What is the wishful thinking of Tesla's hardware price cut and software price increase?
Our reporter Wu Wenjing, trainee reporter Feng Sijie
As soon as the price of the Model 3 on the front foot was reduced, Musk announced on the back foot that the price of Tesla FSD would rise by $2,000 from today, from $8,000 to $10,000.
The price of the whole vehicle has been reduced, and the price of software equipment has soared. What is Tesla's wishful thinking?
The average selling price of the vehicle continues to decrease
Demand exceeds supply and strive to expand production capacity
During the National Day this year, Tesla announced that the updated Model 3 standard battery life upgraded version was subsidized and the price was reduced to 249,900 yuan, and the comprehensive range increased to 468km.
In fact, Tesla’s price has been continuously adjusted since it entered China. With the completion of Tesla’s Shanghai Super Factory, the production capacity has been greatly increased, the localization of Model 3 accessories, and software technology progress and efficiency optimization, the price of Model 3 It has been lowered many times, and the sales of Tesla's affordable models have also risen sharply. Of the 139,300 new cars delivered by Tesla in the third quarter, Model 3 and Model Y delivered 124,000 new cars globally, and the growth rate is amazing. The month-on-month increase was 55% and the year-on-year increase was 56%.
On October 22, Tesla announced its third quarter 2020 financial report. While achieving profit for five consecutive quarters, it also showed a strong growth momentum: In the third quarter, Tesla achieved a net profit of 331 million US dollars. , A year-on-year increase of 131% and a month-on-month increase of 218%; free cash flow reached 1.4 billion US dollars, which made many industry competitors take a cold breath.
In fact, as Tesla’s sales product structure continues to shift from Model S and Model X to more affordable Model 3 and Model Y, the average selling price of bicycles may be lowered; in addition, Tesla also paid in the third quarter With a stock incentive of US$290 million, many factors overlap and the growth rate of profits still far exceeds revenue. Tesla achieved an operating profit margin of 9.2% in the quarter.
Tesla said that with the expansion of production capacity and the continuous localization process, the operating profit margin continues to grow and will eventually reach the industry-leading level.
It is reported that Tesla has recently further increased the production capacity of Model 3 and Model Y at the Fremont plant to 500,000 vehicles per year, and the construction of three new plants on three continents has continued as planned.
At the same time, the Shanghai Super Factory has added a third production shift, which has also reached an annual production capacity of 250,000 vehicles.
In addition, while meeting the needs of the Chinese market, the Shanghai Super Factory will also provide products to European consumers. In October, the Shanghai Super Factory officially launched its vehicle export business to the European market.
"In the special period affected by the epidemic this year, Tesla's production capacity in the United States and Europe has been affected to varying degrees. Tesla is rapidly advancing the construction of the Chinese factory and exporting products produced in China to Europe in order to regulate overseas The problem that market orders cannot be completed." Zhang Xiang, an expert in the new energy and intelligent networked automobile industry of the "Changfeng Plan" of the Ministry of Industry and Information Technology, told the reporter of the Securities Daily, "Tesla products are currently in short supply in the market and need to increase production capacity rapidly. Increasing production capacity will help Tesla seize the market faster, and in conjunction with price cuts, squeeze the growth space of industry competitors, Tesla will maintain a dominant position."
At the same time, on this year's Battery Day, Tesla concentrated on displaying a number of innovative technologies such as cell design, cell factory, anode materials, cathode materials, and vehicle manufacturing.
A Tesla related person told a reporter from the Securities Daily: “Through systematic portfolio innovation, Tesla can reduce battery costs per kilowatt-hour by 56%, increase its cruising range by 54%, and reduce investment and production costs by 69%. Based on significant With reduced production costs, Tesla is confident that it will develop an electric car with a price of about $25,000 within three years."
FSD overseas price increase of 2,000 US dollars
Software business refers to core business sectors
The competitive price has allowed Tesla to expand its market share, which is the basis for Tesla to obtain higher revenue through the software business.
According to Tesla, the company's Autopilot autonomous driving team has been focusing on the rewrite of the neural network and control algorithm infrastructure, which can release the remaining driving characteristics.
Just in October of this year, Tesla has already rewritten the first FSD (Full Autonomous Driving Capability) software update-urban roads, to a handful of early experience program users in the United States.
A Tesla related person told reporters that the rewritten FSD has the ability to perceive depth and complex intersections, which greatly enhances the performance of FSD on urban roads, and its rewrite also means that Tesla is about to enter a high-end Fully autonomous driving.
As data continues to be collected, the system is expected to become more powerful.
Just recently, Musk posted on social platforms that the price of Tesla's FSD will rise by $2,000, from $8,000 to $10,000.
At present, the Chinese market has not announced a price increase, and the unupdated FSD price is still 64,000 yuan.
At the same time, Musk also said that as the function of the software gets closer to fully autonomous driving, the price of the software will increase if it is approved by the regulatory authorities, and the software may rise to more than $100,000.
Although Tesla currently does not separately disclose the revenue composition of the software business in its financial report, the gross profit margin of the software business is undoubtedly much higher than that of vehicle sales. In the future, with the introduction and gradual popularity of FSD and more software products, software The business is expected to develop into a core component of Tesla's business model.
In addition, in addition to FSD, from the perspective of Tesla's current product layout, other software businesses are constantly refreshing their "sense of existence."
Tesla’s new vehicle software features have been launched since the third quarter. In order to make products more secure to avoid unauthorized access, Tesla introduced the function of two-step verification through smartphones.
In addition, there are many other updates: such as updating the Powerwall's charging coordination for vehicles, and adding automatic window closing functions and glove box password access.
Customers of the Model Y all-wheel drive version can upgrade the 0-60 mph acceleration performance to 4.3 seconds through software upgrades.
A Tesla related person told a reporter from the Securities Daily that technological attributes are one aspect of Tesla that is different from traditional car companies. FSD will affect Tesla's development in the next few decades, and its value is far higher. With the current net profit and delivery volume, its goal is to rewrite the entire transportation industry.
Since 2020, Tesla's (TSLA) share price has risen by more than 400%, with a market value of nearly US$400 billion, and firmly occupying the top spot in the market value of global auto companies. What is Tesla's software technology? Perhaps it will be the best touchstone for its valuation.
(Securities Daily)