Tesla'S Future In China? Revenue In China Increased 103% In The Second Quarter

Recently, Tesla released its latest financial report on the securities and Exchange Commission (SEC). Data show that the electric vehicle manufacturer's revenue in the first half of this year was $12.021 billion, of which $2.3 billion was in the Chinese market, accounting for 20% of its total revenue.

With the completion and commissioning of the Shanghai plant, China has become an increasingly important market for Tesla, especially in the second quarter of the global epidemic. According to the financial report, Tesla's revenue in China was 1.4 billion US dollars in the second quarter of this year, with a substantial increase of 103% over the same period of the same period.

This is in sharp contrast to Tesla's performance in other markets. In the second quarter, in the United States, the largest domestic market in sales volume, Tesla's operating revenue fell by 11% to 3.09 billion US dollars. In Europe and other markets, its operating revenue dropped by 29% to 1.55 billion US dollars. The company's overall revenue in the second quarter only slightly decreased by 5% compared with the same period last year, which is obviously the turning point of the Chinese market.

The significance of China to Tesla is self-evident. It is not difficult to understand that Tesla will increase its distribution in the Chinese market. Recently, Tesla has started a new round of factory front-line staff recruitment. According to public information, these employees are likely to support the production of phase II plant and new model y. In addition, Tesla China has also issued recruitment information for design posts, and it seems that Tesla products based in China and newly designed are also in the pipeline.

However, behind the bright numbers, Tesla is not without worries. On the one hand, Tesla's own business structure has shown obvious adjustment, and the decline of sales volume of high gross profit products has caused investors' concern to a certain extent; on the other hand, after large-scale mass production, Tesla's capacity problem has not been fundamentally solved. In the short term, some supply chain and production end still have some "fire-fighting" tasks, while in the long run, core raw materials are still used Nickel in power batteries, for example, can still be a "neck sticking" factor.

China's market is up against the current

At the time of global auto market downturn and "breaking muscles and bones", Tesla has rarely encountered "skin trauma". According to the latest financial data, Tesla's operating revenue in the second quarter was 6.026 billion U.S. dollars, a year-on-year decrease of 5%. In the first half of the year, the operating revenue of the whole year was 12.021 billion US dollars, a year-on-year increase of 10%.

The stable revenue was mainly due to the continuous expansion of model y and model 3 deliveries launched by Tesla in March. According to the data, Tesla delivered 90650 vehicles in the second quarter, down only 5% from a year earlier, far higher than the 72000 previously expected by Wall Street analysts. Among them, the delivery volume of model y and model 3 series was 80277 vehicles (accounting for 90%), with a month on month increase of 5%.

It should be noted that the Shanghai plant and the Chinese market contributed significantly to Tesla's second quarter delivery. Affected by the new crown epidemic, the production and delivery of Tesla Fremont factory was suspended for a time, but with the help of Shanghai Super factory production and China's new energy vehicle subsidy policy, according to data vision, Tesla delivered 31700 vehicles in China in the second quarter, accounting for 35% of its global sales.

"Tesla is the second largest market besides Tesla in China." Earlier, Tesla said in a release when it released its second quarter quarterly report.

On the other hand, Tesla's rapid promotion of domestic car models and other related policies after the outbreak of Tesla's epidemic situation, on the other hand, the reason why Tesla has provided more support to Tesla's overseas marketing strategy, for example, has not been separated from the rapid development of China's domestic product distribution.

In April this year, after advancing the domestic progress of the model 3 long endurance model, and responding quickly after the introduction of the new subsidy policy, the starting price of the domestic model 3 standard extended range version was reduced to less than 300000 yuan, so as to meet the subsidy requirements and attract more consumers.

In addition, Tesla is also accelerating the construction of offline sales and service network. Previously, in mid May, the 21st century economic reporter found that the number of Tesla's offline experience stores and exhibition halls had increased from 51 at the beginning of the year to 53, while the number of service centers increased from 36 to 38. According to an in-depth report of Soochow securities, Tesla's service centers will be expanded to 63 this year. In early July, Tesla opened a new store near its Shanghai factory.

In the near future, Tesla continues to accelerate the layout of its business in China. According to the public recruitment information, Tesla is "recruiting" for the front line of the factory, with a total scale of 970 people, involving all workshops such as die-casting, stamping, car body, coating and general assembly. People who have long been following Tesla speculate that these new employees will be used to support the production of the model y line. According to the communication content of previous investors' meeting, the domestic mode y will be delivered in 2021.

Can myth be continued?

Tesla's share price has become a nightmare for bears. In the case of repeated success, capital gave Tesla generous support. Although the stock price has been slightly adjusted recently, Tesla is still at the top of the entire automobile industry. As of the time of publication, the total market value of Tesla is 275.16 billion US dollars, far more than that of Toyota.

However, there are also hidden worries under the rapid growth. Recently, there have been voices of doubt. Although the sales of model 3 / y are booming, model s and model X are irretrievably "collapsing". In the long run, Tesla's gross profit level will be restricted, and even some brand power will be lost, and some core consumers will be lost.

Data show that the delivery of model s and model X in the second quarter of this year was 10614, a further decline of 13% month on month. In Tesla's latest "Fengshui treasure land" market in China, model s and model X are in sharp and cruel contrast with model 3: in the first quarter and the second quarter of this year, the total sales volume of these two models in China was only 1192 and 928, accounting for only 6% and 4% of the total sales volume (the proportion of global sales is still 11%) - among them, the model s and model X are in the same situation The "s" was sold in China only in February this year.

Although Tesla's gross profit margin is not affected by the product structure adjustment, objectively speaking, to a large extent, it benefits from the rapid construction and production of Shanghai factory. In the long run, whether Tesla adheres to low gross profit products is actually a matter of concern to many investors.

Some investors asked at the financial report exchange meeting: how to balance the profitability of the company and the price of electric vehicles? The answer to this is both. He believes that with the support of independent research and development, Tesla has the ability to let more people own electric vehicles while maintaining a certain profit. "But we're not trying to achieve super high profits either. Obviously, the profit margin is about 1% or 2%. "

Another worry comes from production. Musk himself also admitted in the exchange meeting that demand is not a problem, what bothers the team is a pile of "fire fighting" work in the supply chain and production. After the orders were quickly placed, especially since the launch of model y, musk tried to avoid the recurrence of the "production hell" two years ago. He introduced that the Fremont factory was assembling a casting press to transition the body casting of model y from two-piece to one-piece, so as to improve the production efficiency.

In the long run, after mass production, the supply of raw materials may also become a constraint, especially for core components such as batteries.

Some people who have observed the automobile industry for a long time believe that from the current situation, the business model of electric vehicles has not yet worked out. Automobiles are economies of scale, and they need to reduce costs to achieve profits. However, whether the cost of core parts and batteries can be reduced is still uncertain. An objective fact is that batteries are made of a large number of rare materials, and the reserves of mineral resources are limited. Logically speaking, raw materials will not become cheaper and cheaper.

Musk is also deeply touched by this. Some investors ask: is Tesla still limited by batteries? Musk didn't even give a positive answer. Instead, he called out "all mining companies": please mine more nickel! "If Tesla is going to provide you with a huge amount of nickel in a long-term, efficient way." How to ensure the supply of raw materials upstream is also a headache for the "Silicon Valley Iron Man".