tesla's manufacturing operations earlier in 2023, Zhu Xiaotong was responsible for Tesla's China operations.
Rebecca Tinucci, Tesla's head of global charging infrastructure, stressed that Tesla needs to build its own network to improve charging performance. Supply chain executives Karn Budhiraj and Roshan Thomas talked about how Tesla is coping with shortages that have led to shutdowns at other automakers, saying dual sourcing of key components, simplified design, and vertical integration have all helped.
Colin Campbell, vice president of automotive power transmission engineering, and Lars Moravy, vice president of engineering, were also present at the event. Speaking about production innovation and cost, Moravi said the Model Y uses integrated die-casting technology, a cost-saving innovation, and outlined other assembly innovations aimed at further reducing costs. Campbell said Tesla's next permanent magnet motor will not use any rare earth metals.
New business: toll charging, refined lithium and software
Tesla plans to offer home charging for a monthly fee to some car owners.
The company says users living in Texas can purchase nighttime unlimited home charging for as little as $30 a month. Tesla has also provided such products to users before, such as providing insurance for drivers. The new service highlights Tesla's ability to use its utility energy storage solutions, such as Megapack, and software products to buy electricity at low prices.
In addition, Tesla Senior Vice President Bagrino spoke about battery manufacturing.
Tesla's battery factory in Nevada produces about 37GWh of batteries per year, enough to supply about 35% of Tesla's cars in 2022.
The company plans to expand capacity at its Nevada battery plant, adding 100GWh of battery manufacturing capacity per year. Bagrino said Tesla has broken ground on a lithium smelter in Texas, where the company will begin trial operation of refined lithium.
Pete Bannon, Tesla's vice president of self-driving engineering, and David Lau, vice president of software engineering, told investors that cars are becoming smarter and more controlled by software, and more software means cars can get better with software updates.
This is an important part of the "Tesla story." The company wants users to pay $15,000 for self-driving software, but the software must get better to be widely adopted.
Ashok Elluswamy, Tesla's director of Autopilot software, also said that about 400,000 users have purchased FSD, saying that users who use the software are five to six times safer than the average American driver.
Tesla shares have a high percentage of retail ownership and are more volatile
Tesla shares closed down 1.4% at $202.77 on March 1, down about 3% in the past two weeks, but still up 65% so far this year, and the U.S. stock market fell more than 5% premarket on March 2, and the stock price also fell to about $191.
Historically, Tesla's stock price has tended to move lower after major events.
After releasing the humanoid robot Optimus on Artificial Intelligence Day on September 30, 2022, Tesla closed the day down 8.6%. The launch didn't bring too many surprises to investors.
Tesla's stock price fell 10.3% after it hosted a battery technology day at the end of September 2020. Tesla came up with a vision for low-cost batteries at the time, but the incident did not have the effect that the publicity intended. Tesla shares are up nearly 30 percent in the two weeks leading up to the event.
Tesla's shares fell 3.7% after the release of the Cybertruck in November 2019, and investors believe that this is not a high-end car that can compete with the likes of the Ford F-150.
A large portion of Tesla's free-floating, tradable stock is held by retail investors, who hold about 44 percent, which is a high level for a stock of Tesla's size.
By comparison, the average retail ownership of FAANG stock plus Microsoft is about 18%.
Institutional and retail investor holdings of large technology stocks
Gray: Institutional investors Blue: Retail investors
Higher retail ownership can lead to greater stock price volatility because retail investors tend to buy and sell stocks more frequently than institutional investors.
Tesla shares are trading at about 70 percent, while the average volatility of FAANG stock plus Microsoft is about 44 percent, and the S&P 500 is trading at about 16 percent.
Article | Barron's Chinese Edition Contributor Guo Liqun
Edit | Peng Ren
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(The content of this article is for informational purposes only and the investment advice does not represent the interests of Barron's; The market is risky, and investment should be cautious. ）