After trading yesterday, Tesla (Tesla, Inc.) announced a split of its shares, hoping to make it easier for employees and investors to buy shares in the company. Tesla shares rose 6.46 per cent after the news. The company said that shareholders registered on Aug. 21 will receive four additional shares for every one share they hold, while new shares will begin trading on Aug. 31.

In general, stock splits are a way for companies to make it easier for retail investors to get shares, which may attract individual investors who trade small amounts.

Tesla, Inc. 's share price has more than tripled since the beginning of this year, which is controversial.

What also sparked a heated discussion in the industry is the continued hot-selling Tesla, Inc. electric car.

In the first half of this year, Tesla, Inc. sold a total of 179000 electric vehicles worldwide, more than the car giants Renault-Nissan, Volkswagen and BYD combined. The latter sold 65521, 64542 and 46554 vehicles respectively in the first half of the year.

In China, the Model 3 won the first place with sales of 43000 vehicles in the first half of 2020, far ahead of other electric vehicle models.

In June 2020, specific sales figures for the top single models in the three major cities showed that in June this year, the Model 3 topped the list with 1876 vehicles, 3171 vehicles and 1717 vehicles respectively in Beijing, Shanghai and Shenzhen. It is not only 2-3 times ahead of the second place in sales, but also surpasses the "star" fuel models including Mercedes-Benz GLC, Carola, Xuanyi, Tuguan L and so on.

This also validates the judgment of Tesla, Inc. CEO Elon Musk (Elon Musk) that Tesla, Inc. 's real opponent is not the other new energy vehicles still on the production line, but the fuel vehicles on sale.

Tesla, Inc. Model 3 sales continue to rise in first-tier cities. In the face of such a situation and reality, even Li Xiang, founder of Li Auto Inc., who has always been famous for his rational and objective evaluation of the dynamics of the automobile industry, has to sigh: "Ah …"... "annihilation", "A car with a range of 445km has overturned everything", "almost all enterprises do not know where Tesla, Inc. won, because the reason for winning is too primary and not so glamorous. On the contrary, it has been ignored" and "it shows that most of us have not yet figured out how Tesla, Inc. won. Compared with range, intelligence and cost performance, these three have won and have not achieved any results." As a new force of car-building, especially the founder of the new power of car-building, which has just been listed on the stock market in the United States, we can feel the helplessness Li thought and the helplessness between the lines.

Why did Tesla, Inc. win too junior?

Because what's worse than losing is not knowing how to lose.

Range, size, intelligence (this is debatable), individual victory (Tesla, Inc.), overall failure (sales).

Li wanted to be depressed, but also a sour ES6, "No one knows why the ES6, which sells for close to 400000, has a range of only 420km." Sales are steady first, while the Model 3 "does everything" with a range of 445km.

Although Tesla, Inc. has been complained too much, poor craftsmanship, poor quality of interior decoration, etc., but sales still firmly ranked first, while other car companies began to prepare to run over Tesla, Inc. with a range, Tesla, Inc. dominated the world with a range of 400km, which turned out to be a false proposition.

First, where did Tesla, Inc. win?

1. Brand strength

Once the brand power is formed, its power is huge, which is why, although Apple Inc's mobile phone is not cheap, it can still firmly occupy 80-90% of the profits of the mobile phone industry.

What's the difference between a technology company and a car maker?

When most Chinese brand car companies study the market from the perspective of users, configuring prices close to the people and moving heaven and earth, they can't move you in the end, but Tesla, Inc. doesn't think much about the feelings of users, whether it's the design of the central control screen without physical buttons, or the self-driving with user training level, which is the correct version of Huang Xiaoming's famous saying-- don't think about it, I want me to think.

Musk's charisma and the roles of adventurers and followers all determine the value-added gap between Tesla, Inc. and the products of traditional car companies and new powers, but Musk's personal temperament is that he will never admit that he is wrong. From a psychological point of view, Musk's tough attitude conquered a group of consumers, coupled with the high price strategy, double support the value of Tesla, Inc..

The rebellious Model 3 is like iPhone 4 at that time. Imagine how controversial the design of canceling physical buttons would be if Tesla, Inc. had done market research from the beginning (which is what many traditional car companies love to do). If it had been replaced by traditional car companies, the proposal would have been scrapped long ago.

Tesla, Inc. didn't care what potential users thought from the beginning, while traditional car companies cared too much.

This is Tesla, Inc. 's brand strength, leading the pace of innovation in the field of electric vehicles.

2. Software-defined car

Since the second half of last year, SDV (Software defined car) has gradually become popular again, which is inseparable from Tesla, Inc. 's function-paid upgrade model that has been emulated by domestic OEM. Traditional OEM suddenly discovered a new world, they did not expect that the auto industry can still play this way, and this kind of play has no sense of disobedience.

The picture below is Tesla, Inc. 's paid upgrade package.

Because the hardware cost still accounts for the vast majority of the BOM cost of the traditional car, which determines the grade of the vehicle or the number of configuration. Now, the cost of software is getting higher and higher, especially in the field of infotainment and the development cost of autopilot is so high that OEM find it difficult to recoup the cost by selling hardware alone, which is bound to make OEM begin to explore how to make a better return on high software investment.

It is estimated that software will account for 40% of the vehicle manufacturing cost by 2023.

Specific to the aggregator of SDV-Tesla, Inc..

Tesla, Inc. 's software services are mainly divided into three categories: Auto Pilot FSD autopilot software package, OTA paid upgrade, premium car network subscription payment, of which FSD accounts for the largest contribution to software service revenue.

Usually, the product planning of traditional car companies is to build cars and sell them to consumers. But for Tesla, Inc., selling cars is just the beginning. "Tesla, Inc. can earn up to $600m by selling 'fully autopilot' software packages," Tesla, Inc. CFO said on a conference call on Q1 earnings in 2020. With the continuous release of new features, the service will become an important lever to pry the company's gross profit margin. Obviously, Tesla, Inc. makes money by reducing prices to expand market share and then selling software and other additional services.

In essence, Tesla, Inc. is close to a software company.

The premise of making money from software is to have a huge user base. When the number of users is large enough, any new feature is likely to bring revenue and huge profits, so Tesla, Inc. uses the lower price of Model 3 and the soon-to-be mass production Model Y to accumulate more users for Tesla, Inc..

3. Mileage anxiety and charging troubles, are these essential problems?

Like the first generation of iphone at that time, many people thought it was just a cool toy, but it turned on the intelligence of mobile phones. Until the advent of IPhone4, more and more people felt that they really needed a smartphone. Apple Inc still had all kinds of problems: the screen was not resistant to falling, the battery was not durable, and there was no keyboard. Today, people seem to have adapted to these problems.

Today's electric cars, people also have the problems of mileage anxiety and charging.

Tesla, Inc. is a car company that lives on the long board effect, so it means that it has obvious shortcomings. The whole vehicle manufacturing process of its model has become the object of complaint of the majority of car owners. But even so, why are its sales so high?

The reason is simple: at present, as the only car company that can use intelligent driving function as the core product power, its excellent intelligent experience has made people accept the shortcomings of its product technology.

Second, how to treat Tesla, Inc. 's valuation?

Apple Inc has long been regarded as a single-product hardware company, and as its market capitalization grows, investors worry that its price-to-earnings ratio will never reach or exceed the market price-to-earnings ratio.

However, Apple Inc's valuation has continued to rise over the past two years.

Apple Inc's share of iPhone revenue in 2015-2018 is about 60%. In 2019-2020, the share of iPhone revenue dropped to 40%. In 2019-2020, the share of revenue from wearable devices and software services, such as headphones, increased significantly, with strong explosive growth, high gross profit margin, better profitability, more diversified business and improved profitability. Apple Inc's valuation center was 17 times higher in 2017-2018. Valuations rose in the second half of 2019 and 2020 and are now valued at 33 times.

The rise in valuations is driven by growth in new income with higher gross margins.

From the trend, Apple Inc Mac, iPhone, iPad "three big pieces" revenue decline, wearable and service revenue continues to grow.

In terms of business share, the 2020Q3 financial quarter shows that the revenue share of Apple Inc's mobile phone has dropped to less than 50%.

In other words, the shift in profit structure to services has made investors realize that Apple Inc's financial model is less like a hardware business and more like a digital service, so a higher price-to-earnings ratio is needed.

The same conclusion can be applied to Tesla, Inc..

Anxin Securities predicts that due to valuation-driven, innovative new high-profit business models such as Tesla, Inc. SAAS and MAAS will support Tesla, Inc. 's high valuation in the next 5-10 years. Assuming Tesla, Inc. is valued 30 times in 2025, the market capitalization will reach 600 billion US dollars, assuming 40 times valuation, the market capitalization will be as high as 800 billion US dollars.

Specifically:

The proportion of SAAS business (software as a service) increased from 2020 to 2025: in 2025, the net profit of Tesla, Inc. 's vehicle and energy business was about US $11 billion, with a net profit of about 8%. The net profit of JFSD software was about US $9 billion, and the overall net profit was about US $20 billion.

The share of MAAS business (mobile as a service) increased in 2025-2030: after 2025, the commercial application of Robotaxi business tends to mature, in which case Tesla, Inc. will play a role similar to UBER TECHNOLOGIES INC, taking a 30 per cent cut from revenue per mile. The global travel market is 10 trillion miles per year. Assuming that the cost competitiveness of Tesla, Inc. 's vehicles with private vehicles reaches 70 cents per mile, the 10 per cent transportation market will generate $200 billion in annual service revenue. Crucially, the income should have a high gross profit margin, which Musk estimates can make up to $30,000 a year.

Third, who is Tesla, Inc. 's real competitor?

In terms of sales volume, the target of Tesla, Inc. Model 3 has never been the electric car products of new forces and traditional manufacturers, subverting fuel cars is Tesla, Inc. 's ultimate goal. Obviously, Tesla, Inc. has achieved such a goal in places such as going north to Shenzhen, and perhaps the most worrying situation for the new domestic car-building forces and other traditional manufacturers has become that Tesla, Inc. never regards them as competitors.

If Tesla, Inc. is a new species, it is subverting the auto industry, and its real competitors are smart devices such as mobile phones. The fundamental reason why smartphones and the mobile Internet industry they carry gave birth to almost all the giant companies of our time is that we humans spend more time on mobile phones than any other device.

In this dimension, in the long run, Tesla, Inc. 's real competitor may be Apple Inc, which is a game in which terminals compete with vertically integrated solutions.

Apple Inc has enough capital and strength to compete in this market, if it is willing. Apple Inc is expected to spend nearly $19 billion on research and development this year, an increase of more than $10 billion over five years ago. By contrast, the auto industry as a whole spends $80 billion to $100 billion on R & D each year, which is one reason why Apple Inc and other technology companies can be subversive over time. Historically, Apple Inc has been the most successful in vertical integration, and the same strategy can be applied to the automotive industry.

Conclusion

Tesla, Inc. is always controversial and is using the leapfrog strategy of high-tech products to market the future of electric vehicles.

Tesla, Inc. is essentially a computer, a computer with four wheels that will have autopilot function in the future. People misdefine it as a car, so they misjudge that people like BBA can still rule the world. It is only when you understand that Tesla is more than an electric car that you are just beginning to understand the nature of Tesla.

With the full recovery of Tesla, Inc. 's existing capacity and the rapid landing of new models in the new factory, people will see a magnificent revolution-new battery technology and self-driving technology.

Scientific and technological innovation is a beacon to open up the future direction of human civilization.

There are many similarities between Apple Inc under Steve Jobs and Tesla, Inc. under Elon Musk.

The difference is that Apple is already at its peak, while Tesla is on its way.