Tesla cuts prices again, and Musk's richest man is gone?

The dragon slayer boy will eventually become an evil dragon!

Tesla, which was keen on "price reduction" last year, was finally "counterattacked".

The annual profit fell for the first time in seven years, the gross profit margin hit a 4-year low, and the market value evaporated by more than 500 billion yuan in one day, compared with the high point in December 2023, the cumulative decline exceeded 29%!

After completing the annual sales target of 1.8 million vehicles, although Tesla, the "price butcher", has taken the strategy of price reduction and quantity to the extreme, the price is not huge.

Moreover, Tesla was "beaten" 11 times by the new car-making forces last year!

When the chaotic story ebbed, Tesla in 2024 will still have to face a skinny reality - more rolled, slower and harder.

If the car companies in 2023 are selling volume, then the "volume" in 2024 is survival; Model 3 and Y dividends are exhausted, and 2024 will be a year of slow growth for Tesla; Tesla, which does not use the multi-brand strategy, is gradually surpassing its product power in the increasingly competitive Chinese market, and the situation in 2024 is bound to be even more difficult!

Tesla's technological advantage is being exhausted, and Tesla seems to have no other choice but to "cut prices" for the sake of sales... At the beginning of the year, Tesla announced a price cut.

Could it be that after 12 years in China, Tesla has learned to cut prices?

01

Success is also a price war, defeat is also a price war!

Tesla, which took the lead in starting a price war, was deeply involved in it and was counterattacked. Recently, Tesla released its annual earnings report, which is very sluggish compared to the past.

On January 25, Tesla's latest financial report showed that the company's performance was less than expected, with a net profit of $10.882 billion, down 23% year-on-year, and an operating profit of only $8.891 billion, down 35% year-on-year;

The total revenue for the year reached US$96.773 billion, an increase of 19% year-on-year, and the revenue growth in 2023 will slow down significantly compared with the growth rate of more than 50% in the previous two years.

Tesla has been the world's fastest-growing and most profitable car company for the past few years, and now those good days are over. Tesla's annual profit fell for the first time since 2017!

In the fourth quarter of 2023, Tesla's operating income was $25.17 billion, and its operating profit was only $2.1 billion, a year-on-year decrease of 46%.

Tesla's gross profit margin in the fourth quarter hit the lowest level since 2019 again, at 17.6%, down 6.12 percentage points year-on-year and 0.3 percentage points quarter-on-quarter.

In the last three months of 2023, Tesla's gross margin fell further to 17.6%, the company's lowest level since 2019 – a figure that has not only lagged behind BYD for many quarters, but has even been overtaken by Li Auto.

Increasing revenue without increasing profits, and declining gross profit margin is Tesla's current situation.

Tesla CEO Elon Musk also said at the results meeting that the company is currently in the middle of two major growth waves, the first wave began with the global expansion of the Model 3/Y a few years ago, and the second wave will not be triggered until the next generation of models comes out.

Tesla is currently building a new generation of models at its Texas factory, which is expected to be launched later next year at the earliest. This means that Tesla will encounter great challenges in 2024.

Affected by this, Tesla's stock price fell by more than 12% on the same day, its market value evaporated by $80 billion (about 574.2 billion yuan) overnight, and Musk's net worth lost more than $18 billion.

Musk's throne as the richest man in the world is gone!

On January 29, Forbes real-time billionaire rankings showed that Bernard Arnault, chairman and CEO of French luxury goods giant LVMH, surpassed Elon Musk in personal assets to become the new richest man in the world.

However, as of January 30, Tesla's market value has recovered, allowing Tesla CEO Elon Musk to regain the title of the world's richest man.

It's really the richest man in iron, the name of flowing water!

02

Tesla's market capitalization climbed to $1.24 trillion in January 2022 alone. Since then, Tesla's stock price has oscillated downward, and the latest market value has been cut in half.

As of the close of the U.S. stock market on January 29, 2024, Tesla closed at $190.93, with a total market capitalization of only $607 billion!

It can be seen that Tesla is paying for the continuous price reduction strategy over the past year and has become one of the biggest victims of the price war.

In 2023, when the price war of new energy vehicles is frequent, Tesla, the "price butcher", took the lead in cutting prices, and dropped again and again, so it can be said that the strategy of price reduction and quantity protection has been brought to the extreme, and finally completed the annual sales target of 1.8 million vehicles, but the profitability has returned to the level of 2019.

In the first half of 2023, Tesla delivered a total of 889,000 vehicles, an increase of 57% year-on-year and 46.3% month-on-month, nearly half of the full-year sales target, which means that Tesla's price reduction strategy has an immediate effect.

However, after a brief siphon effect, Tesla's growth in size fell into weakness again.

In 2023, Tesla will deliver 604,000 vehicles in China, corresponding to a market share of 7.8%, which is in a state of stagnant as a whole;

At the same time, with the acceleration of the electrification transformation of traditional car companies such as Ford and General Motors, Tesla's dominance in the United States is gradually being dissolved.

According to Cox Automotive statistics, the total sales of pure electric vehicles in the United States in 2023 will be about 1.2 million units, while Tesla's market share will be 55%, a year-on-year decrease of 10 percentage points, of which, in Q4 of 2023, this data will further drop to 51%.

Tesla's "price reduction and quantity destocking" has seriously stimulated other players in the domestic new energy market, and everyone has gone all out to "involute" under the survival of life and death, and the price war has "intensified";

Under the coercion of this torrent, Tesla can only start a series of price reduction modes until the financial report problems begin to appear.

03

This is likely to be Tesla's best earnings report in the coming year!

Tesla rarely did not disclose its delivery target for 2024, but it made it clear that production, deliveries, and shipment growth will slow down in 2024 and may be significantly lower than in 2023.

Tesla wasn't born to make money. The company was founded in 2003 and lost money for 17 years before becoming profitable until 2020.

In the "most miserable" year of 2017, Tesla's total revenue was US$11.76 billion (including vehicle sales revenue of US$8.54 billion), total cost of US$9.54 billion, gross profit of US$2.22 billion, gross profit margin of 18.9%, and operating loss of US$1.63 billion, loss rate of 13.9%.

In 2019, with the help of the Shanghai Gigafactory, Tesla was just out of the brink of life and death.

From 2020 to 2021, with the unprecedented prosperity of new energy vehicles in the world, Tesla became the soul of the industry, and its stock price soared dozens of times, entering the trillion-dollar market value club, helping Musk briefly become the richest man in the world!

During this period, Tesla "crushed" its competitors and expanded its market share with cost and technological advantages. Delivery prices have unilaterally declined, but gross margins have risen steadily.

In 2022, Tesla's net profit will reach $12.59 billion, with a net profit margin of 15.5%, and the annual delivery of 1.314 million vehicles will drop to 40% again.

In January 2023, Tesla took the lead in officially announcing price cuts - the maximum price reductions for Model 3 and Model Y were 36,000 and 48,000 respectively;

Tesla, which has a "price war" throughout the year, has finally completed its annual target of 1.8 million vehicles, but unfortunately its sales volume has always been inferior to BYD.

In 2022, the difference between Tesla and BYD's sales will be 550,000 units, and in 2023, the gap between the two will widen to 1.21 million units!

Last year, BYD's quarterly sales of pure electric vehicles also surpassed Tesla for the first time, becoming the world's largest electric vehicle manufacturer!

In the past, Tesla may have been a shining benchmark in the field of new energy vehicles;

But now, the once-unique advantages are disappearing.

With the rise of China's new energy vehicles, domestic auto brands have the ambition to rush to the world!

04

Just 3 years have passed, why was Tesla abandoned by the capital market again?

Tesla is the only company in the world that does not use a multi-brand strategy, which makes its sales growth extremely dependent on a single popular model.

In fact, Tesla's hidden concern is not to reduce prices, but to lose its benchmark position as a leader in technological innovation like Ford.

"Hanging" Apple is a routine operation of major mobile phone brand conferences.

And in the automotive circle, it is Tesla that enjoys this treatment.

In 2023, Tesla will be beaten 11 times by new forces!

In the straight-line race, the ZEEKR 007 left behind the high-performance version of the Model 3 P and Model Y P, and the dual-motor all-wheel drive version of the Model S and Model X.

Xpeng and Huawei car companies are more inclined to "beat" Tesla in terms of intelligent driving;

At the press conference, the Zhiji LS6 "beats" the T brand Y Performance model in an all-round way in terms of platform voltage, battery capacity, CLTC range, peak charging power, as well as motor power, torque, maximum speed and acceleration time.

For Tesla, with the Model Y that has been on the market for more than 4 years and the Model 3 that has been on the market for nearly 8 years, it has once become a leader in the new energy industry, and has created a myth of a new era, but now it is embattled and faced with the crazy beating of the back waves, but no new car can cope with it.

In addition, although price cuts can increase sales, continued price cuts are also eroding Tesla's profitability. In Q3 2023, Tesla's net profit will be $1.85 billion, down 44% year-on-year.

In 2023, both in terms of sales volume and profit, the results will not be satisfactory, which shows that Tesla will not move.

In fact, as early as the third quarter of last year, Tesla had already responded to the decline in gross profit. Unlike independent brands that have increased their price wars, Tesla has gone against the norm and has raised prices against the trend several times.

In the third quarter of 2023, Tesla's total revenue will be 23.4 billion US dollars, equivalent to about 171.2 billion yuan, a year-on-year increase of 9%, and its net profit will be about 1.9 billion US dollars, equivalent to about 13.9 billion yuan, a year-on-year decrease of 44%. Under the pressure of huge revenues, the five consecutive increases in new car prices in a single month appear to be traceable, which is also in stark contrast to the price war launched at the beginning of the year.

Compared with the momentum of wielding a price sickle at the beginning of 2023, Tesla's days in January 2024 can be described as plummeting.

05

Now, the cold facts have been put in front of him, and Musk is obviously "exhausted".

What to do? Keep reducing the price.

Less than half a month before the start of 2024, Tesla once again raised the "price butcher knife".

On January 12, Tesla's official website in China lowered the prices of the Model 3 and Model Y again.

After the price reduction, the Model 3 starts at CNY 245,900 and the Model Y starts at CNY 258,900. The reduction ranges from 6,500 yuan to 15,500 yuan.

Stare into the abyss for too long, and the abyss will stare back!

The doomed success of the car-making business in 2024 also means that Tesla's stock price elasticity in 2024 mainly depends on the next car-making platform, and if it sells cars ahead of schedule (the market expects the end of 2025), it is estimated that it can form a certain positive, as well as the progress of the implementation of FSD V12.

The two core markets in the world, China's electric market is too volatile and facing the encirclement and suppression of new forces, while the U.S. electric market has cooled down significantly, and has been eaten up by Japanese hybrid vehicles.

Tesla's 2024 may be really difficult!

Resources:

"The World's Richest Man Replaces!", China Fund News

"Musk can't drive Tesla", Miaotou APP

"Tesla's Hard Life, Electric Vehicle's "Good Friday", Power Plant

"Tesla's ideal price cut, Mercedes-Benz Audi terminal discount of nearly 100,000, luxury car market to meet the change?", Times Weekly