On July 23rd local time, Tesla released its Q2 2024 financial report.
Thanks to the rapid growth of its energy business, Tesla achieved a record breaking quarterly total revenue of $25.5 billion, a year-on-year increase of 2%. Among them, the revenue of energy generation and energy storage business was 3.01 billion US dollars, a year-on-year increase of 100%; However, due to price reductions and declining sales, Tesla's main automotive business was $19.88 billion, a year-on-year decrease of 7%.
Recently, Tesla's latest global production and delivery report showed that in the second quarter of 2024, Tesla produced a total of 410831 vehicles, a year-on-year decrease of 14%; 443956 vehicles were delivered, a year-on-year decrease of 5%. The decline in production and sales volume is mainly affected by the main sales model Model 3/Y. In this quarter, the production of Model 3/Y decreased by 16% year-on-year, and the delivery volume decreased by 5%.
Affected by the decline in both quantity and price, Tesla's gross profit margin for the quarter was 18%, a year-on-year decrease of 23 basis points; GAAP net profit was $1.478 billion, a year-on-year decrease of 45%; GAAP earnings per share decreased from $0.78 in the same period last year to $0.42, lower than Wall Street's expectations. Meanwhile, Tesla's free cash flow turned positive in the second quarter, with $2.53 billion at the end of the previous quarter and $1.342 billion this quarter.
During after hours trading on the US stock market, Tesla fell nearly 8%.
Automotive business bet on autonomous driving
Although Tesla is still the best-selling electric vehicle manufacturer globally, with the slowdown in global demand, the long replacement cycle and rigid product matrix of Tesla's main sales models have led to a decline in competitiveness, resulting in a continuous erosion of market share by competitors.
Although Musk had previously made it clear on social media that he would not launch a new version of the Model Y this year, in order to expand the product matrix, Musk reiterated at the earnings conference that a more affordable new model is expected to be put into production in the first half of next year, and expects the Cybertruck to be profitable by the end of this year. It is reported that in the second quarter, Cybertruck became the best-selling model in the segmented market in the United States, with production increasing by more than three times compared to the previous quarter, and production capacity climbing significantly.
But in the fiercely competitive Chinese market for new energy vehicles, Tesla with a single product structure can only rely on active sales policies to drive sales. Since early April, Tesla China has introduced loan benefits such as "3-year interest free" and "official exchange 5-year interest free" for the first time, indirectly lowering prices. On April 21st, Tesla China announced a price reduction of 14000 yuan for all Model 3, Y, S, and X models. A few days later, Tesla China once again lowered the purchase threshold and launched a heavyweight benefit of "zero down payment and ultra-low interest" for the designated version of Model 3/Y. At a time when the price reduction stimulus effect was weak, Tesla China slightly increased prices for some models in May, once again stimulating sales in the opposite direction.
To further promote sales, Tesla China's financial policy will be further strengthened in July, introducing a five-year interest free policy that will continue until August 31st.
Despite Tesla's skillful sales strategy, its sales in the Chinese market in the second quarter still fell by 6.9% year-on-year to 146000 vehicles, a much higher decline than the global market average.
Thus, FSD (fully autonomous driving) has become the key to reversing Tesla's declining sales growth. Four years ago, Tesla launched the FSD function, which is currently available in the US market but has not yet been launched in China. The latest news shows that the southern expansion project of the Texas Gigafactory is about to be completed, which will accommodate Tesla's largest Nvidia H100 chip cluster to date for FSD training.
On April 28th, Musk suddenly visited China on a private plane. At that time, there were media reports that Musk's visit to China was intended to discuss the launch of fully autonomous driving (FSD) software in China and seek approval. Previously, Musk responded to inquiries from netizens on social media, stating that Tesla may soon offer FSD to Chinese customers.
Recently, Lu Sen, Director of the Data Department of the Shanghai Lingang New Area Management Committee, revealed at the start of Tesla's Shanghai Energy Storage Super Factory that Nanhui New City is promoting the pilot implementation of FSD for 10 Tesla vehicles.
Tesla's series of innovative technologies have already been partially surpassed by Chinese car companies. Now, the only way for Tesla to reverse its sales is through FSD. Previously, autonomous driving vehicles such as Serris, Xiaopeng, and NIO have already been implemented in China, and for Tesla, implementing FSD in China is imminent, "Zhang Xiang, a visiting professor at Huanghe University of Science and Technology, told 21st Century Business Herald reporters.
During the second quarter earnings call, Musk once again responded to the landing of FSD in other markets, stating that Tesla may obtain FSD licenses in the Chinese and European markets by the end of this year.
But this' possibility 'is still full of variables, and whether the subscription price of up to 64000 yuan can make users pay is also a major challenge. It should be noted that the optional rate of Tesla FSD in North America in the first quarter was only 2%, which fell short of the target.
Meanwhile, the Robotaxi, originally scheduled to be released on August 8th, has been postponed to October 10th. Tesla has stated that it may be put into use by the end of this year or at the latest next year. Musk previously explained that the reason for the delay was the need for design changes to the front of the robot taxi, and added that additional time was needed to 'allow us to showcase some other things'.
However, Musk has always had confidence in Tesla's autonomous driving technology. "Tesla's greatest value comes from autonomous driving, and many other things are noise for autonomous driving. If you believe in our autonomous driving capabilities, you should buy our stocks," Musk said at the earnings conference.
The third chapter of the grand plan is underway
Electric vehicles are just the carrier of Tesla's business, and their essence is to break the original industrial division of labor, integrate key technologies in the fields of electric vehicles, energy storage products, artificial intelligence (AI), and robotics, and form a closed loop of software and hardware integration. "An insider revealed to 21st Century Business Herald reporters.
The continuous expansion of the business is driven by Tesla's thinking on sustainable development.
In 2006, Musk proposed the first chapter of Tesla's grand vision, hoping to manufacture multiple affordable electric vehicles and provide sustainable energy. Currently, the goal has been basically achieved, with representative products including Tesla sports cars Roadster, Model S/X, Model 3/Y, etc.
In 2016, Musk proposed the second chapter of his ambitious plan, which includes developing energy storage business, expanding the electric vehicle product line, and developing autonomous driving technology. Currently, most of the ideas have been basically achieved, and related products include Powerwall, Powerpack, Cybertruck, Semi, FSD, etc.
In March 2022, Musk replied to netizens on social media, revealing that he was "working on the third chapter of Tesla's' secret plan '" and also revealed that "Tesla's main goal is to expand the' scale 'to the' extreme ', which is what humans need to get rid of fossil fuels, as well as artificial intelligence (AI). But I will also include parts about SpaceX (American space exploration technology company), Tesla, and Boring Company (American infrastructure and tunnel construction company)
Last March, the third chapter of Tesla's grand vision was unveiled at Tesla Investor Day, which is a path towards a "fully renewable energy future". The goal of this vision is to store 240 terawatt hours (TWH) of energy, generate 30 terawatt hours (TW) of renewable electricity, invest $1 trillion in manufacturing, and meet energy requirements that are less than half of the fuel economy. Renewable energy production facilities account for 0.2% of the land area, and energy storage resources will reach 10% of the world GDP by 2022.
Musk divided the implementation path of this "secret plan" into five steps: using renewable energy to drive the existing power grid; Completely shifting towards pure electric vehicles; Fully adopt heat pumps in household, commercial, and industrial fields; High temperature heat transfer and electrification of hydrogen industry; Sustainable fuel drives transportation vehicles such as airplanes/ships. According to Musk's plan, the world is expected to achieve this sustainable energy plan by 2050.
Up to now, Tesla has been working hard to achieve the third chapter of its grand plan, which is the direction and important strategy for Tesla's next stage of development.
In the second quarter, Tesla's installed capacity of energy storage products reached 9.4 gigawatt hours, setting a new record for single quarter installed capacity. Powerwall 3 has been consistently successful since its launch and is currently available in Canada, the United Kingdom, and Germany, in addition to the United States. In May of this year, Tesla's Shanghai energy storage super factory officially started production, which will produce Tesla's ultra large electrochemical commercial energy storage system Megapack. The factory is expected to start production in the first quarter of 2025, with an estimated annual production capacity of 10000 units and an energy storage capacity of nearly 40 gigawatt hours. It is reported that the Megapack energy storage system can store over 3.9 megawatt hours of energy per unit, which is sufficient to meet the electricity demand of 3600 households for one hour, or to drive 65 Model 3 rear wheel drive versions on full charge. Musk reiterated at the latest earnings conference that Tesla's energy business will grow faster than its automotive business.
In addition to focusing on energy, Tesla CEO Elon Musk has emphasized on multiple occasions that "Tesla is not just a car manufacturer, but an AI/robotics company
At present, the second-generation humanoid robot Optimus, which shares the same technology as electric vehicles, is equipped with Tesla's fully autonomous driving capability computer and related neural network technology. It has been processing battery related tasks in the factory, and it is expected that thousands of Optimus will perform tasks in Tesla factories by the end of 2025. Delivery to external customers will begin in 2026. Musk predicts that Optimus will significantly improve the production efficiency of Tesla factories in the future and is expected to occupy a place in the global labor market. Tesla is expected to achieve a profit margin of $1 trillion annually.