The electric vehicle industry also has a very long upward cycle, at least 10 years, estimated to be 20 years. In this long-sloping and snowy track, there are four flywheel drive industries that continue to rise:

The first flywheel is hardware growth, and electric vehicles replace fuel vehicles.

The second flywheel is software growth, and the subscription model improves profit margins.

The third flywheel is service growth, which can also be understood as the growth of application scenarios, the release of in-car entertainment and office demand, and the replacement of the mobile travel industry when self-driving technology is mature.

The fourth flywheel is the robotization of cars, and your smart car is your mobile robot companion, which can travel through the streets and even serve you in different cities according to your instructions. Take takeout, pick up express delivery, buy cigarettes and alcohol, deliver goods, give people away, pick up children and girlfriends for you. The increase in your time in the car is part of it, and more importantly, the number of interactions between you and the car will increase exponentially.

Personal views may not be correct.

The probability of implementation of 1, 2 and 3 is close to 100%. It's just a matter of time. 4 is uncertain, for reference only.

Based on the above judgment, it is necessary for us to pay enough attention to Tesla, Inc., the bearer of the electric vehicle industry.

On July 26th, Tesla, Inc. released his second quarterly report for 2021, a near-perfect quarterly financial report, which not only answers almost all questions, but also leaves plenty of room for imagination.

Below we will use three chapters to take a look at Tesla, Inc. 's financial performance, his response to questions and his imagination for the future.

Graphic illustration of Tesla, Inc. 's second quarterly report

Before analyzing Tesla, Inc. 's financial report, let's determine its business composition.

In addition to the electric car business recognized by the public, Tesla, Inc. also has car rental business, carbon points trading business, energy storage and leasing business, and automotive software service business.

Combining all businesses, Tesla, Inc. 's revenue has risen from $7 billion to $31.536 billion in the last five years, with a four-year CAGR (compound annual growth rate) of 46 per cent.

On a quarterly basis, from Q1 in 2019 to Q2 in 2020, Tesla, Inc. 's quarterly revenue increased from US $4.551 billion to US $11.958 billion. Q2 increased by 98% year-on-year, 15% month-on-month, and CAGR reached 37% in two years. Without the impact of the epidemic, the compound growth rate would still be more than 40%.

Next, let's learn about the progress of Tesla, Inc. 's various business sectors.

First of all, let's take a look at its electric car sales and rental business.

In 2021, Tesla, Inc. delivered a record 201304 new cars, up 121 per cent from last year, 9 per cent month-on-month, and CAGR reached 45 per cent in two years. A total of 386181 new cars were delivered in the first half of the year, achieving 48.3% of the annual target of 800000, which is likely to exceed the target this year.

According to data released by Tesla, Inc., Tesla, Inc. 's market share of all new cars in North America, Europe and China is rising rapidly. The North American market has risen from nearly zero in 2015 to 1.65 per cent of Q2 in 2021, and the European and Chinese markets have both risen to about 1 per cent.

In the clean energy plan designated by the Biden government, it is expected that electric vehicles will account for 40% of all new car sales in the US market by 2030, which is a huge boon for Tesla, Inc., who aims to accelerate the transition to sustainable energy.

Revenue from the Q2 car rental business was $332 million, up 24% year-on-year and 11% month-on-month. There will not be much room for imagination in this business for the time being. I believe that if self-driving technology is realized in the future, Tesla, Inc. will be able to organize his own self-driving fleet, connect the global idle Tesla, Inc. car network, and develop rental and taxi-hailing services. will be a very imaginative business.

Next, let's take a look at Tesla, Inc. 's unique carbon points income.

Carbon credits come from part of America's clean energy program, and the government has a policy that requires automakers to sell a certain percentage of zero-emission vehicles-- that is, electric vehicles. If not, you can only buy the quota with your peers who meet the requirements. Tesla, Inc. only produces electric cars, so naturally there is a lot of extra quota. Traditional fuel vehicle manufacturers such as General Motors Co buy carbon points heavily from Tesla, Inc..

There are similar regulations not only in the United States, but also in China and the European Union. At present, the carbon price in Europe has reached 34 euros / ton (China is currently 50 yuan / ton). If 2.5 kilograms of carbon emissions are produced by a liter of gasoline, it will bring an additional cost of 0.08 euros (about 0.63 yuan) to a liter of gasoline.
However, as traditional car companies accelerate into the battlefield of electric vehicles, the proportion of their electric vehicle sales is at least a matter of time required by the government, and there will be no need to buy carbon points in the future. as a result, the points of new energy vehicle manufacturers such as Tesla, Inc. will have nowhere to sell.

Then let's take a look at Tesla, Inc. 's energy and storage services business, which mainly stems from the acquisition of solar power company Solar City and the supercharging station business. Solar power has evolved into two business segments: solar roofing systems and solar panels.

Revenue from Tesla, Inc. 's energy storage business Q2 reached a record-breaking $801 million, an increase of 117 per cent year-on-year and a two-year CAGR of 47 per cent.

Tesla, Inc. collects energy through Solar City's solar roof system, converts it into electricity and stores it through advanced technology, and then inputs Tesla, Inc. 's car through more than 26900 super charging piles all over the world. Of course, the number of overcharging is still growing rapidly, because its energy storage is also growing rapidly, the number of cars is also growing, and power consumption is also growing rapidly. Q2 storage energy in 2021 increased by more than 200% compared with the same period last year.

Ideally, Tesla, Inc. 's energy storage and charging cycle system can not only provide a continuous supply of almost free electricity for Tesla, Inc. cars around the world, but also open it to other brands of electric vehicles for charge. this is part of Musk's ambitious open plan for supercharging, with the ultimate goal of accelerating mankind's move towards sustainable energy plans.

Tesla, Inc. 's other services business reached a record $951 million this quarter, up 95 per cent from a year earlier, with a CAGR of 25 per cent in two years.

This speed is not fast, mainly because Tesla, Inc. FSD (fully autopilot technology) software development takes time, the previous development is Autopilot assistant driving software.

With the full release of FSD9.0 in North America on July 8, 2021, it is believed that there will be a surge in the number of users choosing this software service in the future if this technology solution finally proves to be effective.

Currently, the cost of matching the service is $10, 000, and in order to increase user usage, Tesla, Inc. also offers a monthly subscription version, which costs $199 per month for the standard version and $99 for the low-end version, provided the cars support HW3.0.

Financial report responds to questions

With the increasing scale of Tesla, Inc., its stability is getting higher and higher. in the past, some people jumped out and said that Tesla, Inc. 's business that could not live for more than three months disappeared, and the voice that Tesla, Inc. was a scam also disappeared. subsequently, Tesla, Inc. could not continue to grow rapidly, Tesla, Inc. only increased production without increasing income, Tesla, Inc. could never achieve self-driving, and so on.

This financial report is unlikely to falsify all doubts, or at least prove that it is on the right path.

In April, there was a large area of negative news about Tesla, Inc. in China, and domestic sales fell sharply, which was the first time that Tesla, Inc. experienced a decline in sales beyond the reasons for production capacity.

When most people worried that Tesla, Inc. 's sales boom might enter a bottleneck, it responded with a near-perfect quarterly sales report.

The bigger scepticism comes from concerns about its profits. Although Tesla, Inc. has made profits for eight consecutive quarters, not a single quarter has been achieved by selling cars. In 2020, for example, Tesla, Inc. made an annual profit of 721 million US dollars, but the income from carbon credits alone was nearly 1.6 billion US dollars. Actually, it lost more than 800 million US dollars. And carbon points trading is not always a long-term business, sooner or later will disappear.

Tesla, Inc. made a quarterly profit of $1.142 billion in the Q2 quarter of 2021, with a profit of nearly $800m, excluding $354 million in carbon credits.

Tesla, Inc. proved for the first time that he can make a profit on a large scale without relying on carbon credits.

In 2021, Tesla, Inc. 's overall profit margin rose to 24.1% from 21% a year ago, and the gross profit margin of the automobile business rose to 28.4%, an increase of 298bp over the same period last year and 950bp higher than Q2 in 2019.

For Tesla, Inc., or for the electric vehicle industry, the ultimate doubt is whether self-driving can be realized.

Before self-driving is really realized, no one can make the doubters falsify it, and all they can do is to keep moving forward step by step. Tesla, Inc. FSD version 9.0 push, can be regarded as a resounding response to skeptics, but this set of technology still remains to be proved, both legal and practical aspects, it has a long way to go.

The combination of the Internet and the mobile phone industry has created a soft-hard combination mode of small steps, fast running and fast iteration in the smartphone industry. in the end, the software dominates. After Moore's Law expires, it is the software that further pushes the industry forward and continues to improve the user experience. Of course, it also continues to grab profits.

There is a good chance that this model will be repeated in the electric car industry. Tesla, Inc. FSD 9.0 version set an industry precedent, he is exploring the way for the entire industry participants, which is why even competitors would like to see Tesla, Inc. succeed.

Why does Tesla, Inc. go up in the short term and in the long run?

Tesla, Inc. rose 0.57% for the year to Aug. 3, 2021, lagging far behind the S & P 500's gain of about 18% this year.

Not to mention the performance of giants such as Microsoft Corp, Google and Facebook Inc.

Of course, among the large technology stocks, Apple Inc and Amazon.Com Inc also performed mediocre, with Apple Inc up 10 per cent and Amazon.Com Inc up 2 per cent. Apple Inc's scale is really too large, and the smartphone industry has passed a period of rapid growth. Amazon.Com Inc's performance has been dragged down because consumers have returned to the arms of offline consumption after the epidemic was alleviated.

Tesla, Inc. is in the early stage of the development of the electric vehicle industry, and the performance in the second half of the year is also worth looking forward to, which is likely to exceed the annual target of 800000 vehicles. In the case of continuous price reduction, the phenomenon that Tesla, Inc. is in short supply continues to ferment, the once interrupted Model S and Model X are about to resume production, and the demand continues to be strong. Electric pickup truck Semi and electric truck Cybertruck are also widely expected.

The only thing Tesla, Inc. seems uncertain about is the progress of the supply chain and the progress of the new plant, but if elon musk can't handle these things on this planet, you can't expect anyone else in the electric car industry to do it.

During the long period of respite in Tesla, Inc. 's share price, investors rarely have enough time to buy on the bargain.

In the long run, from the perspective of hardware alone, it is highly probable that the proportion of new energy vehicles in the United States will reach 40% or even exceed this proportion in 2030. If the US market maintains sales of about 20 million a year, it means that the sales of new energy vehicles will then reach 8 million, and the global sales of new energy vehicles may reach the range of 3000 to 40 million.

Global sales of new energy vehicles (including pure electricity, hybrid and extended range) reached 2.86 million in 2020, an increase of 36 per cent over the same period last year, with Tesla, Inc. accounting for 17.4 per cent and a growth rate of 36 per cent.

In the next few years, Tesla, Inc. aims to achieve a compound annual growth rate of 50 per cent. Assuming it is completed at a 20 per cent discount, Tesla, Inc. 's sales in 2030 will be 29 times that of 2020, or 14.5 million vehicles.

At present, the average price of Tesla, Inc. is about $50, 000, assuming that the average price falls by 25% to $37500 within 10 years, which also means that Tesla, Inc. 's income from selling cars reaches $536.5 billion. Suppose the hardware business has a net profit of 5 per cent, or a profit of $27 billion, and with a 10-year CAGR of 50 per cent, taking 60 times PE, the market capitalization of the vehicle hardware is $1.6095 trillion.

Assuming that 20 per cent of new cars use FSD and the price of the service falls to $8000, revenue from this business will reach $23.2 billion, plus $16.8 billion for subscribers, which will be a business with annual revenue of about $40 billion, and the software business will typically have a profit margin of about 40 per cent, valuing it at 80 times PE at $1.28 trillion.

The solar energy storage and supercharging network in 2030 is estimated to have covered the world, replacing part of the profits of traditional petroleum and petrochemical enterprises. Based on the fact that normal cars run 8000 kilometers a year and fuel consumption per kilometer is 0.9 yuan, the annual fuel consumption of a car is about 7200 yuan. If Tesla sells 14.5 million new cars in 2030, it is estimated that car ownership will reach about 50 million. If these cars consume fuel, the annual expenditure will be about 360 billion yuan. That is, about 56 billion US dollars, and the power consumption cost of Model 3 is about 0.35 yuan per kilometer. Tesla, Inc. 's other models generally consume more electricity. Assuming that the average power consumption cost is 0.4 yuan per kilometer, then car owners spend about 25 billion US dollars a year on electricity.

Add in businesses such as supercharging open to other brands and solar roofs, and revenue is conservatively estimated at about $50 billion a year. Give 10% profit margin and 80 times PE, corresponding to a valuation of $400 billion.

16095 dollars 12800 dollars 4000 = 3.2895 trillion dollars.

These are relatively certain businesses, and there is no estimate of the uncertain self-driving business-- or the self-driving technology that can be realized in 2030. And the potential demand for in-car entertainment, office and other applications, and the opportunities brought about by car robotization.
It was a magnificent opportunity.

A reader once asked me: are there any good targets for the investment in the electric car sector?

My answer is: if you want certainty, the best choice of the whole vehicle plate is Tesla, Inc., comprehensive certainty and growth, the best is Tesla, Inc.. In terms of growth, the electric three silly is slightly higher than Tesla, Inc.. Of course, there are many opportunities for investment in the industrial chain in the electric vehicle sector, which will be answered after the study.