Behind the plunge in Tesla’s stock price, is Musk planning a big game for shared cars?

Tesla, which has escaped the curse of low production capacity, is still not good enough in the eyes of the capital market.

On July 24, US time, Tesla released its second quarter financial report for 2019. The most eye-catching data in this report is the automotive performance - 95,356 deliveries and 87,048 production, which set Tesla's highest single-quarter delivery and production records respectively. Unfortunately, the delivery volume does not mean that Tesla has enough strength to turn losses into profits.

Tesla lost $389 million in the quarter, and the gross profit margin of its automotive business dropped from 20.6% a year ago to 18.9%. At the close of the day, Tesla's stock plummeted 13.61%, and its market value evaporated by more than $6.2 billion (about RMB 43.1 billion), with a total market value of only $39.755 billion. It is worth noting that from the beginning of 2019 to recently, Tesla's stock has fallen by 30%.

Although Tesla turned losses into profits in the second half of 2018, looking back at Tesla's nine-year history of listing, it can be found that "losses" have always been a nightmare that Tesla has been desperately trying to get rid of but can never get rid of.

Tesla's Xiaomi fate

Although Tesla set a sales record in the second quarter, in terms of products, Tesla Model 3 production in the second quarter was 72,531 units, with 77,634 units delivered; Tesla Model S and Model X production was 14,517 units, with 17,722 units delivered. Tesla Model 3 sales accounted for 81% of the total sales.

This is very similar to Xiaomi in the mobile phone industry, which increased sales by lowering product prices, but its gross profit margin was hit hard. Although Tesla achieved good sales data with the Tesla Model 3, the gross profit margin of its automotive business also dropped from 20.6% to 18.9%.

You should know that as early as 2016, when Model 3 was first launched, Musk publicly stated that the gross profit margin of Model 3 would be maintained at 25%. Today, Tesla has repeatedly reduced the price of Model 3 and its financial reports show that Model 3 is getting further and further away from the 25% gross profit. Musk said that as the technology matures, the purchase rate of the autonomous driving option package will increase significantly, so the gross profit margin of Model 3 will also increase accordingly.

Musk hopes that software services will become a major source of profit for Model 3. This is exactly the revenue model of Xiaomi. According to Xiaomi's first quarter 2019 financial report, the total revenue was 43.8 billion yuan, and the Internet revenue was only 4.26 billion yuan, accounting for 10% of the total revenue, but the gross profit margin was as high as 45%.

However, although Tesla has been promoting Autopilot autonomous driving, for example, as early as 2016, when the Model 3 was first launched, it added an autonomous driving option package; in 2017, Musk said that autonomous driving would be commercialized in 2018 - but to this day, our Autopilot has not reached the heights it claims.

Therefore, it is completely unrealistic for Tesla, which is facing internal and external troubles in the short term, to rely on the optional self-driving package to increase gross profit margin. At present, Tesla should focus on automobile hardware and reverse the loss problem while achieving sales growth.

China market becomes Tesla's lifeline

From the progress of the promotion and "dancing at Musk's signing ceremony", we can also see how strong Tesla's demand for the Chinese market is.

On January 7, Tesla's Gigafactory Shanghai Lingang Industrial Zone officially started construction. On July 6, talent recruitment officially began, and the fastest time to start work was one month. On July 25, Tesla's Shanghai Gigafactory leaked. Before the end of the year, Model 3 will be officially put into production, and the initial quarterly production capacity is expected to reach 150,000 vehicles.

Comparing with Tesla’s second-quarter financial report, it can be found that Tesla’s Shanghai Super Factory Model 3 quarterly production capacity will be twice the current global Model 3 production capacity.

Due to the reduction in tariffs and production costs, the disassembly expert Munro team said in an interview that the standard version of Model 3 produced by Tesla's Shanghai Super Factory can bring Tesla a hardware gross profit margin of 25%.

In addition, from the market perspective, according to statistics from the China Association of Automobile Manufacturers, China's automobile sales in 2018 were 28.081 million units, a year-on-year decrease of 2.8%. However, the sales of new energy vehicles maintained rapid growth, with annual sales of new energy vehicles reaching 1.256 million units, a year-on-year increase of 61.7%. Ouyang Minggao, an academician of the Chinese Academy of Sciences, predicted that in 2015, the number of new energy vehicles in my country will reach 50 million to 80 million units.

On the one hand, localization has reduced production costs and increased gross profit margins; on the other hand, the Chinese market is a huge treasury waiting to be developed. How can Tesla not be eager to build a factory?

Perhaps car sharing is Musk’s ultimate goal?

Although Tesla is currently plagued by "losses", this does not prevent Musk from planning its future or pointing the way for the automotive industry.

On April 23, at Tesla's "Autonomous Driving Investor Day", Musk stated that Tesla will achieve true autonomous driving that is completely independent of the driver in the second quarter of 2020, and can increase the utilization rate of car owners' cars and automatically drive the owners' Tesla cars out for "rental" business.

On July 8, Musk further announced that he would stop selling Tesla cars once he fully mastered the autonomous driving technology.

Considering data, sociology and technological trends, Musk's "shared car" development model does have traces to follow.

First of all, according to Uber statistics, there are more than 100 million cars in the world, and the average time of restriction is 95% a day. This is a huge waste of resources.

Yuval Noah Harari's book "A Brief History of Humankind" also expressed the concept of "shared cars". Because the vacancy rate is too high and the error rate of human operation is too high, there will be no concept of private cars in the future. Instead, data and cars will be connected. When we need a car, there will be a car at any time. After taking us to the destination, the car will pick up another passenger based on the data - this will also greatly reduce traffic jams and may also make traffic lights a thing of the past.

Interestingly, Cruise Automation, a subsidiary of General Motors, also stated that it will achieve shared favor around 2020, which also shows that Musk’s judgment on the trend is accurate.

Although there is great development prospect, there are still two major obstacles facing Tesla.

The first is the applicability of Tesla's autonomous driving under different road conditions in different countries. According to Yuval Noah Harari, a major prerequisite for realizing the concept of "shared cars" in the future is the networking of cars around the world. Currently, only Tesla is focusing on this business. Even if Tesla's autonomous driving technology is excellent, it will inevitably have problems with acclimatization in extreme cases.

In addition, Tesla currently only has hardware strength and does not have the ability to operate a commercial sharing platform. In the future, Tesla can only choose to build its own operating brand, but this involves the above-mentioned problem. If there are only Tesla cars, then the market share will not be high and the number of users will be small. If Tesla chooses to cooperate with Uber and Didi, it will face huge platform service fees, and its own profits will be greatly damaged.

Overall, Tesla's biggest challenge at present is to survive the "losses". Although Tesla's Shanghai Super Factory can alleviate the "loss" problem by increasing production capacity after its completion, facing domestic competitors, it is difficult for Tesla not to cut prices in exchange for a high market share.

Although Tesla can make money from the services provided by the optional autonomous driving package in the future, Musk has also shown an attitude of developing "shared cars", which will conflict with the idea of ​​making money from the optional autonomous driving package.

On the whole, Tesla should increase its product market share in the early stages, and wait until autonomous driving technology matures. Then, it should steadily advance the construction of "shared cars" by cooperating with car owners. Once it has sufficient operational capabilities, it can completely control all cars and rentals in its own hands to achieve absolute profit growth.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.