Source:Letter List
Author: Bi Andi
Net profit has plummeted by nearly half, and Robotaxi has been postponed.
"If we can't achieve fully automatic unmanned driving (Unsupervised FSD) next year, I will be very shocked."$Tesla (TSLA.US)$At Tesla's Q2 2024 earnings conference call, CEO Elon Musk confirmed the delay in the Robotaxi ride hailing business and announced it will be launched on October 10. He also mentioned that after the release of FSD version 12.6, it will be available in China, Europe, and other countries. The company will submit it to the relevant regulatory authorities for approval, and is expected to be approved by the end of the year.
Three months ago, Musk announced that the release of Robotaxi would be in August this year, and the plan for launching inexpensive models next year, although the overall performance was not satisfactory, the market happily accepted these news. As a result, Tesla's market value skyrocketed by 400 billion Yuan in a day. However, this time, the magic seems to have failed.
In addition to FSD and Robotaxi, on this conference call, Musk also spoke again about the low-cost model that was previously rumored to have been canceled, which is planned to be delivered in the first half of next year, as well as the Optimus Prime humanoid robot, the first version of which will be produced in limited quantities next year. However, while Musk promised several "delicious dishes" that would show up in the 2nd half of this year and next year, Tesla's stock fell sharply after hours following the earnings call. When the call ended, Tesla's after-hours stock price had fallen by about 6% (later expanding to 8%). Calculated at a market cap of $785.7 billion at the close of the day, Tesla evaporated about $47.1 billion in a span of a day, equivalent to RMB 329.7 billion.
However, this time, the magic seems to have failed.
In addition to FSD and Robotaxi, on this conference call, Musk also spoke again about the low-cost model that was previously rumored to have been canceled, which is planned to be delivered in the first half of next year, as well as the Optimus Prime humanoid robot, the first version of which will be produced in limited quantities next year.
However, while Musk promised several "delicious dishes" that would show up in the 2nd half of this year and next year, Tesla's stock fell sharply after hours following the earnings call. When the call ended, Tesla's after-hours stock price had fallen by about 6% (later expanding to 8%). Calculated at a market cap of $785.7 billion at the close of the day, Tesla evaporated about $47.1 billion in a span of a day, equivalent to RMB 329.7 billion.
In Q2 2024, Tesla's revenue was $25.5 billion, a YoY increase of 2%. This number is obviously higher than the analyst's expected $24.5 billion. However, the bad news is staggering: Tesla's net profit in Q2 2024 was $1.48 billion, a YoY decrease of 45%, far below the analyst's expected $1.806 billion.
Earlier this year, Tesla's stock price had dropped more than 40% from its peak, but the company has recovered most of the lost ground through a series of measures. However, the crisis is far from over. In Q2 2024, Tesla's car sales fell 4.8% YoY, although this figure was higher than the analyst's expectations, it still shows signs of weak demand.
Musk is seeking many possible growth paths for Tesla, including artificial intelligence, humanoid robots, Robotaxis, inexpensive models, energy storage businesses...except for energy storage business, which its revenue doubled from the same period last year, other businesses are still in the early stages and have not yet taken off.
A
Tesla is still profitable. This is Tesla's 19th consecutive quarter of profitability. In Q2 2024, Tesla's revenue was $25.5 billion, a YoY increase of 2%."Despite the difficult operating environment, we achieved record quarterly revenue." Gross profit was $4.578 billion, a YoY increase of 1% compared to $4.533 billion in the same period last year, and a significant increase compared to the $3.696 billion in the previous quarter. Gross margin was 18%, down from 18.2% YoY, but better than the 17.4% in the previous quarter.
The decline in net profit is quite shocking. In Q2 2024, Tesla's net profit was $1.48 billion, a YoY decline of 45%. Tesla stated that the main reason is the downward trend in average car sales price, as well as the rising project cost in the field of artificial intelligence.
Tesla's car sales still haven't picked up. While offering great discounts, sales have increased, but not enough. According to delivery data, Tesla delivered a total of 443,966 cars in Q2, a YoY decrease of 5%, but an increase compared to 386,810 in the previous quarter.
Tesla's revenue mainly comes from car business, energy business, services and other businesses, of which the car business still accounts for the bulk, reaching $19.88 billion, which is more than 70% of the total revenue for the quarter. However, compared with the same period last year, revenue from car business has dropped by 7%.
It is worth noting that Tesla's energy storage business has performed well, to a large extent offsetting the weakness in the car business. In Q2 2024, energy business revenue was $3 billion, a YoY increase of 100%. In the production and delivery report for the quarter, Tesla disclosed a new quarterly high of 9.4 GWh of battery storage, more than twice the amount of battery deployment in the previous quarter.
Once again, Musk mentioned the low-cost model. At the beginning of the conference call, Musk mentioned that Tesla's inexpensive model will be mass-produced in the first half of next year (2025).
Once again, Musk mentioned the affordable model. At the beginning of the conference call, Musk mentioned that Tesla's affordable model will be put into production in the first half of next year (2025).
This time, re-proposing a low-priced model is also injecting some hope for Tesla, which has not welcomed new flagship products for a long time. In early April of this year, foreign media reported that Tesla executives secretly cancelled the development plan of the low-priced model "Model 2" in February without letting employees and suppliers know, and then Musk refuted the rumors on X platform. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
At the first quarter financial report conference call, Robotaxi's plan was the highlight, but Musk also mentioned the low-priced model. At that time, he said, "That will be very fast. The next generation product line will be built on the existing production line."
B
In fact, this earnings conference call only lasted about an hour, which is a bit short for Tesla.
If compared with the previous quarterly conference call, it is not difficult to find the repetition. This may be a footnote to Tesla's current difficulties: At a time when the car business is weak, Tesla is seeking many new growth points, but the landing of these new projects takes time. Keeping the confidence of investors and the market between vision and landing is the biggest challenge.
For the status quo, Tesla claimed that the company is between two growth waves: the first wave is the global expansion of the Model 3/Y platform, and the next growth wave will be launched by the progress of autonomous driving and the launch of new products, including models based on the next generation automotive platform.
Robotaxi, FSD, humanoid robots, and AI are all Tesla's "next big things".
For Robotaxi, Tesla officially postponed the online plan originally scheduled for August to October 10th.
For humanoid robots, Musk revealed before the earnings announcement that a small number of humanoid robots will be used internally in Tesla next year and are expected to be mass-produced for his company in 2026. At the earnings conference, Musk further stated that Optimus Prime "will bring huge performance contributions to Tesla in the future".
But compared with the time point proposed in April of this year, this plan has been postponed for about half a year as a whole. At that time, Musk proposed that there will be a Optimus Prime robot working in Tesla factories before the end of this year, and it can be delivered to other companies before 2025.
Regarding FSD, Musk gave a more specific commitment than before when this earnings report was announced, stating that "If Tesla cannot achieve unsupervised fully automatic driving (Unsupervised FSD), I will be shocked." In addition, Tesla will apply for regulatory approval of supervised Tesla FSD in Europe and China, which is expected to be approved before the end of 2024. Obtaining approval from relevant regulatory agencies is also a key point for Musk to promote the Robotaxi grand plan globally.
On the conference call, Musk stated that Tesla will soon complete the largest artificial intelligence training cluster to date, equipped with 0.02 million H100 GPUs.$NVIDIA (NVDA.US)$As for the high cost, Musk also has a plan. He told investors that the company will work hard to develop its Dojo supercomputer: "It is very difficult to compete with Dojo and Nvidia, but I think we have no choice. We now rely too much on Nvidia."
On the X platform (formerly pushed Te), Musk mentioned that by the end of this year, Dojo 1 will launch a training project with computing power equivalent to 8000 Nvidia H100s: "Although this scale is not large, it is not small."
"The whole story is about what will happen next." The managing partner of Deepwater Asset Management commented in an interview with Bloomberg.
C
The good news is that investors seem to be working hard to maintain trust and waiting quietly between disappointment and hope.
Since December of last year, Tesla's stock price has been falling, hitting bottom in April this year with a 22% drop in just one month. Its market cap evaporated by $151.9 billion.
In the crisis, Musk continued to make moves: suddenly announcing that the Robotaxi project would be launched in August this year, describing it as the 'Tesla network'. At the same time, Musk explicitly denied rumors of giving up the cheap model plan. In May, Tesla released the latest demo video of the humanoid robot Optimus. In the video, the Optimus robot in the Tesla factory picks up batteries and arranges them neatly in the battery slots.
In addition, in April, Musk announced Tesla would lay off 1.4 million people as part of cost reduction efforts. In July, foreign media reported that Tesla was recruiting nearly 800 new employees, a far cry from the jobs that were laid off, but it provided a glimpse into Musk's adjustments to Tesla. These newly opened positions at Tesla were mostly focused on AI and robot product fields, with at least 25 positions related to autonomous driving development and more than 30 positions focusing on humanoid robots.
A series of operations have brought Tesla's stock price back up in the past three months, recovering most of its losses. People are so eager to wait for good news from Tesla that when Tesla released production and sales data for Q2 2024 on July 2 showing that global production and deliveries were down year-on-year but up quarter-on-quarter, Tesla's stock price continued to rise. Tesla's stock price has already returned to its level in December last year.
The bad news is that Tesla's time is running out - the commitment to key new projects' launch dates are all in the second half of this year or the first half of next year, which are challenges Tesla faces to maintain market confidence and compete against external rivals. In terms of the Chinese market alone, the later Tesla's cheaper models and Robotaxi enter the market, the greater the competitive pressure will be. At present, the domestic car price war is still unresolved, with numerous car companies including Zero Run, Avita, Chery, and Geely launching new discount policies in July alone. Not to mention new players like Xiaomi and Xiaopeng, who are eagerly lining up to compete with Tesla.
In terms of the Chinese market alone, the later Tesla's cheaper models and Robotaxi enter the market, the greater the competitive pressure will be. At present, the domestic car price war is still unresolved, with numerous car companies including Zero Run, Avita, Chery, and Geely launching new discount policies in July alone. Not to mention new players like Xiaomi and Xiaopeng, who are eagerly lining up to compete with Tesla.$NIO Inc (NIO.US)$These highly anticipated new players are lining up one after another to compete with Tesla.
Robotaxi services have already begun testing and operating in various companies including Didi.$Baidu (BIDU.US)$Recently, there has been controversy over the online car-hailing business in China as the Baidu-owned Luobo Kuaipao service has been accused of competing for passengers with traditional taxis. According to Economic Daily News, a Wuhan citizen posted a 7.1-kilometer self-driving order with Luobo Kuaipao, and the order only cost 5.07 yuan.
Although after this financial report Tesla disclosed a lot of information, including the exact timing of the Robotaxi launch that was delayed, the commitment to obtain FSD permit in Europe and China within this year, and the effort to counter the high cost of Nvidia GPU with Dojo, it's worth ringing alarm bells that Tesla's stock price still fell sharply.
In order for Musk's new pie to be absorbed by the market, Tesla needs to come up with more specific measures.
The good news is that investors seem to be working hard to maintain trust and waiting quietly between disappointment and hope.
Since December of last year, Tesla's stock price has been falling, hitting bottom in April this year with a 22% drop in just one month. Its market cap evaporated by $151.9 billion.
In the crisis, Musk continued to make moves: suddenly announcing that the Robotaxi project would be launched in August this year, describing it as the 'Tesla network'. At the same time, Musk explicitly denied rumors of giving up the cheap model plan. In May, Tesla released the latest demo video of the humanoid robot Optimus. In the video, the Optimus robot in the Tesla factory picks up batteries and arranges them neatly in the battery slots.
In addition, in April, Musk announced Tesla would lay off 1.4 million people as part of cost reduction efforts. In July, foreign media reported that Tesla was recruiting nearly 800 new employees, a far cry from the jobs that were laid off, but it provided a glimpse into Musk's adjustments to Tesla. These newly opened positions at Tesla were mostly focused on AI and robot product fields, with at least 25 positions related to autonomous driving development and more than 30 positions focusing on humanoid robots.
A series of operations have brought Tesla's stock price back up in the past three months, recovering most of its losses. People are so eager to wait for good news from Tesla that when Tesla released production and sales data for Q2 2024 on July 2 showing that global production and deliveries were down year-on-year but up quarter-on-quarter, Tesla's stock price continued to rise. Tesla's stock price has already returned to its level in December last year.
The bad news is that Tesla's time is running out - the commitment to key new projects' launch dates are all in the second half of this year or the first half of next year, which are challenges Tesla faces to maintain market confidence and compete against external rivals. In terms of the Chinese market alone, the later Tesla's cheaper models and Robotaxi enter the market, the greater the competitive pressure will be. At present, the domestic car price war is still unresolved, with numerous car companies including Zero Run, Avita, Chery, and Geely launching new discount policies in July alone. Not to mention new players like Xiaomi and Xiaopeng, who are eagerly lining up to compete with Tesla.
In terms of the Chinese market alone, the later Tesla's cheaper models and Robotaxi enter the market, the greater the competitive pressure will be. At present, the domestic car price war is still unresolved, with numerous car companies including Zero Run, Avita, Chery, and Geely launching new discount policies in July alone. Not to mention new players like Xiaomi and Xiaopeng, who are eagerly lining up to compete with Tesla.$NIO Inc. USD OV (NIO.SG)$These highly anticipated new players are lining up one after another to compete with Tesla.
Robotaxi services have already begun testing and operating in various companies including Didi. Recently, there has been controversy over the online car-hailing business in China as the Baidu-owned Luobo Kuaipao service has been accused of competing for passengers with traditional taxis. According to Economic Daily News, a Wuhan citizen posted a 7.1-kilometer self-driving order with Luobo Kuaipao, and the order only cost 5.07 yuan.
Although after this financial report Tesla disclosed a lot of information, including the exact timing of the Robotaxi launch that was delayed, the commitment to obtain FSD permit in Europe and China within this year, and the effort to counter the high cost of Nvidia GPU with Dojo, it's worth ringing alarm bells that Tesla's stock price still fell sharply.
In order for Musk's new pie to be absorbed by the market, Tesla needs to come up with more specific measures.
Editor/Emily