As soon as the price of model 3 in the front foot was lowered, musk announced that the price of Tesla FSD would rise by $2000 from today, from $8000 to $10000. All the way down the price, software and equipment prices skyrocketed, what is Teslas wishful thinking?
The average selling price of the whole vehicle is decreasing continuously
Supply exceeds demand, expand production capacity
During the national day of this year, Tesla announced that the price of the updated model 3 standard extended version was reduced to 249900 yuan, and the comprehensive range was increased to 468km.
In fact, Teslas price has been constantly adjusted since its entry into China. With the completion of Teslas Shanghai Super factory, the substantial increase of production capacity, the localization of Model3 accessories, and the improvement of software technology and performance optimization, the price of Model3 has been lowered for many times, and the sales of affordable models of Tesla have also increased significantly. Among the 139300 new cars delivered by Tesla in the third quarter, the price of Model3 has been reduced , Model3 and modely delivered 124000 new cars in the world, and the growth rate was astonishing, with a month on month increase of 55% and a year-on-year increase of 56%.
Just on October 22, Tesla released the third quarter of 2020 financial report, which achieved profits for five consecutive quarters, but also showed a strong growth momentum: in the third quarter, Tesla realized net profit of $331 million, a year-on-year increase of 131%, a month on month growth of 218%; free cash flow reached $1.4 billion, which let many industry competitors take a breath.
In fact, as Teslas sales product structure continues to shift from models s and modelx to more affordable model 3 and model y, and the average selling price of a single car may fall again; in addition, Tesla also paid $290 million in stock incentives in the third quarter, and many factors superimposed, but the growth rate of profit still far exceeded revenue. Tesla achieved an operating profit margin of 9.2% in the quarter.
Tesla said that with the expansion of production capacity and the continuous localization process, the operating profit margin continued to grow, eventually reaching the industry leading level. It is reported that Tesla has recently further increased the production capacity of model 3 and model y of Fremont plant to 500000 vehicles per year, and the construction of three new factories on three continents continues to advance as planned. At the same time, the Shanghai Super factory has added a third production shift, and has reached a production capacity of 250000 vehicles per year. In addition, Shanghai Super factory not only meets the needs of Chinese market, but also provides products to European consumers. In October, Shanghai Super factory officially launched the vehicle export business to European market.
In this years special period affected by the epidemic, Teslas production capacity in the United States and Europe has been affected to varying degrees. Tesla has rapidly promoted the construction progress of Chinas factories and exported products made in China to Europe, so as to adjust the problem that orders cannot be fulfilled in overseas markets. Zhang Xiang, an expert in the new energy and intelligent connected automobile industry under the long wind plan of the Ministry of industry and information technology, told the Securities Daily that the supply of Tesla products is in short supply in the market, and the production capacity needs to be increased sharply. The rapid increase of production capacity will help Tesla to seize the market more quickly. With the measures of price reduction, it will squeeze the growth space of competitors in the industry, and Tesla will maintain a dominant position.
At the same time, on this years battery day, Tesla focused on a number of innovative technologies such as cell design, cell factory, anode materials, cathode materials, vehicle manufacturing, etc. Through systematic portfolio innovation, Tesla can reduce battery cost per kilowatt hour by 56%, increase driving range by 54%, and reduce investment and production cost by 69%. Based on significantly lower production costs, Tesla is confident of developing an electric car for about $25000 in three years.
FSDs overseas price rises by $2000
Software business refers to the core business sector
The competitive price makes Teslas market share continue to expand, which is the basis for Tesla to obtain higher revenue through its software business.
According to Tesla, the companys autopilot auto assist driving team has been focusing on the infrastructure rewriting of neural networks and control algorithms, which can release the remaining driving characteristics. Just in October, Tesla sent the first FSD software update, urban roads, to a very small number of early experience program users in the United States.
Tesla related people told reporters that the rewritten FSD has the perception ability of depth and complex intersections, which greatly enhances the performance of FSD on urban roads, and its rewriting also means that Tesla will soon step into a high-level fully automatic driving. As data continues to be collected, the system is expected to become more powerful.
Recently, musk wrote on social platform that the price of Tesla FSD will rise by $2000, from $8000 to $10000. At present, the Chinese market has not yet announced a price increase, and the price of FSD is still 64000 yuan. At the same time, musk also said that as the software functions more and more close to fully automatic driving, the price of the software will rise if it is approved by the regulatory authorities, and the software is likely to rise to more than $100000.
Although Tesla has not disclosed the revenue composition of software business separately in its financial report, the gross profit margin of software business is undoubtedly much higher than that of vehicle sales. In the future, with the introduction and popularization of FSD and more software products, software business is expected to develop into the core component of Teslas business model.
In addition, in addition to FSD, from the current product layout of Tesla, other software businesses are constantly refreshing their sense of presence. Teslas new vehicle software function has been launched since the third quarter. In order to make the product safer and avoid unauthorized access, Tesla has introduced the function of two-step verification through smart phones. In addition, there are many other updates: for example, the Powerwalls charging coordination for vehicles has been updated, and the automatic window closing function and glove box password access have been added. Customers of modely all wheel drive can increase acceleration from 0-60 mph to 4.3 seconds through software upgrades.
Tesla related people told the Securities Daily that the technology attribute of Tesla is different from the traditional automobile enterprises. The FSD will affect the development of Tesla in the coming decades, and its value is far higher than the current net profit and delivery volume. Its goal is to rewrite the entire transportation industry.
Since 2020, the stock price of Tesla has risen by more than 400%, with a market value of nearly $400 billion, firmly occupying the first place in the market value of global automobile enterprises. The best touchstone for its valuation is the quality of Tesla software technology. (Securities Daily)
Source: Securities Daily editor: Wang Fengzhi_ NT2541