[CNMO Technology] "2 price increases in 5 days", "5 price increases in 1 month", and "14,000 price reductions in three days of pick-up" are all things that Tesla has done.
Tesla Motors
I'm afraid that no entrepreneur in the world can "go his own way" like Tesla CEO Elon Musk and adopt such a flexible pricing strategy for products. Even Lei Jun, the founder, chairman and CEO of Xiaomi, sighed, "Musk is really a very remarkable outstanding entrepreneur." In the face of the competitive environment, Tesla has shown such a sensitive response, which I admire very much, which is not at all like the multinational giants with a market value of five or six hundred billion dollars. ”
This is Tesla's pricing strategy, using a direct sales system, the price directly reflects the cost, the cost rises when it rises, and the cost falls when it falls. Flexible is not at all like a multinational giant. However, despite this, in the first quarter of 2024, Tesla's revenue declined.
Tesla's Q1 revenue hit a 12-year low
In the early morning of April 24, Beijing time, Tesla released its financial report for the first quarter of 2024: revenue in the first fiscal quarter was 21.3 billion US dollars (about 154.3 billion yuan), a decrease of 9%, the largest decline since 2012. Analysts were expecting $22.3 billion. Among them, the auto sector, which had the largest revenue, was severely hit, with total revenue of US$17.378 billion, down 13% year-on-year, and net profit down 55% year-on-year.
Q1 net income was $1.13 billion versus analysts' expectations of $1.81 billion, Q1 free cash flow was negative $2.53 billion versus analysts' expectations of plus $653.6 million, gross profit totaled $3.696 billion in the fiscal first quarter, down 18% year-over-year, gross margin was 17.4% versus analysts' expectations of 16.5%.
Although Tesla did not quite meet analysts' expectations, the company's first-quarter results were positively evaluated by shareholders. Before this earnings conference, Tesla's stock price had experienced seven consecutive declines, and after the release of the "worst financial report", Tesla's U.S. stock rose more than 10% after hours.
Tesla's first-quarter earnings report
Tesla's first quarter record was "worst in 12 years", but the poor revenue and gross profit were not just caused by fierce market competition.
First of all, Tesla suffered relatively large production disruptions and delayed deliveries. Due to the diversion of transportation affected by the Red Sea conflict and the arson attack at the factory, Tesla said that the production of the Berlin Gigafactory was severely disrupted, which directly led to a decline in the production of the Model Y, which in turn affected the overall delivery volume and revenue. At the same time, it also encountered the iteration period of the Model 3, and the temporary decline in production caused by the upgrade of the product line at the Fremont plant affected production and delivery in the short term.
Second, Tesla was under financial pressure in the first quarter. Tesla's free cash flow in Q1 was -$2.5 billion, which was due to high capital expenditures, particularly investments in AI infrastructure, which consumed a significant amount of cash (AI infrastructure capital expenditures were $1.0 billion in Q1). As a result, at the end of the first quarter, Tesla's cash and investment balances decreased by $2.2 billion compared to the previous quarter.
Finally, fierce market competition, especially in the domestic market, has become a key factor in Tesla's revenue hinderment. At present, the competition in the new energy market is becoming increasingly fierce, new models are emerging one after another, and the domestic price war is also round after round. Tesla's two ace models, the Model 3 and Model Y, have been launched for several years, and their competitiveness has declined. In addition, the popularity of hybrid vehicles in the domestic market has also dealt a blow to Tesla. In the first quarter of this year, Tesla delivered 386,810 vehicles, down 8.5% from the same period last year.
During the earnings conference, Musk said that the adoption rate of electric vehicles is under pressure. But Tesla will not launch a hybrid model. Musk pointed out that although electric vehicles are facing a siege of hybrid products from traditional car companies and emerging competitors in the short term, Tesla firmly believes that pure electric vehicles are the absolute dominance of the future market.
Tesla accelerates the rollout of cheaper models
In response to competition, Tesla has recently lowered the prices of its Model 3 and Model Y models in China in an effort to boost sales. At the same time, in the early hours of this morning, Tesla also launched a high-performance version of the Model 3. The new car features a number of improvements over its predecessor, including improved track mode, a new adaptive damping system, a more aerodynamic exterior design and new sports seats. The price is 335,900 yuan, and it is expected to be delivered to customers in the third quarter of this year.
Tesla Model 3 Performance Edition
However, Tesla's Model 3 and Model Y are less competitive in China, and price cuts are only a policy. And the Model 3 high-performance version is obviously not a volume model. For the current situation, Tesla urgently needs to introduce more powerful new models.
In this regard, Musk said on the conference call that Tesla will continue to update its vehicle lineup and accelerate the launch of new models, and some of the production plans originally scheduled for the second half of 2025 may be advanced to early 2025 or even the end of 2024, including cheaper models, which will form a strong combination with existing models. The new model will utilize next-generation platform and current platform technology and will be produced on the company's existing production lines. These new vehicles will bring Tesla's production capacity to 3 million units.
Despite the decline in deliveries in the first quarter, Musk is still confident about deliveries this year, believing that EV deliveries in 2024 will be higher than last year. In addition, the growth rate of the energy storage business will be higher than that of the electric vehicle business.
Artificial intelligence is a key area for Tesla in the future
The future will not only be the era of electric vehicles, but also the era of autonomous driving. In order to make FSD's full self-driving capability (supervised version) widely available, Tesla lowered the price of the US subscription to $99 per month, and the US purchase price to $8,000.
Tesla believes the company is currently in the middle of two major growth waves: the first wave that began with the global expansion of the Model 3/Y platform, while the next wave will be brought about by advancements in autonomous driving technology and the introduction of new products, including those built on next-generation vehicle platforms.
Tesla Cybercab
Musk confirmed that Tesla will release a robotaxis on August 8, 2024, and management unveiled an update on the progress of the robotaxis, which will be manufactured "unboxed". During the earnings call, Musk inadvertently referred to the upcoming self-driving car as a "Cybercab." This is most likely the official name of Tesla's taxi project.
Earlier this month, Musk announced plans to launch a driverless taxi on social platforms, a move that was seen by the industry as the company's "all-in" autonomous driving and Robotaxi strategy. Musk revealed that Tesla's Robotaxi fleet will operate like a combination of AirBnB and Uber. Tesla also gave a preview of the ride-hailing app in its financial report.
In terms of Optimus, a humanoid robot with the same origin as car technology, Musk said that the company will be the most capable of all humanoid machine manufacturers, and humanoid robots may be able to start doing simple work in factories by the end of 2024.
Musk reiterated: layoffs are for better development
Regarding Tesla's recent layoffs, the CFO reiterated the company's previous view that Tesla needs to optimize for the next phase of growth. "Any tree that grows needs to be pruned. That's pruning," Musk said. "The future is really bright. We just need to get through this period to get there," he said.
"As far as I know, we're not going to give up anything important," Musk said. "Tesla has experienced a long boom since 2019. "Now is the time to restructure the company for the next phase of growth. Musk said.