Tesla has experienced two consecutive 'Black Fridays'.
On July 27th Beijing time, Tesla's stock price closed slightly lower, and its market value remained stable at $702.2 billion. Since the release of its Q2 financial report this week, Tesla's market value has plummeted overnight from $785.8 billion to below $700 billion, marking the largest single day decline since September 2020. In the following days, Tesla's market value has slightly increased, ultimately evaporating $80 billion due to a single financial report.
On July 19th, Tesla's market value evaporated by $32 billion (approximately RMB 230 billion) overnight due to multiple factors such as changes in US electric vehicle subsidy policies, IT system crashes leading to equipment errors in the car factory. This week (July 22nd to July 26th), the halved net profit and declining car sales in Q2 2024 once again dragged down Tesla's market value.
However, Tesla CEO Elon Musk, who has experienced two "Black Fridays," remains calm.
On July 28th Beijing time, he was still vigorously promoting Tesla's Cybertruck. At the previous earnings conference call, Musk also appeared incredibly confident, saying, 'If you believe Tesla can solve autonomous driving, buy Tesla stock, otherwise sell it.'. But in the face of Musk's confidence, the market has given a completely different reaction.
The market value has plummeted for two consecutive weeks, and fundamentally, Tesla is at the forefront of multiple challenges and doubts.
From an external perspective, Tesla's former leading position is facing fierce competition from emerging forces, with market share constantly being eroded, putting pressure on Tesla. From an internal perspective, the large-scale layoffs that began in April this year and the difficulties in launching autonomous taxis indicate that companies are at a critical juncture of cost control and transformation. Under the pressure of internal and external pressure, investors' trust in Tesla has been eroded, ultimately reflected directly in the drastic fluctuations of its stock price.
The main business revenue of automobiles has declined, and market share has been eroded
Musk's ambitions have never been limited to cars. He carries a "secret plan" in his heart, believing that the rapid expansion of new businesses such as artificial intelligence and energy storage may push the company's market value to over $30 trillion, and Tesla is also striving to become a closed-loop enterprise in the automotive, energy, and AI industries. Not long ago, Musk claimed that Tesla is an artificial intelligence and robotics company, and the energy storage super factory has already started construction and is in full swing in China.
But ultimately, Tesla is a car company first and foremost. The impact of the automotive business on Tesla's revenue remains decisive.
According to the latest financial report data, the company achieved a revenue of $25.5 billion in the second quarter of this year. Among them, the total revenue from the automotive business was 19.878 billion US dollars, accounting for 77.95% of Tesla's total revenue.
In contrast, the revenue from the power generation and energy storage business was only $3.014 billion, accounting for approximately 11.81%. The revenue from Tesla's services and other businesses was $2.608 billion, accounting for approximately 10%.
When it comes to future development, Tesla told Shell Finance reporters that for Tesla, electric vehicles are the basic carrier for realizing applications, with the aim of integrating key technologies in the fields of electric vehicles, energy storage products, artificial intelligence, and robotics to form a closed loop of software and hardware integration.
However, it should be acknowledged that nearly 80% of Tesla's revenue still comes from its automotive business. Even more fatal is that Tesla's car sales business did not perform well in the second quarter of this year, with revenue shrinking and declining.
From the financial report data, it can be seen that Tesla's revenue growth is supported by its power generation and energy storage business, with revenue of $1.509 billion compared to the same period last year, a year-on-year increase of up to 100%. Tesla's revenue from services and other businesses was $2.608 billion, a year-on-year increase of 21% compared to $2.15 billion in the same period last year.
However, the automotive business, which accounts for nearly 80% of the revenue, has experienced a year-on-year decline of 7% compared to the same period last year when it was $21.268 billion.
The impact of weak car sales is also reflected in profits. In the second quarter, Tesla's net profit attributable to common stockholders was $1.478 billion, a decrease of 45% compared to $2.703 billion in the same period last year. Tesla's operating profit was $1.605 billion, a decrease of 33% compared to $2.399 billion in the same period last year. Tesla's operating profit margin for the second quarter was 6.3%, a decrease of 333 basis points compared to the same period last year's 9.6%.
Looking at the sales data again, in the second quarter of this year, Tesla's total production of cars was 410831, a year-on-year decrease of 14% and a month on month decrease of 5%; The total delivery volume was 443956 vehicles, a year-on-year decrease of 5% and a month on month increase of 6%.
At the same time, although the Cyber SUV became the best-selling model in the US segmented market in the second quarter, with production increasing more than three times compared to the previous quarter, this model has still not achieved profitability and will not have any hope of profitability until the end of this year.
Wang Peng, an associate researcher at the Beijing Academy of Social Sciences, stated that the increasingly fierce competition in the global automotive industry has led to profound changes in the competitive landscape of the electric vehicle industry, and Tesla's former leading position is facing fierce impact from new forces.
Over the years, Tesla's launch of car models can be described as steady or slow, while newcomers in the automotive market have gradually eroded Tesla's market share with more avant-garde market strategies and disruptive products, bringing unprecedented pressure to it.
Moreover, the impact of the price war in China's new energy vehicle market is becoming increasingly prominent. Tesla mentioned in its latest financial report that the decline in net profit is partly due to fewer cars being sold. On the other hand, it's because cars are selling cheaper.
For a long time, reducing vehicle prices has been Tesla's philosophy and marketing strategy, but under the impact of domestic price wars, it is difficult to sell cars solely by lowering prices.
Musk mentioned that Tesla's previously expected low-priced models are expected to start production in the first half of 2025, using existing production lines, which will maximize the utilization of the existing capacity of nearly 3 million vehicles and achieve a 50% growth compared to 2023. Tesla will invest in new production lines in the future.
This is like building a pyramid, perhaps the artificial intelligence and energy storage at the top of the pyramid are shining, but for now, Tesla still needs to lay the foundation for the car project.
Internal troubles continue, employee severance pay exceeds 4.2 billion yuan
Musk himself is confident in predicting market value.
Recently, Kathy Wood, CEO of Ark Invest, has given an extremely optimistic forecast for Tesla's market value. Musk praised her prediction that Tesla's market value is expected to reach $5 trillion, while also believing that Tesla is worth more.
But under this confidence, Musk also has to admit that Tesla's internal operations and even himself are going through a storm.
In April of this year, Musk announced that Tesla would lay off over 10% of its global workforce, in order to reduce costs and improve production efficiency. This also means that this layoff will affect 14000 people.
Subsequently, Tesla China significantly withdrew offers originally intended for interns. Tesla's supercharging business unit has also been laid off, with the head leading a team of about 500 people to resign. Employees from multiple departments including software, services, and engineering have all received layoff emails.
Tesla's latest financial report shows that due to large-scale layoffs, the company paid $583 million in severance pay (approximately RMB 4.239 billion).
Musk himself has also been embroiled in lawsuits recently. The most notable is the legal dispute since the beginning of this year over whether Musk can receive a $56 billion compensation package. In February of this year, Musk accused OpenAI of breach of contract and filed a lawsuit in court. Both sides have repeatedly clashed with each other. In June, Musk publicly criticized OpenAI's partnership with Apple.
Due to the acquisition of Twitter, Musk has been facing a series of lawsuits from the US Securities and Exchange Commission (SRC) and laid-off employees since 2022. This also means that Musk is facing almost simultaneous attacks from the government, Tesla shareholders, old partners, Twitter laid-off employees, and other parties.
Not only that, Tesla is also surrounded by safety concerns. Tesla previously revealed in its financial report that the US Department of Justice is expanding its investigation into Tesla and has issued subpoenas regarding issues such as autonomous driving, range, and stakeholders.
In the first six months of this year, the Product Defects Center of the State Administration for Market Regulation issued a total of 99 domestic passenger car recall notices, with a total of over 4.08 million recalled vehicles, including over 1.757 million new energy vehicles, accounting for more than 43%.
Among the top five new energy vehicle models in terms of recall quantity, Tesla's models occupy four seats. In terms of quantity, Tesla has recalled over 1.632 million vehicles, ranking first.
From safety concerns about vehicles, drastic changes in executives, to escalating friction with regulatory agencies, this series of negative news is like a chain reaction, eroding the cornerstone of public trust in Tesla, ultimately reflected in the dramatic fluctuations in its stock price, creating two consecutive 'Black Fridays'.