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Flash collapse! Tesla lost 570 billion of his market value overnight.

2024-04-22 Update From: AutoBeta NAV: AutoBeta > News >


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Tesla announced its fourth-quarter and full-year earnings for 2023 after the U.S. stock market closed on January 24. According to the financial report, Tesla's annual operating revenue in 2023 was US $96.77 billion, up 19% year-on-year, including revenue of US $25.17 billion in the fourth quarter, up 7% year-on-year, lower than analysts 'forecast of US $25.87 billion; net profit for the whole year was US $14.997 billion, up 19% year-on-year, including net profit of US $7.928 billion in the fourth quarter, up 115% year-on-year;

Perhaps more worrying for the market is that Tesla's profitability is continuing to decline. The financial report shows that Tesla's gross profit margin in 2023 was 18.2%, of which the gross profit margin in the fourth quarter was only 17.6%, lower than the market expectation of 18.3%, the lowest level since 2019, down 6.12 percentage points year-on-year and 0.3 percentage points month-on-month;

The automotive business is Tesla's pillar product, with annual revenue of $82.419 billion, up 15% year-on-year, and revenue of $21.563 billion in the fourth quarter, up only 1% year-on-year. The weak revenue growth of the automobile business is Tesla's efforts to meet the set sales targets on schedule and start selling at reduced prices in several markets around the world, resulting in a decline in average selling prices. According to previous disclosures, Tesla delivered 1.8086 million vehicles worldwide in 2023,"stepping on the line" to achieve 1.8 million delivery targets.

It is worth mentioning that Tesla has also released danger signals for its sales outlook for 2024. Tesla warned that car growth in 2024 would be "probably significantly lower" than in 2023. Tesla, which rarely gives specific delivery targets in its earnings, has long averaged annual growth of about 50%, after analysts estimated Tesla sales of 2.2 million vehicles in 2024, up about 20% from 2023.

Although Tesla successfully completed its sales target for 2023, the core reason is of course the excellent competitiveness of Tesla products, but it is also inseparable from the sacrifice of profits for price. In 2023, Tesla cut prices in the U.S., Europe, China and other markets, which undoubtedly increased the competitiveness of Tesla models, consumers are still willing to compromise for price, but this also caused Tesla's gross margin to fall from 19.3% in the first quarter to 17.6% in the fourth quarter.

Tesla's U.S. shares fell 12.13% on January 25, the biggest drop in nearly a year, losing $80 billion in a single day and falling below $600 billion to $580.57 billion. Tesla shares have fallen about 26.5 percent this year after more than doubling in 2023.

Musk said in a post-earnings conference call that "Chinese auto companies are the most competitive auto companies in the world, Chinese electric vehicle manufacturers will achieve" significant "success outside China, and Tesla will also face fierce competition from these companies. Musk also said,"If you don't build trade barriers, they (Chinese auto companies) will almost destroy most other companies in the world." We don't see opportunities to partner with Chinese auto companies yet, but we'd be happy to license other technologies such as supercharging networks and autonomous driving technology. "

With the rapid development of domestic electric vehicles, Tesla is no longer the only object sought after by consumers. BYD has an absolute market position in the market below 200,000 yuan, surpassing Tesla to become the world's largest pure electric car company in the fourth quarter of 2023. In the market of 300,000 - 500,000 yuan, it is constantly eaten by manufacturers such as Krypton, Weilai, Ideal and Lantu, especially the ideal car, which plans to sell 800,000 vehicles in 2024, which will add one member to the mainstream consumer price range of 200,000 - 300,000 yuan. The ideal L6 at a lower price may be the key to the impact of higher sales volume of the ideal car, and the impact on Tesla may be huge, even if the ideal car and Tesla are not direct competitors.

For Tesla, there is an urgent need to launch a volume model to stimulate sales growth. Tesla executives have previously said they will rethink the way electric vehicles are produced to make the next generation of cars faster, cheaper, with smaller powertrains and lighter weights. Reuters has learned from four people familiar with the matter that Tesla hopes to start production of a new mass-market compact crossover in mid-2025, with an expected weekly production of 10,000 vehicles, code-named Redwood. However, Tesla refuted the news.

2023 is Tesla's brilliant year, creating a historical peak of 1,808,600 vehicles, but there is no doubt that this achievement is hard and weak. Looking at 2024, Tesla will cut prices on models produced and sold in China at the beginning of the year, undoubtedly hoping to sacrifice profits for sales in order to achieve more aggressive goals, but whether growth in price-for-volume will work in 2024 still needs to be questioned. The good news is that after the Model 3 change, it is rumored that the Model Y will also complete the change in 2024, and as Tesla's most important source of sales, it may allow the Model Y to create a bigger miracle in sales and further inject market competitiveness into Tesla. The bad news is that Tesla still relies on Model 3 and Model Y models in 2024. Low-priced models cannot be mass-produced, and Cybertruck pickups are still climbing, which makes Tesla vulnerable. How to survive 2024 without a sharp decline in profits will be Tesla's biggest test.

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