Tesla may usher in its first profitable fiscal year, China’s supply chain will deepen global supply

  Original title: Tesla may usher in its first profitable fiscal year. China’s supply chain will go deep into global supply

  Source: China Securities Journal

   On October 21, local time, Tesla announced its third-quarter financial report. Revenue and net profit achieved substantial growth year-on-year and quarter-on-quarter. Tesla ushered in “the best quarter in history.” .

   This is the fifth consecutive quarter of profitability for Tesla. The analysis pointed out that, if nothing else, Tesla may achieve full-year profitability in 2020. For Tesla, the cheaper Model 3 and the Model Y, which will be officially launched in China next year, will be the key to maintaining the industry’s leading position in the short term. With radical R&D investment and asset expansion, domestic companies are likely to deepen or dominate the global supply of various links.

  Profit for the fifth consecutive quarter

  The financial report shows that Tesla achieved revenue of 8.771 billion U.S. dollars in the third quarter, a year-on-year increase of 39% and a quarter-on-quarter increase of 45%, higher than the market Expected 8.478 billion U.S. dollars, operating profit margin of 9.2%. Under the US GAAP, Tesla achieved a net profit of US$331 million attributable to common shareholders, a year-on-year increase of 131% and a month-on-month increase of 218%, and the fifth consecutive quarter of profitability. Under non-GAAP standards, net profit attributable to common shareholders was US$874 million, a year-on-year increase of 156% and a month-on-month increase of 94%.

  The main reason for the continued growth in the third quarter is the further increase in vehicle delivery. During the reporting period, the automotive business revenue was US$7.611 billion, an increase of 42% year-on-year and a quarter-on-quarter increase of 47%; the operating profit margin of the automotive business reached 27.7%, higher than the 25.4% in the second quarter.

  Data shows that Tesla produced 145,000 vehicles in the third quarter, an increase of 51% year-on-year and an increase of 76% month-on-month; delivery of 139,600 vehicles, an increase of 44% year-on-year and a month-on-month increase of 54%, again Set a new high. Among them, the output of Model 3 and Model Y was 128 thousand, a year-on-year increase of 60% and a month-on-month increase of 69%. Model 3 and Model Y delivered 124,300 vehicles, a year-on-year increase of 56% and a month-on-month increase of 55%.

   Although the prices of Model 3 and Model Y are more affordable than Model S and Model X, with large-scale production and delivery, Tesla’s gross profit margin of the automotive business in the third quarter reached 27.7%. , The overall gross profit margin reached 23.5%, both hitting new highs.

   It is worth noting that the increase in Tesla’s gross profit margin is largely related to the Chinese factory. With the policy support of improving the level of opening up and cultivating the new energy automobile industry chain, Tesla’s factory in Lingang, Shanghai has received many concessions. At the same time, with the formation of the local supply chain, the overall efficiency has been further improved.

  Maintain the goal of delivering 500,000 cars this year

   Tesla said that despite the difficulties, it still maintains the goal of delivering 500,000 cars this year. Achieving delivery targets mainly depends on the quarterly growth of Model Y and Shanghai Super Factory’s production capacity, as well as improvements in logistics and delivery efficiency.

   But so far this year, the company has delivered only 319,000 vehicles, which means it needs to deliver 181,000 vehicles in the fourth quarter to achieve this goal.

   In the conference call that day, Tesla CEO Elon Musk did not elaborate on the outlook for the fourth quarter, but he expects sales to increase substantially in 2021. Tesla puts an important way to achieve this goal on the Chinese market. Musk said that the production capacity of the Model 3 in the Shanghai plant has increased to 250,000 vehicles per year. “Due to the reduction in battery costs and the increase in local procurement, we have reduced the price of Model 3 to 249,900 yuan.”

   Soochow Securities Electric analyst believes that Tesla is fourth The quarterly sales growth mainly came from: First, the standard version of Model 3 in the Chinese market fell to 250,000 yuan, and the long-term battery life was reduced to 310,000 yuan, which will bring full production and sales, and quarterly sales are expected to exceed 50,000; second, the US factory Model Y Production capacity has climbed, and currently exceeds 10,000 vehicles in a single month, which is expected to rise again. Plants in Europe and Texas will be put into production in 2021, and Model Y will be mass-produced, and sales are expected to increase to 1 million. The launch of subsequent low-priced models will promote the parity of electric vehicles and lead the global electrification.

   While expanding production capacity, Tesla continues to enhance its “core competitiveness” driving ability. The day before the earnings report was released, Tesla pushed the beta version of the fully automated driving system and said that the push would be extremely slow and cautious. In the earnings call, Musk said that FSD will complete the test as soon as possible within a few weeks and strive to push it before the end of the year. Musk also said that the deferred revenue from the fully automated driving system in the third quarter was approximately $10 million.

  Related supply chain is expected to usher in long-term growth

   Despite Tesla’s bright earnings report, third-quarter net profit increased by 131% year-on-year, cash flow and gross profit margin, etc. The indicators have exceeded expectations, but investors still question whether Tesla’s current valuation of up to $400 billion is reasonable? During the year, Tesla’s stock price has soared by more than 400%, and its current market value exceeds US$400 billion, which is much higher than traditional automakers including Toyota and Volkswagen.

  Some analysts pointed out that in the United States, Tesla sales have slowed down. In China, Tesla has cut prices several times this year, but according to data from the Federation, the sales of its Model 3 produced in Shanghai in September declined slightly. In Europe, Tesla also faces increasing competition from traditional car manufacturers. Therefore, for Tesla, the cheaper Model 3 and the Model Y, which will be officially launched in China next year, will be the key to maintaining the industry’s leading position in the short term.

   On October 19th, Tesla China stated that its Shanghai Super Factory has officially launched its entire vehicle export business. The exported vehicles are the upgraded version of Model 3 standard battery life, which is consistent with the models supplied to the Chinese market. Including more than ten European countries such as Germany, France, Italy, and Switzerland.

   China Merchants Securities analyst You Jiaxun believes that the sales and penetration rate of new energy vehicles in Europe will continue to increase in the next five years, and the corresponding demand for power batteries will also grow rapidly. With radical R&D investment and asset expansion, Chinese companies are likely to deepen or dominate global supply in all aspects. Among them, in the European market, high-quality Chinese midstream companies have entered the supply chain of mainstream European car companies. With the continuous accumulation and improvement of car companies’ supporting experience and material systems, superimposing the advantages of Chinese companies in manufacturing cost control, it is expected that their competitiveness will be further strengthened, and related battery materials, batteries, and electrical system companies are expected to usher in long-term growth .

   West China Securities analyst Cui Yan pointed out that Tesla maintains product competitiveness by continuously reducing costs and continuously lowering the price of models. Chinese parts suppliers have outstanding cost advantages while having stable supply capabilities. Tesla’s overseas factory construction is progressing in an orderly manner, and the globalization of the supply chain has increased. Tesla Chinese suppliers are expected to take the opportunity to enter Tesla’s global supporting system.

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