Is Tesla, Inc. worth US $400 billion in market capitalization? The market debated the topic when it released its results last quarter. Another quarter has passed, people who like Tesla, Inc. or hate Tesla, Inc. are still dead, and in the controversy, Tesla, Inc. has always maintained a ferocious growth momentum:

• In the third quarter, Tesla, Inc. delivered 139000 vehicles worldwide, a year-on-year increase of 44% and an all-time high.

• In the third quarter, Tesla, Inc. realized gross profit of 2.06 billion US dollars, up 73% from the same period last year, and realized net profit (non-GAAP) belonging to ordinary shareholders of 870 million US dollars, up 157% from the same period last year, making a profit for the fifth consecutive quarter.

At the same time, Tesla, Inc. goes further in autopilot technology. It has announced the launch of a fully autopilot test version to a small number of users on the evening of the 21st, and Musk also said on the phone that Tesla, Inc. is expected to launch the fully autopilot function by the end of this year.

In contrast to the bright performance, Tesla, Inc. fell into a whirlpool of public opinion several times in the third quarter.

In China, one of the most important markets, Tesla, Inc. is constantly in the news, one of the funniest of which is the Sina Technology report that Tesla, Inc. China forbids employees to say the word "leek" and even forbids food containing leeks in Shanghai superfactories, such as leek steamed buns and leek dumplings.

Tesla, Inc. 's sensitivity to the word "leek" comes from the dissatisfaction of old car owners caused by its frequent price cuts. so far this year in the Chinese market, Tesla, Inc. 's best-selling series, the Model 3, has been cut twice in April and October, and the price of the standard continued version has been as low as 249900 yuan. After the second price cut in early October, accusations about Tesla, Inc. "cutting leeks" surged again.

A few days ago, there were rumors in the market that Tesla, Inc. Model 3 would reduce the price to 199000 yuan. although Tesla, Inc. 's general manager in China quickly responded to "out-and-out rumors" among car friends, consumers said they were psychologically prepared for Tesla, Inc. 's possible price cuts in the future.

According to media statistics, Tesla, Inc. has adjusted the official price range of his Model S, Model X, Model 3 and Model Y models for a total of about 59 times since he entered the Chinese market in December 2013. Frequent price adjustments have made Tesla, Inc. mired in great controversy in the Chinese market, and the label of "cutting leeks" is difficult to remove.

The Chinese team is worried about this, but in sharp contrast, Musk on the other side of the ocean is still triumphant. Tesla, Inc. 's stock market capitalization has reached an average of US $250 billion in six months, as long as Q3 Tesla, Inc. 's revenue or profit meets a certain target. Musk will have a chance to unlock the fourth batch of option awards.

On the one hand is the record-breaking performance, on the other hand is endless questioning and controversy, in this strange contradiction, Tesla, Inc. is still ferocious.

A record quarter

Musk once again achieved his boasting.

In September, Musk announced in an internal email that the company was "on track to set another record for new car delivery in the third quarter." Facts show that Tesla, Inc. indeed ushered in another highlight moment in Q3, with the number of vehicles delivered worldwide reaching 139000, a year-on-year increase of 44% and an all-time high.

At the same time, in terms of sales, Tesla, Inc. also performed well, with vehicle sales reaching 145000 in the third quarter, up 51 per cent from the same period last year. This is also the best figure in history, and it also indicates that under the premise that production capacity is guaranteed, Tesla, Inc. 's delivery volume in the next quarter is also worth looking forward to.

In terms of production capacity, the annual production of its California plant Model 3max Y has been increased to 500000 vehicles, while the Shanghai plant Model has a production capacity of 250000 vehicles in three years and will achieve mass production of Model Y by 2021. At the same time, the Berlin plant is also expected to start production in 2021, and it can be predicted that with the expansion of sales volume, Tesla, Inc. will have a big increase in production capacity next year.

The main contributor to sales is still the relatively inexpensive Model 3 series, with Tesla, Inc. selling an average bike of $53000, down from the first two quarters of this year. At the same time, the price of Tesla, Inc. 's Model 3 series fell again in October in the Chinese market, and the average price of a bike is likely to be pulled down again.

Tesla, Inc. 's idea of reducing the average car unit price and expanding the scale of sales has achieved results. In the third quarter, its operating revenue also achieved a large increase: total revenue reached 8.77 billion US dollars, an increase of 39% over the same period last year. Vehicle sales revenue was 7.34 billion US dollars, up 43.1% from the same period last year.

In addition to the increase in revenue and delivery volume, the most noteworthy point in Tesla, Inc. 's financial report is the re-optimization of its profitability.

• In the third quarter, Tesla, Inc. made a gross profit of US $2.06 billion, up 73% from the same period last year, and his gross profit margin rose to 23.5% from 18.9% in the same period last year. Among them, the gross profit margin of vehicle sales increased from 21.8% to 27.0%.

• In the third quarter, Tesla, Inc. achieved a net profit (non-GAAP) of $870 million belonging to ordinary shareholders, up 157 per cent from a year earlier, and the corresponding net profit margin rose to 10 per cent.

The growth of sales and revenue comes more from the recognition of the market, and the improvement of profitability reflected in Tesla, Inc. 's financial report shows the gradual maturity of the company's own business ability.

In terms of cost control, Tesla, Inc. performed smoothly, and the operating expense rate dropped slightly to 14.3% compared with the previous two quarters. But it is important to note that part of the increase in Tesla, Inc. 's management fees is used to pay Musk's incentive compensation, and the talented CEO has unlocked several option awards in succession since the beginning of this year.

With the release of the Q3 financial report, Tesla, Inc. 's adjusted EBITDA reached US $1.81 billion in the third quarter, which means that Tesla, Inc. 's adjusted EBITDA has broken through the US $4.5 billion mark for four consecutive quarters. Musk has obtained the key to unlocking the fourth option and may receive another US $3 billion in salary income.

No matter from any point of view, this is a financial report that is sufficient to satisfy the market. Since Tesla, Inc. surpassed Toyota to top the list of global car companies by market capitalization, there has been a discussion about whether it does not live up to its name, and Tesla, Inc. 's growth potential and growth ability reflected in his financial reports have repeatedly disappointed short sellers.

Sales are the king.

Behind the continuous improvement in performance since the beginning of this year is Tesla, Inc. 's series of radical measures aimed at the market.

The performance of the third quarter revealed the uniqueness of Tesla, Inc. 's enterprise. Even if it fell into a storm of public opinion several times and there were not a few skeptics and short sellers, the market always preferred Tesla, Inc..

At the beginning of this year, Tesla, Inc. proposed that the annual delivery should reach the target of 500000 vehicles. Under the influence of the epidemic, the global vehicle market as a whole shrank, but Tesla, Inc. still maintained a good growth momentum. Musk said in an internal email in early October that the company is still expected to produce 500000 cars this year.

To achieve this goal, it means that Tesla, Inc. needs to deliver 182000 vehicles in the fourth quarter."it all comes down to the fourth quarter. Please take any conceivable steps to increase production.(improve quality at the same time)」。

Under this goal, Tesla, Inc. has lowered prices in North America, Europe and China since the beginning of this year. Beneath the appearance of its aggressive pursuit of sales, there is a deeper strategic appeal.

First of all, compared with fuel vehicles, the market share of electric vehicles is still very low, and there is still a gap between new power car companies such as Tesla, Inc. and traditional car companies.

With the reform of the automobile industry, Tesla, Inc. has ranked first in the market capitalization of auto companies in the world, but the actual sales and delivery data are not consistent with the stock price performance. In this context, Tesla, Inc., who is burdened with the expectations of investors, one of the current primary tasks is to accelerate the electrification process of the vehicle market and narrow the scale gap with traditional car companies.

Therefore, Tesla, Inc. repeatedly adjusted the price of his models, especially the inexpensive model Model 3, squeezing the living space of electric vehicles and even fuel vehicles in the same price range, and grabbing market share, so as to consolidate the current dominant position.

Secondly, expanding auto hardware shipments can also provide a basis for Tesla, Inc. to expand the scale of software revenue.

Judging from Tesla, Inc. 's current product layout, the existence of software sales business is getting stronger and stronger. Tesla, Inc. said it is expected to launch fully autopilot (FSD) by the end of this year. The price of the US version of the software is $8000 and the price in China is 64000 yuan-equivalent to the price of a standard continued version of Model 3. In addition, Musk also said that the price of FSD will become more and more expensive in the future, because there will be more features to join.

It is conceivable that with the launch and popularization of FSD and more software products, software revenue will become an important part of Tesla, Inc. 's income, and the gross profit margin brought by software will be much higher than vehicle sales. The premise of promoting software is that the automobile products equipped with software are of a considerable scale.

Tesla, Inc. 's idea is similar to Apple Inc. Apple Inc has been increasing investment in software and online services in recent years, focusing on the building of software ecology. Tesla, Inc. 's investment in software is also a proof that it is different from the traditional car company and has the attribute of a science and technology enterprise.

In addition, in the Chinese market, the price reduction of the Model 3 may also need to be attributed to the layout of its auto product line.

The domestic Model Y, which is between the price of the luxury car Model S and the affordable car Model 3, will be on the market in 2021. In the layout of the product line, Tesla, Inc. 's various models are obviously aimed at different levels of consumers, so the price of Model 3 goes down one step in advance, opening the gap between different models at different prices and creating more market space for the upcoming domestic Model Y.

For the above reasons, Tesla, Inc. 's frequent price reduction is not difficult to understand. Although its aggressive promotion strategy has triggered a wave of ridicule, but at least from the perspective of financial results, Tesla, Inc. still got positive market feedback.

Genius and madman are two common labels on Musk. Tesla, Inc. 's rapid advance in recent years has confirmed Musk's ability and boldness, but under the blindly radical strategy, Tesla, Inc. is not without hidden worries.

Tesla, Inc. 's strength and arrogance

Behind Tesla, Inc. 's frequent price cuts, there are more and more doubts, but sales are also growing at the same time.

Take the Chinese market as an example. After Tesla, Inc. 's first price reduction in April, the revenue in the Chinese market in the second quarter reached 1.4 billion US dollars, an increase of 102.9% over the same period last year. Tesla, Inc. 's results after the second price reduction in October still have to wait for the fourth quarter financial report data to explain, but from the existing feedback, the performance will not be too bad, some employees posted on social mediaModel 3 orders are flooding in, leaving employees with little time to eat or talk to customers.

Tesla, Inc. does have the courage to "cut leeks".

In terms of cost, Tesla, Inc. 's gross profit margin on vehicle sales reached 27% in the third quarter, a figure that supports Tesla, Inc. to expand sales at the expense of profits. If you just look at the Model 3 series, a team of experts from German automakers concluded in 2018 that the Model 3 cost about $28000 (about 186000 yuan) after dismantling the car. With the commissioning of the Shanghai plant and the cooperation with domestic battery manufacturer Ningde Times, the cost of domestic Tesla, Inc. will only be lower than this figure.This provides enough room for Tesla, Inc. to reduce the price.

In addition, in terms of technology and brand, Tesla, Inc., as a well-deserved benchmark of the new energy market, is regarded as the automobile company that can best represent the future. The fully self-driving test version just launched is another technological breakthrough ahead of the times. For consumers in the new eraTesla, Inc. 's brand charm under the labels of "Future", "Technology" and "trend" is an important reason why consumers are willing to be "leeks".

Brand is one of the core factors that influence consumers' car purchase decision. This has been further magnified in the Chinese market. For domestic consumers, cars are "asset products" second only to real estate, and consumers have a high demand for brands.Under this objective consumption concept, foreign-funded brand cars have inherent advantages, not to mention Tesla, Inc., who is added to the concepts of "the first car company in the world by market capitalization" and "future cars".

Price reduction is a means for Tesla, Inc. to expand the scale and improve the product structure, but it may cause a consumer rebound which is also very obvious. At a time when the "leek theory" is becoming more and more popular, Tesla, Inc. needs to realize that in the harm to consumers again and again, the brand advantage may also be worn away.

Tesla, Inc. 's unwillingness to curry favor with the market is very much in line with Musk's personal characteristics. No one can deny that Musk is a genius. Tesla, Inc. has a large number of followers and admirers, thanks in part to Musk's personal charm.Musk's high-profile and radical style is part of his charisma, but after the integration of this temperament with the enterprise, in order to gain universal market recognition, it also needs to integrate a more refined and friendly consumer operation strategy.

With the deepening of market penetration, Tesla, Inc. has to face consumers who are relatively strange to him, and how to win over these consumers determines Tesla, Inc. 's competitive position in the next stage. At present, Tesla, Inc. 's frequent price cuts have had a negative impact on his brand, which has even become a breakthrough for some competitors.

Musk doesn't seem to realize what the problem is. In early October, Tesla, Inc. announced the dissolution of the North American public relations team, which means that Tesla, Inc. refused to communicate deeply with the media, and corporate news will only be released through the official account or Musk's personal Twitter account. Tesla, Inc. believes that the public relations team in the new media era no longer has the necessity to exist, from this move, we can also see the Musk-style advanced business philosophy.

In the Chinese market, Tesla, Inc. was caught in a brand crisis several times last quarter because of price cuts and disputes with Pinduoduo, and most of Tesla, Inc. 's official responses were posted on Weibo Corp through Tao Lin, his vice president of foreign affairs-just as Musk used his personal Twitter as Tesla, Inc. 's official speaking window. In addition, in addition to Weibo Corp's official remarks, Tesla, Inc. Model S continued to reduce prices and only released a three-month confidence guarantee plan to go offline.All reflect that Tesla, Inc. does not seem to pay enough attention to external disputes.

Under the advantages of Tesla, Inc. 's existing technology and brand, the doubts and disputes in the market have not actually hurt Tesla, Inc.. However, with the continuous technological catch-up of the new forces of domestic car-making, it remains to be seen how much consumers can tolerate Tesla, Inc. 's arrogant attitude. In sharp contrast to Tesla, Inc., NIO Inc., a domestic new car-building representative enterprise, happens to be characterized by high-quality car owner service.

The importance of the Chinese market to Tesla, Inc. is on the rise. in addition to shouldering the heavy responsibility for sales growth, Tesla, Inc. has announced that this month he will begin to export Chinese-made Model 3 electric cars to more than a dozen European countries, including Germany, France, Italy and Switzerland. The Chinese market has become a major center of Tesla, Inc. 's production and sales. therefore,The brand crisis faced by Tesla, Inc. in the Chinese market will further magnify the threat to Tesla, Inc..

As the financial results are made public, Musk, who is very likely to get another huge sum of money, may have to pay more attention to the other side of the ocean. As an outsider, arrogance against the wishes of consumers is not the best way for an enterprise to survive in a country where modesty is the gift.