The hidden problems behind Tesla's rapid development under the wave of intelligence

On February 6, 2018, a cherry red Tesla sports car was launched into space on a SpaceX Falcon Heavy rocket. Inside the sports car sat a simulated astronaut named Starman, the screen inside the car read "Don't panic", there was a towel and a copy of The Hitchhiker's Guide to the Galaxy, and David Bowie's Space Oddity was playing on the stereo.

This is an advertisement, but also a tribute. This company named after a physicist seems to have an extra layer of romance.

This car that is getting farther and farther away from the earth and the man who does this activity for fun, Elon Musk, seem to have indicated at that time that this company, which is supported by IT model and technology, has the potential to soar. Although in Buffett's eyes, the competition in the automobile industry is still treacherous and the final winner is still unknown. But in the first two months of this year, Tesla has been advancing triumphantly amid doubts, and the stock curve is like a cobra with its head raised high, stimulating the eyes and investment nerves.

On the 21st, Tesla's closing price once again exceeded $900, with a market value of $163.3 billion, showing a strong momentum. Some people even asked, "Can Tesla become the next Apple?" It seems that the iPhone 4 miracle in 2008 can be repeated in Tesla's hands.

New opportunities under battery innovation

After acquiring Maxwell at a premium, Tesla recently signed an agreement with the "rumored target" CATL. CATL seems to be the third power battery supplier after Panasonic and LG, and this will also be the first time Tesla uses lithium iron phosphate batteries.

As the core part of new energy vehicles, batteries are related to the survival of electric vehicles. Tesla also emphasized that the most important thing in the future is to save battery costs. Therefore, Tesla's "Battery Day" shareholder meeting to be held in April will surely "stir up a thousand waves" and trigger a new round of reshuffle in battery selection.

As Musk himself said at the press conference after the financial report: "If you don't increase battery production capacity, but instead move the battery from one car to another, this is not really increasing sales because you're not producing a real electric car." It is not difficult to see from this that battery innovation is Tesla's main focus at present, and it may also be the "trigger point" for some new energy industries.

Perhaps Tesla's preference for lithium iron phosphate batteries will bring a new spring to the industry. Tesla's choice of CATL is undoubtedly due to the need to reduce the cost of batteries and electric vehicles. This move also pushed the price of lithium iron phosphate batteries close to parity, providing more opportunities for small and medium-sized new energy vehicle companies to increase their market share.

As new energy has become a hot topic, with the support of public transportation energy reforms in various places, more opportunities are presented to phosphate railway battery and related materials companies, including many companies such as CATL, BYD, and Penghui Energy. The domestic new energy vehicle and related markets are expected to gradually increase.

What Tesla has gained is not only lower costs, but also a large market share in China. It is no surprise that Tesla, which has seized this opportunity, has developed so rapidly in China.

China's growing new market

According to the 2019 financial report data officially announced by Tesla, the company's operating income in 2019 was US$24.778 billion. Among them, the automotive business revenue was US$23.047 billion, and the revenue in the Chinese market was US$2.979 billion, about RMB 20.8 billion, an increase of 69.55% compared with 2018.

The financial report shows that the operating income of the Chinese market was US$2.979 billion, accounting for 12.12%, second only to the US market, making it Tesla's second largest consumer market in the world. The revenue in the US domestic market was US$12.653 billion, accounting for 51.48%, still the largest market, but down 15% from the same period in 2018.

The launch of Tesla's Shanghai Super Factory has also stimulated the explosion of Tesla's concept and output. The new battery cooperation has prompted Tesla's full localization, and the cost of the new model 3 is expected to continue to decline. The announcement pointed out that the cost of the model 3 produced by the Shanghai Super Factory will be lower than that of the Fremont Factory.

Although the domestic market has been affected by the COVID-19 epidemic, the resumption of production at the Shanghai Gigafactory on February 10 seems to indicate that Tesla is not afraid of the market turmoil caused by the epidemic. Sun Xiaohe, Tesla's epidemic prevention liaison and chief clerk of the New Industry and Technological Innovation Department of the Lingang New Area Management Committee, said that the Gigafactory is expected to achieve a production capacity of about 12,000 vehicles per month. Not only that, Sun Xiaohe also said that the output of the Shanghai factory will gradually increase, and this year's output will definitely be an upward trend.

The announcement also pointed out that the factory has an annual production capacity of 150,000 vehicles and has begun construction of the second phase of the project to produce Tesla MODEL Y, increasing the production capacity to at least the same level as the first phase. With the resumption of production at the Shanghai factory, the production problems that have plagued Tesla for a long time have been solved, and it has truly become a car company that can continue to make money.

Driven by full localization, the domestic price of Model 3 is expected to drop again. After the pneumonia epidemic, many consumers will change their mindset after experiencing such a long "dark period". They will also have the idea of ​​"working hard to make money but ignoring the quality of life and health". Compared with the increase in people's consumption desire after SARS in 2003, a new turnaround in the consumer market is expected to emerge after this epidemic. Will the price reduction of Model 3 also provide consumers with new choices?

And with the success of Model 3, it is not only Tesla that benefits.

A new spring for the industrial supply chain

With the release of Model 3 production capacity, the domestic related parts will also usher in a new era. Tesla's industrial chain covers a wide range, and many domestic and foreign companies have become its suppliers. Tesla's rapid development provides growth opportunities for domestic listed companies that enter its supply chain.

Among them, power batteries, as the core part, are the biggest beneficiaries. CATL, Tesla's third battery partner, went against the tide on the opening day of February 3 and emerged as a dark horse in the sluggish A-share market. The maximum increase once reached 9.89%. By the close of trading, each share was reported at 135.36 yuan, up 3.67%, becoming the "brightest star" among the 3,200 stocks that hit the limit down.

Suppliers in other related fields, such as automotive electronics and thermal management, will also see new growth. In the thermal management system, among domestic companies, Sanhua Intelligent Control supplies Tesla with thermal management products such as expansion valves and water cooling plates. In the automotive electronics sector, among domestic listed companies, Joyson Electronics mainly supplies human-machine interaction products HMI, NavInfo is Tesla's exclusive navigation map supplier, and Changxin Technology supplies central control screen module products.

According to the Choice database of Eastmoney, there are 81 Tesla concept stocks in the A-share market, of which Guangdong, Jiangsu, Zhejiang and Shanghai have 22, 15, 10 and 5 related listed companies respectively. Among the 81 Tesla concept stocks, 60 listed companies are private enterprises, accounting for more than 70%.

It is not difficult to see from the stock market on February 17 that Tesla-related concept stocks, Haida shares rose straight to the daily limit, Shengli Precision hit the daily limit, and Xiuqiang shares hit the daily limit for ten consecutive days. This report card is already considered impressive.

In 2019, Tesla delivered a total of about 367,500 vehicles, a 50% increase over the previous year, barely meeting its full-year sales target. However, Tesla's outlook for the new year is very optimistic, with sales expected to easily exceed 500,000 in 2020, equivalent to a 36% increase over last year's sales.

Tesla used to be known for "burning money", but now as production capacity is gradually released, the company said that future cash flow will be positive and there will be no more funding shortages . Tesla also said in its financial statement: "Tesla is able to survive on its own funds. Further growth in sales, increased production capacity and continued cash flow are our future priorities."

But will Tesla be content with just being in the car industry?

New development under the wave of intelligence

Compared to traditional car companies such as Ford and General Motors, Tesla is more like a technology company.

"The era of traditional car manufacturers is over." Volkswagen Group CEO Diess once said at an executive strategy meeting that Volkswagen is considered a car company, while Tesla is considered a technology company. "Cars will become the most important mobile device. We are still evaluated as a car company, while Tesla is already a technology company."

As a bold innovator, this leading enterprise in new energy vehicles is indeed different from traditional automobile enterprises. It specializes in product operation and has only launched a few products such as model X/model Y/model S/model 3 so far, focusing on high-end products and shaping the industrial system.

Of course, Tesla is not only satisfied with the automotive industry. Solar panels, charging pile networks, software service ecosystems, etc. will also become important sources of income for Tesla. As far as the software system is concerned, the continuous upgrading of the car system and operation methods is trying to create a more intelligent product.