Musk made a difficult choice
Text | Hu Mo
Edit | Yang Xuran
Tesla is losing traction from consumers. From the perspective of products, whether it is Model Y, Model 3, Model S, and Model X, they are all old products from many years ago, and it is difficult to stimulate consumers' increasingly picky nerves.
Reuters previously said that Tesla had abandoned plans to produce the Model 2, a $25,000 low-cost electric car. Musk denied this and said that he would release a robotaxi on August 8 to fight back.
However, in today's consumer environment, cheap cars are the magic weapon to increase sales, and the Model 2 is obviously more significant than the Robotaxi. Especially for Tesla, which is in the midst of a decline in sales.
From a macro policy point of view, Tesla is facing a more difficult situation. In order to protect the interests of traditional car companies, the United States and Europe have begun to decline their support for pure electric vehicles, and Europe is also fluctuating in the transition to new energy.
In order to slow down the penetration of new energy vehicles in the world and buy more time for the local traditional automobile industry, some decision-makers have deliberately slowed down the progress of industrial transformation, but the most seriously injured is not Chinese car companies, but Tesla, the core new energy vehicle company in Europe and the United States.
Musk, who has been involved in the torrent of global economic and industrial games, has begun to face a vicious war. His awkward role also dictates that he must point out new directions for the company - Robotaxi is his answer.
01 After all, I can't roll it
Reuters previously reported a scoop that said Tesla had abandoned plans to produce the Model 2, a $25,000 low-priced electric car, because the Chinese market was too volatile, which sent Tesla's stock price plummeting by more than 6%.
Musk, who has always been unaccustomed to the media, also stood up and responded that "Reuters is lying". However, a few hours later, Musk suddenly announced that Tesla would release a robotaxi on August 8.
Since Musk did not specify which part of Reuters "lies", coupled with the sudden release of Robotaxi unmanned taxis, it shows that the probability of Tesla's cheap car project being cut or postponed is very high.
The Reuters news is not unfounded. Previously, several people familiar with the matter also revealed to the media that Tesla canceled the development of the entry-level model Model 2 and turned to the development of driverless taxi business on the car platform.
Providing consumers with affordable electric vehicles has always been Musk's goal. To this end, Tesla has taken the lead in opening multiple rounds of price wars in recent years.
But since this year, Tesla's strategy of sinking the market through price cuts has become more and more difficult to work. Even if Tesla's $25,000 Model 2 is released, it will be difficult to form enough competitiveness - the price of the BYD Qin Plus has dropped to 79,800 yuan this year, which translates to only $10,000.
BYD Qin blocked the way out of Tesla's cheap cars
Tesla has always wanted to do the popular dream, and BYD realized it ahead of schedule. Through full-stack self-research and a low-cost model built by a mature supplier system, Chinese automakers can continue to explore product prices with the support of scale effect, truly benefit the people with technology, and win the deepest market.
Of course, the threat of Chinese car companies to Tesla is not only low price, but also poses a threat to Tesla's Model 3 and Model Y in terms of cost performance.
In recent years, in the press conferences of China's new energy brands, words such as "the best within N" have frequently appeared. This clearly reflects the status quo: it is really difficult to achieve the cost performance of products in China, because you will meet more volume kings. Xiaomi Auto confirms this. At the beginning of the development of the SU7, it was around the Tesla Model 3 to "open up in the face", and the final starting price was 30,000 yuan cheaper than the Model 3, which was completely forced to make the palace.
Perhaps what makes Musk most uneasy is the unique pricing method of Chinese car companies.
Huawei's Executive Director, CEO of Terminal BG, and Chairman of Intelligent Vehicle Solution BU, Yu Chengdong, talked about the price of Zhijie S7, and said that the company has a lot of noise about the pricing of this model, and the current price of the four versions is loss-making, we just want more consumers to experience Huawei's products, and hope that with the increase in volume in the future, the cost can be balanced.
I thought everyone came out to make money, but they just wanted to make friends with consumers. Lei Jun also said, "Xiaomi loses every car it sells, and the earliest price of the top version is 350,000, which is also a loss, and in the end it was directly set at 299,900, anyway, it vomited blood." ”
Of course, car companies are not vomiting blood in vain. Take BYD's successful experience as an example, in the first three quarters of last year, BYD's bicycle cost dropped by 21,000 yuan when the price of a single car fell by 17,000 yuan, and the gross profit margin of the automobile business increased to 25.6%, and its earning power even exceeded Tesla's.
To put it bluntly, selling cars at a loss is just a means, and its business model is to increase sales through price reductions, and then achieve profitability through scale effects. Of course, if it is really not profitable, then it is good to "make friends" with consumers, and in the future, you can launch new products with lower positioning to achieve profitability.
It's just that this is hard for Musk, and Chinese car companies have taken all the paths he wants to take.
02 Become "Didi"
Musk's obsession with Robotaxi has been reflected for a long time. In "Musk's Biography", it is mentioned that his grand vision is to create a vehicle that can be fully autonomous without any human intervention.
In this way, Tesla owners can lie at home and let the car work outside to earn money. The user uses the software to summon the Robotaxi like an online car-hailing service, but there will be no driver in the car.
The reason why Musk was able to shout the release of Robotaxi on August 8 is also due to the progress of FSD's full self-driving.
At the end of March this year, Tesla launched the FSD V12.3 version, and the suffix was canceled Beta. Generally speaking, Beta stands for beta version, although Musk has previously explained that the Beta suffix of FSD does not mean beta in the usual sense, but to reduce the blind trust of car owners. Now, the removal of the post-beta FSD means that Tesla has become more confident in its self-driving technology.
FSD V12.3 makes a major change at the algorithm level, completely abandoning the previous method of relying on manual coding rules and machine learning models, and instead fully adopts an end-to-end neural network AI system.
There are over 300,000 lines of C++ code written by engineers in the FSD V11 version control stack, but in V12.3 there is no rule code, only neural networks. Thanks to FSD's strong self-learning capabilities and more than 1 billion kilometers of driving data, the driving level of FSD is rapidly improving.
According to the test of American bloggers, the current FSD V12.3 version has been able to realize automatic driving in a variety of complex road conditions, including various scenarios such as undrawn routes, queue cutting lanes, and railroad tracks without red lights.
Moreover, the driving experience of FSD V12.3 is very close to that of old drivers, for example, when passing through the road situation that there will be an intersection every short distance, FSD V12.3 does not let the vehicle mechanize to move closer to the top speed, but chooses to run at a comfortable speed for humans.
The technology is not cheap, the FSD is priced at $15,000 in North America, and the optional price in the Chinese market must be more than 60,000 yuan. However, Musk has already thought of a solution, according to his vision, car owners who join the Robotaxi team can make a profit of $30,000 a year, which can be turned into a financial product to help users repay car loans. If the vehicle itself can help you make money, it doesn't seem like much to spend a little more money.
Despite this, there are still many doubts about whether Robotaxi can save Tesla's short-term decline.
The vision of making a vehicle a financial tool is beautiful. However, even if Tesla can successfully launch Robotaxi on August 8, it will still have to go through a certain cycle of testing before it can be widely applied.
Especially for driverless taxis, a traffic accident – regardless of whether the responsible party is the company's car or not – can cause huge trouble and even devastating blows to the company in public opinion and the law.
Previously, Cruise's unmanned taxi had been involved in a traffic accident in San Francisco, and after another vehicle hit a pedestrian, the Cruise unmanned vehicle did not recognize the person under the vehicle in front of it, and continued to run over the person, causing the latter to be seriously injured. With California and federal regulators stepping in to investigate, Cruise announced the complete suspension of all robotaxis for technical safety risk assessments. Since then, Cruise's business has been shut down, with significant layoffs and valuations halved.
Tesla's Robotaxi vision is good enough, but it can also pose unforeseen risks to the company itself.
03 Stay away from the trend
You know, the Model 3 has been on the market for 7 years, and the Model Y has been a model 4 years ago. However, low-cost models can't catch up with Chinese car companies, the global market price is high and cold, and the future of Robotaxi is difficult to say, and Tesla's growth has actually been resisted.
While Tesla's sales are stagnant and China's new energy vehicle sales are booming, the logic of the growth of the overseas pure electric vehicle market seems to have been challenged.
Kang Linsong, chairman of the board of directors and CEO of Mercedes-Benz Group AG, said at the annual general meeting that it would abandon the all-electric plan. Kang Linsong said that Mercedes-Benz will no longer adhere to its original goal of fully switching to electric vehicle sales in major markets by 2030, given that the adoption of electric vehicles has not reached expectations.
GM has also strongly announced that "the company will fully switch to electric vehicles in the future", but it has also failed to give up the goal of producing 100,000 electric vehicles in the second half of 2023 and another 400,000 electric vehicles in the first half of 2024.
According to Edmunds Insights, the average selling price of an electric vehicle in the global market is $59,400, much higher than the $44,800 of traditional combustion vehicles. In today's global economic slowdown and shrinking demand, if the price of pure electric vehicles is too high, it is inevitable that its market space will not be able to break through.
It is difficult to break through the cost performance of new energy vehicles in the European and American markets
This is also reflected in Tesla's sales in the first quarter of this year. Tesla delivered a total of 386,810 vehicles, well below analysts' previous average expectations of 449,080, the data showed. This is also the first time Tesla has fallen below the 400,000 mark since the third quarter of 2022, a decrease of more than 8.5% compared to the delivery of 422875 units in the first quarter of last year.
In South Korea, the home of international cheap fuel vehicles, Tesla sold only one in January (you read that right) in South Korea, the home of international cheap fuel vehicles, according to data from South Korean research institute Carisyou and the South Korean Ministry of Trade.
As a result of various problems, Tesla did not give a clear sales guidance for 2024 at the latest earnings conference, which caused the capital market to worry about Tesla's sales. Tesla's stock price has fallen from a high of $299 last year to $172 today, which is not a small drop. It can be seen that investors do not have too many illusions about Tesla's future performance in the short and medium term.
Tesla stock price performance (since listing)
Judging from the changes in the international situation, the situation has not turned to Musk's side.
Take the U.S. market as an example, in order to protect the interests of traditional automakers, it has relaxed the emission standards for automobile exhaust, and the support for pure electric vehicles has begun to decline, reducing the proportion of pure electric vehicles in new cars from 67% to 35% in 2032, and also stipulating that power batteries must be produced in the country before consumers can receive a government price subsidy of $7,500 per vehicle.
A similar situation has emerged in the European market, as European auto giants in order to maintain their advantages in the field of fuel vehicles, the news about the EU to suspend the development of the new energy vehicle industry or stop the new energy transformation has been heard from time to time, and the auto giants have begun to play games with policies at the level of economic and social effects.
The final result of these games can only be to make the development trend of the European and American automobile industry and new energy vehicles drift apart.
04 Write at the end
It can be seen that with the rise of China's new energy vehicle companies, European and American car companies have suffered a huge impact, and returning to the fuel vehicle market is more like a forced choice than an initiative.
Musk himself has a clear judgment on this:
China's new energy vehicles are so powerful that without trade barriers, Chinese electric vehicle companies can destroy most of the world's competitors.
In an unfavorable situation, the new moat he chose for Tesla was autonomous driving and its derivative Robotaxi market. This basically means abandoning the low-cost car market and at the same time trying to get more added value.
Whether this direction can bring enough business increment to Tesla, at least for now, is uncertain - especially if Baidu's unmanned taxis in China have not yet made enough progress and effect.
For Musk, being caught in the political and economic game of major countries is really not a comfortable role, but it is also the price of being able to turn over successfully.