Capital detective

Author | Li Tingting

The harder you scold, the better you sell. Tesla has repeatedly verified how unreliable "public opinion" is.

On July 2, Tesla released a very eye-catching Q2 sales and delivery data, both of which exceeded 200000, a record high and exceeded market expectations. Driven by high delivery, Wall Street has given Tesla extremely high expectations for this quarter's performance, and Tesla's Q2 revenue is expected to grow by 86.4%.

Tesla's actual performance even exceeded expectations. According to the financial report disclosed by Tesla in the early hours of this morning, a number of its indicators refreshed history:

• In the second quarter of 2021, Tesla achieved a total revenue of US $11.958 billion, an increase of 98% over the same period last year.

• The operating profit reached US $1.312 billion, an increase of 301% over the same period last year, and the operating profit margin reached 11%.
  

• The net profit of homing reached US $1.142 billion, a year-on-year increase of 998 per cent.

However, although Wall Street recognized the growth of Tesla's performance, it did not project this "recognition" into the actual business, and the major analysts had mixed comments on Tesla. According to Seeking Alpha, Wall Street gave Tesla an average target price of $659.83, which is less buoyant than Tesla's current price, and Tesla stood at a high of $800 at the beginning of the year.

Tesla's performance disclosure and strategic nodes often trigger a war of words between bulls and bears. This time is no exception, the data level, Q2 financial results can be said to be positive across the board, but combined with market performance and strategic direction analysis, Tesla's advantages and anxiety are equally obvious, questioning and pursuit still go hand in hand.

Delivery is at a new high, but the danger is looming.

Even under the storm of public opinion, Tesla is still the best-selling new energy car company in the world.According to the financial report, Tesla's delivery volume reached a record 201000 vehicles in the second quarter, an increase of 121% over the same period last year and 8.9% month-on-month growth.

In terms of model structure, the proportion of the Model 3roomY has further expanded to 99.1%, while the actual delivery of the Model Strix in the second quarter was only 1895, mainly because delivery began in mid-June after the Model S was revamped. In addition, according to the latest news, some buyers of Tesla Model S have been told that the delivery of their new cars will be suspended, which means that delivery of the model will not be fully released in the next quarter.

However, this does not affect Tesla's "scale effect" to continue to play a role. With the launch and best-selling of the Model Y, Tesla is further moving towards increased economies of scale and diminishing marginal costs-lower costs, lower average selling prices and higher sales in exchange for higher revenue and gross margins.

In 2021, when the delivery volume hit a new high, the average selling price of Tesla's bike was still controlled below 50, 000 US dollars, which was slightly higher than that of Q1 due to the increase in bicycle price and the increase in the proportion of Model Y sales under the pressure of the supply chain.

The gross profit performance of this quarter fully validates Tesla's car-building logic based on boundary benefits.

Thanks to higher delivery, Q2 and Tesla's vehicle sales revenue reached $9.874 billion in 2021, pushing Tesla's total income up 98% year-on-year to $11.957 billion.The gross profit of vehicle sales reached 2.76 billion US dollars.The gross profit margin of vehicle sales reached 27.9% again.Tesla in the car-building process of cost control and pricing strategy is more and more sophisticated, sales expansion at the same time the performance of gross profit is getting better and better.

Tesla sells cars very well, but at a time when the track is becoming more and more crowded and the competition is becoming more and more fierce, Tesla's market performance can not be seen separately. The overall improvement of the new energy vehicle market is an important background for Tesla to achieve record delivery results.

In this case, the fluctuation of Tesla's market share may be more valuable than the change in delivery volume.

This is an important reason why short sellers are worried about Tesla's future. In the two most important markets, the United States and China, Tesla's encirclement and interception has put his market share in crisis.

In the US, Tesla's new car registration rose 80 per cent in May, while the total number of electric vehicles on the market rose 116 per cent. Tesla lags behind the market as a whole, partly due to the fact that the Model SUV X model has slipped out of the best-selling list due to changes, but also because of the strong impact on it by competitors such as Ford Mustang Mach-E, Audi e-tron and Porsche Taycan.

At homeTesla's Chinese apprentices are growing rapidly. Although there is still a gap between the scale of sales and that of Tesla, the growth rate is faster than that of Tesla:Weilai set a new quarterly delivery record of 20060 vehicles in the first quarter, up 422.7% from the same period last year. Q2 also maintained a year-on-year growth rate of 111.9%; the ideal two quarters' year-on-year growth rate was 334.4% and 166.1% respectively, while Xiaopeng's year-on-year growth rate was 487.4% and 439%, respectively.

Not only Tesla, the new forces of car building are constantly refreshing their quarterly delivery records. in the long run, the gap between "Wei Xiaoli" and Tesla in the domestic market is narrowing step by step.

Tesla, of course, was aware of the hidden crisis under the decline in market share and waved the "price sickle" again. In early July, Tesla released a domestic standard continued version of Model Y, which starts at 276000 after subsidy, which is more than 70, 000 yuan lower than the previous long-lasting version. The SUV is already the most popular model among Chinese consumers, and the launch of the Model Y standard continued version directly led to an "explosion" on the official website.

Increase sales by reducing prices, this is Tesla's tried-and-tested routine, the price of Model Y is falling, which will put greater pressure on the Azure and ideal of the same SUV. In addition, hot-selling models such as Ford Mustang Mach-E and Volkswagen ID.4 will also compete with domestic Model Y in the same price range. But what will also be staged at the same time is the rivalry of Tesla's own products.

No matter which range Tesla can push down the price of electric cars, what cannot be changed is that with more and more electric cars available in the market, the glorious situation of a Model 3 sweeping the world will not happen again.

Q2 did not make a profit by selling points and speculating in coins.

The net profit still increases tenfold.

Last quarter, Tesla made $101 million by speculating in bitcoin, driving Tesla's net profit belonging to ordinary shareholders under Bitcoin up 363.4 per cent year-on-year.

But like all "leek" players, it is impossible to make money regularly and continuously by speculation.Tesla did not buy or sell his Bitcoin holdings this quarter, with net digital assets worth $1.322 billion as of Q2 Tesla and a Bitcoin-related impairment loss of $23 million, according to the financial report.

However, under the leadership of Musk, the "head of currency speculation", Tesla is still a loyal fan of cryptocurrency. At the The B Word Bitcoin conference on July 21, Musk reiterated his support for Bitcoin, Ethernet Square and Dog Coin, saying that he would personally lose money if the cryptocurrency depreciated, and that Tesla would resume payment in Bitcoin if Bitcoin production guaranteed a higher proportion of renewable energy.

Also present at the meeting was Cathie Wood, known as the "female Buffett", who is bullish on Bitcoin and a well-known bullion of Tesla, who bought about $71.38 million worth of shares in Tesla on July 7, when the company's share price fell.

Bitcoin is more like a capitalist's game, with ups and downs unpredictable.What is certain is that Tesla is bound to the cryptocurrency more and more closely.

In addition, the benefits of carbon credits for Tesla are not as outstanding as in previous quarters. In 2021, Tesla's income from "selling points" was US $354 million, down 17 per cent from the same period last year and 32 per cent from the previous month.

In terms of expenses, Q2 Tesla is particularly cautious in spending money. The R & D expenditure rate is 4.8%, which is the same as last year's average. Sales and management expenses have dropped to a low of 8.1%.

This also reflects the most commendable aspect of Tesla's financial report this quarter.Tesla really relies on the main business of "making cars" to boost revenue and profits, with delivery hitting new highs, overcoming the rising trend of material costs, and properly controlled expenses, and projects such as Bitcoin and carbon points do not have a strong sense of presence in this financial report.Even excluding carbon points, Tesla's gross profit margin (Non-GAAP) of his car business reached 25.8 per cent.

This can silence some people who have long criticized Tesla for not making money from actual car sales. Car sales in this quarter have driven Tesla's excellent profit performance:

• In 2021, Tesla achieved a net profit of US $1.178 billion and a net profit margin of 9.9%.

• In 2021, Tesla realized a net profit of US $16.16 belonging to ordinary shareholders under Non-GAAP, with a corresponding net profit margin of 13.5%.

FSD has a mixed reputation.

But the future should not be underestimated.

Unlike in the last quarter, Tesla made a lot of money by speculating in coins. The high growth in net profit in this quarter is really driven by the car sales business. However, Tesla has never been satisfied with his status as a "car company", and his extremely high valuation in the secondary market also shows that investors prefer to treat Tesla as a technology company.

Therefore, FSD (fully autopilot technology) is also the key to anchoring Tesla's future value.

Although the revenue generated by FSD is not on a large scale at this stage, software subscription is a higher gross margin and sustainable business than the hard work of building a car. To put it simplyAs a technology company, Tesla reduces the price and expands sales, one of the functions is to make the automobile products with software have a considerable scale, and the ultimate goal is to generate more profits through more software subscriptions.

Gene Munster, another well-known technology analyst of Tesla, even wrote recently thatTen years from now, the annual operating profit of FSD will exceed 100 billion US dollars, and the market value of this service alone will reach 850 billion US dollars, exceeding the current market value of more than 600 billion US dollars of the entire Tesla company.

This figure may seem exaggerated, but it does point out the future direction of Tesla. Just a few days ago, Tesla FSD Beta 9 was officially released on July 23, with a price of $10, 000. in addition, Tesla also added a subscription service model in July, which allows users to access the upgraded version of its advanced driving assistance system for $199 a month, lowering the entry threshold for customers while earning a more stable recurrent income.

In the Q2 earnings call, Musk also reiterated his optimism about the future of FSD, saying that "FSD will be the main service provided by the company" and does not believe that the regulatory level will constitute a "fundamental restraint."

Of course, Tesla FSD is not mature at this stage. For example, Consumer report, an authoritative US magazine, has expressed concern about the performance and security of FSD Beta 9. In addition, the V9 has completely abandoned radar input to rely entirely on car cameras, a technical route that is still controversial. If you want software subscriptions to support revenue in the future, Tesla also needs to invest more money, talent and time to improve the product.

But Tesla obviously will not lose his "technology" attribute, and FSD must be one of the keys to Tesla's future value. If you just sell cars, how can a car company whose quarterly delivery volume has just exceeded 200000 can prop up a market capitalization of 600 billion?