Tesla: There is no best, only better

In the case of strong delivery volume guaranteeing the lower limit of revenue, the cost reduction and cost control have been made, bringing the company’s profit end to exceed expectations. The financial perspective verifies the company’s logic of double increase in volume and profit quarter by quarter, and develops toward the optimistic expectation of Dolphins. Excellent The company has the characteristics of consistently exceeding market optimistic expectations.

Tesla (TSLA.O) released its financial report for the second quarter of 2021 in the early morning of July 27th, Beijing time. The main points are as follows:

1. The overall performance exceeded expectations, and the gold content increased. In the second quarter, the company’s revenue was US$11.96 billion, nearly doubling year-on-year; net profit stood at US$1 billion for the first time, an increase of nearly 10 times year-on-year, and a quarter-on-quarter increase of more than three times. At the same time this quarter, the contribution of automotive regulatory points has decreased, Bitcoin has gone from contributing income to generating impairment losses, and the performance of the company has increased, and the company’s strength has been highlighted.

2. The cost and expenses are well controlled, and the profit level is the biggest highlight of the quarterly financial report. In the second quarter, the company’s gross profit margin was 24.1%, reaching the best level since 2018, and the expense ratio was the lowest since 2018. Reducing costs and improving efficiency are Tesla’s business philosophy mentioned many times in its financial reports. The company is gradually fulfilling the long-term logic of increasing deliveries and increasing profits.

3. Auto delivery continued to strengthen, and gross profit margin hit a new high since 2018. The company’s delivery volume exceeded 200,000 vehicles for the first time this quarter. At the same time, the low-cost Shanghai factory played an important role in exports, and global production efficiency was improved. At the same time, the domestic Model Y launched a lithium iron phosphate version, which became a new driving force for higher deliveries in the second half of the year. The increase in production capacity of the German factory will become the company’s new delivery increment next year.

4. In terms of technology, the pure vision-based FSD VBeta 9.0 version is launched, and a subscription model is also launched, but the price of $199/month is not friendly. The 4680 battery has been verified in terms of performance and life , but it will still take time before mass production. It is expected that battery availability will increase in 2022.

5. Energy storage and service businesses continued to grow, and profitability improved. The energy storage business has achieved double growth, and the gross profit margin has improved significantly from -20% in the first quarter to 2.5% this quarter. However, the contribution of energy storage and service businesses to the company’s overall gross profit is still negative.

Overall view: Under the condition of strong delivery volume to guarantee the lower limit of revenue, all efforts will be made to reduce costs and control costs, bringing the company’s profit side to exceed expectations. The financial perspective verifies the logic of the company’s double increase in volume and profit, and develops toward the optimistic expectation of Dolphins , Excellent companies have the characteristics of consistently exceeding market optimistic expectations.

At the same time, public opinion in the Chinese market has shifted and automobile supply chain problems have eased. Tesla’s fundamentals have become more and more smooth. Perhaps the core factor that plagues investment is the issue of valuation.

The core concerns of this quarterly report are as follows:

How about the company’s overall revenue, profit, gross margin, expense ratio, etc. performance? Does it exceed expectations or fall below expectations?

In the case of known car deliveries, there should be no big expected difference in revenue-end performance. Our core concern is the change in gross profit margin of auto sales?

Production capacity is still one of the key factors affecting the company’s delivery, especially the impact of the Berlin plant in Germany on the European market. Therefore, we continue to pay attention to the production of the company’s super factories and the promotion of new models.

The changes in automobile business models and the imagination of the capital market, we continue to pay attention to the company’s progress in autonomous driving technology and changes in business models.

In addition to the automotive business, the marginal improvement of the energy storage business and other service businesses and their contribution to the company’s overall performance?

The following is a detailed analysis of the content of the financial report:

one

Overall performance:

Revenue and profit exceeded expectations

Revenue doubled year-on-year, exceeding expectations. In the second quarter of 2021, Tesla achieved revenue of 11.96 billion U.S. dollars, an increase of 98.1% year-on-year and an increase of 15.1% quarter-on-quarter. The main contribution of revenue growth is still the automobile sales business, but the relatively small energy storage and service business also maintained good The growth trend of the company exceeded Bloomberg’s consensus expectation ($11.371 billion).

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

Net profit increased by 10 times year-on-year and more than 3 times month-on-month, which exceeded expectations. At the same time, the quality of earnings has improved. In the second quarter of 2021, the GAAP net profit attributable to the parent will be 1.142 billion US dollars, which is the first time it stands at 1 billion US dollars, an increase of nearly 10 times year-on-year and a month-on-month increase of 160%. The corresponding EPS is US$1.02 per share. The increase in delivery volume, cost efficiency and other factors Under the comprehensive influence of the, it far exceeds Bloomberg consensus (Bloomberg consensus expects GAAP net profit to be US$620 million).

At the same time, the contribution of points in the automotive business has decreased. Bitcoin has gone from contributing more than 100 million US dollars to generating 20 million impairments, and the company’s earnings quality has been significantly improved.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

The gross profit margin of the core focus index exceeded expectations, and the gross profit margin of automobile sales exceeded 28%. 2021 second quarter, the company’s overall gross profit margin of 24.1%, year on year, the chain raise about 3 respectively percentage points , over the Bloomberg consensus forecast of 22% . Reconfirmed the long-term logic of Tesla’s sales growth and profitability improvement.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

The cost control is excellent, and the cost rate has reached the lowest level in recent years. In the second quarter of 2021, the company’s R&D expenses are 580 million yuan, accounting for 4.8% of revenue; sales management and general expenses are 970 million yuan, accounting for 8.1% of revenue, of which the CEO performance award contributes about 178 million yuan; overall operating expenses are 1.572 billion US dollars , Accounting for 13.1% of revenue, reaching the lowest level in recent years;

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

Abundant cash reserves. As of the end of the second quarter of 2021, the company had a cash balance of US$16.23 billion at the end of the period, with abundant cash reserves.

At the same time, due to seasonal factors, the cash flow performance in the first quarter was the worst. However, in the first quarter of 2021, the company realized cash flow from operating activities and free cash flow at the same time, and the cash flow performance in the second quarter was better, resulting in net cash flow from operating activities. 2.124 billion U.S. dollars and free cash flow of 620 million U.S. dollars.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

two

Automotive business:

Lower limit of delivery volume

The gross profit margin of over 28% becomes the biggest bright spot

The delivery volume reached a new high: Model 3 and Model Y reached the lower limit, and the new Model S began to be delivered. The company produced a total of 206,000 vehicles, an increase of 14.5% from the previous month, and delivered 201,000 vehicles. The sales volume exceeded 200,000 in a single quarter. The company continued to set new quarterly delivery records, an increase of 8.9% from the previous month.

Sales of Model 3 and Y continue to rise, benefiting from the increasing capacity of Model Y in the Chinese market. Recently, the domestic Model Y has introduced lithium iron phosphate versions, and the price has dropped to less than 300,000 yuan. It is expected that Model Y in the Chinese market will continue to increase in volume.

In addition, the new Model S will be delivered in the second quarter of 2021, and Model X is expected to begin delivery after 2022.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

ASP: The overall model structure and geographic structure lower the company’s ASP, and the proportion of Model Y increases the marginal ASP. In terms of general trends, the Shanghai factory’s production capacity continues to climb, and the low-priced Chinese market sales account for the company’s global sales to increase.

At the same time, the high-end models Model S/X accounted for less than 1% of the shipments, and the model structure and geographic structure caused the company’s ASP to be at a historically low level.

However, from the perspective of marginal changes, due to the squeeze of Model Y on Model 3, the ASP in the second quarter increased slightly compared with the first quarter. In the final second quarter, we calculated the caliber of Tesla’s bicycle revenue to be 50,700 US dollars.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

The contribution of regulatory points has decreased, and the amount of revenue has increased: the overall revenue of the automotive business was 10.206 billion US dollars, nearly doubled year-on-year. In addition, this quarter’s car rental business generated $330 million in revenue, and sales point revenue generated $354 million. The point revenue is at a low level in the past five quarters. Therefore, the gold content of the automotive business revenue this quarter is relatively higher.

Gross profit margin hit a new high since 2018, the biggest highlight of this financial report. Cost reduction is Tesla’s business philosophy mentioned many times in its financial reports. Since 2019, with the rapid growth of vehicle delivery, Tesla’s gross profit margin has increased steadily. For the money-burning car industry, the increase in delivery volume and profitability are welcome in the capital market .

However, after the gross profit margin disclosed in the quarterly report of Tesla for the quarter of 2020 hit the confidence of the capital market downward, the gross profit margin of the company in the first quarter of 2021 turned upward to give the capital market a boost. Continue to improve and hit the highest level since 2018, achieving 28.4%.

three

Production end:

Capacity continues to expand

Chip trouble relief

The core of the current Tesla delivery guidance is capacity, production efficiency and supply chain supply, of which capacity is the hard bottleneck. Tesla China will be completed and put into production in 2019. In 2020, the construction of Tesla’s third super factory in Berlin, Germany will break ground. At the same time, the capacity of the Fremont factory in the United States will increase, and the Texas factory is expected to be put into operation at the end of 2021. Tesla’s capacity expansion this round Planning is in full swing.

The Berlin factory in Germany has been unable to obtain government approval due to environmental issues, and the company is still working hard to start production at the end of 2021; this reflects the completely different attitudes of the European government and the Chinese government on the introduction of Tesla.

The Shanghai plant continues to climb and is close to the planned total production capacity of 500,000 vehicles per year. Due to the lower production costs of the Chinese factory, the Shanghai factory currently serves as an important hub for Tesla’s exports.

In order to give priority to the production and delivery of Model Y, the Texas plant in the United States has delayed the production of semi trucks until 2022 due to battery and supply chain issues. In addition, Cybertruck plans to start production, but it is difficult to increase production.

As for the chip problem, from the results, the suppression of Tesla’s delivery is not obvious, but Dolphin Jun believes that the problem of chip shortage has entered the second half, and the problem of chips for the new energy automobile industry is alleviating.

Four

Autopilot:

Launched FSD subscription model

But the pricing is not friendly

Autonomous driving has always been a core technology highly respected by Tesla, and it is also the source of the company’s strongest sense of science and technology.

In terms of technical route, the company has always clearly adopted a pure vision solution, and in July 2021, it will launch the pure vision FSD VBeta9.0 version based on the camera and AI intelligent algorithms , and begin to gradually verify the plan to remove the radar.

A step forward in the business model is the introduction of a subscription model for smart driving FSD. New users are US$199 (equivalent to RMB 1,289) per month. The subscription model is more in line with the capital market’s imagination of Tesla’s business model.

However, Dolphin thinks that the pricing is not very friendly for the functions that FSD can currently achieve, and it may have little effect from the perspective of increasing the FSD loading rate.

Battery power is another core technology of Tesla, for the quarter progressed successfully verified 4680 battery life and performance, manufacturing and gradually drawing to a close, but still did not reach the level of production, 2022 with an annual capacity may reach 100GWh, due There is a large demand for batteries, and they will still choose to cooperate with suppliers.

In the cost of electric vehicle business, batteries account for a relatively high proportion. Tesla previously announced on the battery day that the 4680 battery is expected to reduce battery costs by 56% and increase the cruising range by 54%. Therefore, the mass production of 4680 batteries will contribute to Tesla’s delivery and profitability. The potential impact of capabilities deserves continued attention.

Fives

Energy storage and service business:

Continue to look forward to the increase in volume to drive profit restoration

Energy storage business: Tesla’s energy storage business includes the sale of solar energy systems and energy storage systems to residential, small commercial and large commercial and utility customers. In the second quarter of 2021, it achieved revenue of 800 million US dollars, an increase of 116% year-on-year, and gross profit margin 2.5%, from negative to positive.

The rapid growth in performance and the improvement in gross profit margin are mainly due to the continued expansion of the Megapack project and the influence of seasonal factors. However, the energy storage business is currently backlogged by a large amount of work due to supply chain issues.

The long-term success of the energy storage business is similar to the logic of the automotive business, and it is also hoped that greater trading volume will increase profit margins and achieve a simultaneous increase in volume.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

Service business: In the second quarter of 2021, Tesla achieved service business revenue of US$950 million, a year-on-year increase of 95%, gross profit margin -3.7%, close to positive, the best level in the past 4 years , mainly due to the strong performance of used cars And control on the cost side.

The service business is based on stock cars. In the future, with the increase in Tesla’s cumulative sales, the scale effect of this business will also drive the restoration of profitability.

Tesla: There is no best, only better

Data source: company financial report, compiled by Dolphin Investment Research

Risk Warning: This article is for the purpose of conveying more information. The content of the article is for reference only and does not constitute investment advice.

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