Musk has passed trillions and has not entered
Musk's hopes of leading Tesla back to a trillion-dollar dollar have been dashed.
On July 20, Beijing time, Tesla released its second quarter 2023 financial report. Affected by this, Tesla's stock price fell more than 4% after hours, and the stock price fell back to about $280.
On the eve of the earnings report, some Tesla fans shared a picture of the imitation movie "300 Warriors: Rise of the Empire" on Twitter, with the text: "Tomorrow, let Tesla rush to $300." Ready, Spartans? Musk said in his reply: "I am really staring at this RN number (that is, Tesla reservation number)."
Once Tesla's share price rushes to $300 as scheduled, it will mean that after breaking through trillion dollars for the first time in October 2021, Tesla will return to the trillion-dollar club, and will also be the second listed company to enter the trillion-dollar threshold in the first half of 2023 besides NVIDIA.
Although Tesla's revenue and net profit in the second quarter both increased (revenue of $24.927 billion, a year-on-year increase of 47%; Net income was $2.703 billion, up 20% year-over-year), but the cost of sharp price cuts continues.
Tesla's gross margin fell for three consecutive quarters, slipping to 18.2% in the second quarter, the lowest level in three years, and there is no possibility of recovery in the short term.
On the earnings call, Musk said that if the economic environment deteriorates, Tesla will have to further reduce car prices and "is willing to continue to sacrifice profit margins in order to increase production." ”
When commenting on car deliveries in the second quarter slightly higher than in the first quarter, investment banker Vitaly Golomb pointed out that the only reason behind this is Tesla's sharp price cuts at the expense of profit margins, "It is clear that Tesla is still largely a car company, facing supply chain and demand pressures like other manufacturers." Tesla even has more and more Model 3 and Model Y inventory, and it seems that it has really reached a certain demand saturation point. ”
Worse than the possible further decline in gross margin due to price cuts, Musk also predicted on the earnings call that this move will lead to a decline in car production in the third quarter as Tesla will stop work in the summer to complete factory upgrades. But Musk reiterated his mandate to deliver 1.8 million vehicles this year.
In the face of the continuous decline in gross profit margin and automobile production crisis, the news of the trial production of the electric pickup truck Cybertruck, which has long been digested by the outside world, and the plan for Dojo supercomputer to be put into production, are difficult to stir the mood of the capital market in a short period of time.
Perhaps to encourage investors, Musk began to preach Buffett's long-termism, saying that he has very high confidence in Tesla's long-term value, "the company is expected to be worth five times or even 10 times its current size." Buy Tesla stock now, go up and sell it, just like Buffett picks stocks. ”
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In the second quarter, in addition to Tesla's above-than-expected car sales driving the stock price up, more impetus for the stock price to skyrocket came from Musk's big pie.
On July 3, Tesla announced its second-quarter deliveries, producing a total of 479,700 new vehicles worldwide, a year-on-year increase of about 86%; Deliveries exceeded 466,100 units, a year-on-year increase of about 83%, setting a new quarterly delivery record and exceeding Wall Street expectations. Affected by this, Tesla's stock price rose 6.9% on the day.
This is just a microcosm of Tesla's soaring stock price in the second quarter. Since May, Tesla's stock price has increased by more than 60%, and the bigger positive factor comes from car sales.
In the second quarter, a number of American car companies such as Ford and General Motors, as well as car companies producing and selling in the United States, began to connect to the Tesla charging network and adapt to Tesla charging standards. This directly boosted Tesla's services and other revenue revenue growth of 47% to $2.15 billion.
Wall Street analysts expect that although the move will not contribute much to Tesla's current revenue, it is expected to boost Tesla's revenue in the future. Piper Sandler estimates that Tesla's charging network revenue will reach $9.65 billion by 2032, with more than half of that revenue coming from other automakers using its charging network.
Another positive factor is thanks to the Cybertruck, an electric pickup truck that has finally moved towards mass production. Recently, Tesla released a photo showing that the first Cybertruck officially rolled off the production line at its Austin factory, Texas.
On the earnings call, Musk mentioned that the Cybertruck will include a large number of new technologies, with tens of thousands of "unique parts and processes", and gave a new delivery schedule, "delivered in the third quarter of this year, mass production next year." ”
The biggest positive thing that has driven Tesla's stock price to skyrocket is a new outbreak of AI craze.
After the arrival of the wave of AI large models represented by ChatGPT, Musk took the lead and became the number one standard-bearer in promoting the AI threat theory.
In order to create safer and more reliable AI products, on July 12, Musk announced the establishment of an artificial intelligence company xAI, and said that he will work with Tesla's chip team on artificial intelligence in the future, and xAI will also help accelerate Tesla's automatic driving capabilities.
In addition to xAI, another big boost for Musk to promote Tesla's self-driving capabilities is the Dojo supercomputer. Musk said that the Dojo supercomputer will officially go into production in July, Tesla will invest more than $1 billion in Dojo next year, and Dojo will also help train large model capabilities.
The advent of AI large model technology change has also allowed the outside world to further see the new path of more intelligent robots, and NVIDIA Huang Jenxun even directly called the "embodied AI" built by large models + robots the next wave of AI.
At the 2023 World Artificial Intelligence Conference, Musk mentioned robots again in his speech and predicted that the number of robots on Earth will exceed the number of humans in the future. In Musk's view, the ratio of humanoid robots to humans may reach 2:1 in the future, when the demand for robots will exceed 20 billion units, helping humans free themselves from boring, repetitive and dangerous work. According to Musk's forecast, Tesla's Optimus robot is expected to have moderate mass production by the end of next year.
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In order to further capture the hearts of the capital market, Musk is also continuing to expand production capacity and sales, as well as reduce costs.
On the eve of the release of the second quarter earnings report, Tesla's German factory broke the news of capacity expansion. Tesla has asked German local authorities to approve plans to expand its Berlin plant, including building a water recycling facility and expanding battery pack production facilities, according to an application document published by Germany's environment and water authorities.
According to the application documents, Tesla's German factory will have a production capacity of 1 million vehicles per year, and battery production capacity will reach 100 gigawatt-hours per year. The implementation of these modifications will begin in the first half of 2024.
At present, Tesla's Berlin plant mainly produces the Model Y, which has an annual production capacity of 375,000 units. Among the world's four major automotive gigafactories, the largest production capacity is still Shanghai, with an annual production capacity of more than 750,000 vehicles, far higher than the 650,000 units in the California plant and the 250,000 units in the Texas plant.
In addition to expanding production capacity, Tesla has also been revealed to be working hard to develop new sales markets, Tesla has started selling Model Y in Malaysia in July, and in August ~ September this year, the domestic version of Model Y will also enter the Korean market for sale.
The Shanghai plant, which accounts for half of Tesla's vehicle production capacity, has just experienced a cost-cutting operation.
According to Shifang Zhixing, in early July, Tesla began to lay off some employees of the Shanghai factory's first-phase battery assembly plant. Although Tesla has not yet explained the reasons for the reduction of battery assembly workers, some analysts believe that with the effective implementation of the US "Inflation Reduction Act", in order to maximize the government's tax credit policy, and then reduce the cost of business operations, it may be one of the reasons why Musk was forced to make this adjustment.
According to the financial report disclosure, Tesla received tax credits from the Inflation Reduction Act in the second quarter between $150 million and $250 million.
In order to further promote sales, Musk, who has always advertised no advertising, also began to bow his head and soften, not only after Tesla first stated at the 2023 annual shareholder meeting that he would "try to put some ads", in June, some Tesla ads officially appeared on the Google search page.
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Musk's above-mentioned measures to help Tesla knock on the trillion-dollar door obviously still fail to meet the expectations of the capital market.
A number of positive factors in the second quarter have basically been digested by the outside world, reflected in the existing stock price skyrocketing, and the outside world does not yet see the possibility of further amplification of these positive factors.
The Cybertruck, an electric pickup truck that will be put into production in the third quarter, as Musk said, "will follow the S-curve like all new products", which also means that it is difficult for Cybertruck to contribute enough effective revenue in a short period of time.
Despite the blessing of the AI large model, the commercialization of Tesla's autonomous driving has not yet opened the situation. Tesla FSD (Full Self-Driving), which has been committed to mass production since 2016, once repeatedly bounced tickets, until October 2021, the FSD Beta beta version based on self-developed chips began to be pushed to users one after another, and was limited to some cities in the United States. In the second half of 2022, the FSD version began to be deployed more widely in North America, accumulating nearly 400,000 subscribers.
In order to further promote FSD in North America and the rest of the world, Musk even offered a free one-month marketing ploy in May. The long-rumored plan for FSD to introduce into the Chinese market is still hanging in the air.
Robots that can help free humans from boring, repetitive and dangerous tasks are a relatively distant goal. On the earnings call, Musk said that the number of Optimus robots made by Tesla is currently about 10.
When Tesla first exceeded a trillion dollars in October 2021, the situation was somewhat similar to what it is now: Tesla officially released the FSD Beta beta version, launched a more energy-efficient and lower-cost 4680 battery module, and unveiled the Dojo supercomputer, the first AI training chip D1, and the humanoid robot Optimus.
But as Tesla vehicle sales repeatedly failed to achieve the set goal of 50% annual growth, Tesla's stock price entered a stage of ups and downs after falling trillions of dollars.
In the fourth quarter of 2020, Musk disclosed long-term guidance of "average 50% annualized delivery growth over many years", hoping to achieve the goal of annual sales of 20 million vehicles in 2030. But Tesla has fallen short of expectations for 2 consecutive years. After failing to meet the annual delivery target of 1 million units in 2021, Tesla also failed to achieve the planned delivery target of 1.5 million vehicles in 2022, with actual deliveries of 1.31 million units for the whole year.
In the first half of this year, Tesla delivered a total of 889,000 vehicles worldwide, and the delivery guidance of 2 million that should have been completed has been actively lowered to 1.8 million by Musk, and the remaining gap of 911,000 vehicles will undoubtedly be Musk's most important KPI in the second half of the year, and may also be expected to become an important stepping stone for Tesla to knock on the door of trillions of dollars.