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Why is Tesla so smug in the car market and stock market?
Jul 1,2020 13:45CST
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The content below was translated by Tencent automatically for reference.

SMM: 2020 is the tenth year of Tesla's listing. At present, Tesla has handed in a satisfactory report card.

Despite the impact of the epidemic, Tesla has maintained a good sales momentum over the past period of time, constantly setting new delivery records. Driven by the performance of the car market, coupled with other "sideline" boost, Tesla's share price has also soared this year, once becoming the world's largest car company by market capitalization. What is the mystery behind Tesla's soaring sales and skyrocketing share prices?

Sales and stock prices fly at the same time, Tesla is still hot under the epidemic.

In the first half of this year, many car companies hit by the epidemic did not perform satisfactorily, but there were exceptions, such as Tesla. According to Electrek, Tesla's second-quarter deliveries are expected to be much higher than expected and may even approach or break the record 95000 deliveries in the second quarter of last year. This is already a sign that Tesla delivered more than 50, 000 vehicles in North America in June, with nearly 10, 000 vehicles in transit, according to people familiar with the matter.

If you add in the results of the first quarter, the overall delivery scale of Tesla in the first half of this year is expected to be close to 200000 vehicles. According to Tesla's official news, in the first quarter of 2020, Tesla produced nearly 103000 electric cars and delivered about 88400, an increase of 14% over the same period last year, the best first-quarter performance in Tesla's history.

Among them, Tesla's performance is particularly bright in the Chinese market. Since the first domestic version of Model 3 was officially delivered on December 30, 2019, it quickly broke into the top five of domestic new energy vehicle companies with an output of 2625 vehicles in the first month, and then continued to improve in China as the production capacity continued to climb. By March, domestic Model 3 sales had successfully exceeded 10,000, reaching 10160 vehicles, making it the top seller in China's new energy vehicle market that month.

Affected by multiple factors such as the slowing down of the pace of delivery and the official decline of standard models in April, Tesla's sales declined briefly to 3635 vehicles, but then rebounded quickly in May, and the sales volume reached 11095 vehicles. Month-on-month increase of 205% over April, successfully won the top of China's new energy vehicle sales list. As a result, the cumulative sales of Model 3 reached 30800 in the first five months, almost twice as much as the new Qin EV in second place.

In addition to the complacency of the car market, Tesla has also done very well in the stock market this year. Tesla shares have skyrocketed since they broke the $500 mark for the first time on January 13, 2020, after the company's total market capitalization successfully surpassed traditional automakers such as Mercedes-Benz, BMW, Ford and General Motors. By Feb. 4, Tesla's share price soared to an all-time high of $900, bringing Tesla's market capitalization to more than $150 billion, more than three times that of General Motors.

In March, affected by the widespread spread of the epidemic overseas, Tesla shares fell to a certain extent, even falling below $400 a share at one point, but soon rebounded again and continued to rise. By June 10, Tesla shares hit another all-time high, breaking the $1000 mark to $1027.48, pushing Tesla's total market capitalization to $190 billion, surpassing Toyota to become the world's largest carmaker by market capitalization. Tesla's share price has fallen again since then, but it has remained high, which is still unmatched by many traditional car companies.

According to the latest news, Tesla shares broke through $1000 again on Monday to close at $1009.35, up nearly 140% from the start of the year, with a total market capitalization of $187.2 billion, surpassing Toyota, which is currently valued at $175.5 billion.

It is worth mentioning that June 29, 2020 coincides with the 10th anniversary of Tesla's listing, when Tesla went public at a price of only $17, which means that after 10 years of development, Tesla's share price is up more than 5800%. Recently, legendary American investor Ron Baron even said that he would continue to be bullish on Tesla and expected Tesla's share price to grow tenfold in the next decade.

What is the charm of Tesla?

A very important point is Tesla's unique logic of thinking and value creation model, based on which Tesla created a new car-building and car-using model. Tesla has the courage of extraordinary car companies in the development and use of new technologies. Tesla is not only the first car company to introduce innovative technologies such as central control large touch screen and OTA upgrade to new cars, but also one of the few companies in the world that can generate revenue by selling self-driving services.

Take OTA as an example, it is well known that once the traditional functional car is delivered to consumers, it is difficult to greatly optimize the vehicle performance and continue to create profits around the vehicle. But Tesla has achieved it. Thanks to its subversive vehicle electrical architecture and advanced intelligent network connection system, Tesla has realized the unique research and development logic of "software-driven hardware, collaborative product definition". Each Tesla can bring a subversive car experience to car owners through continuous OTA upgrades.

Tesla has done hundreds of OTA, upgrades almost every other time since 2012, when Tesla completed a new chapter in the real sense of the smart car in its first full-car OTA, on the Model S.Tesla has done more than a hundred times since it completed a new chapter in the first full-car OTA, on the Tesla S in 2012. In many cases, the change brought about by a OTA is even greater than that of a traditional fuel car, so that users continue to get the feeling of driving a "new car".

Specifically, through OTA upgrades, Tesla may optimize vehicle performance, such as improving vehicle power, acceleration, and upgrading "track mode"; Or provide users with some new features, such as Tesla to cater to the preferences of Chinese consumers, adding functions such as Happy fighting landlord, B Station, QQ Music, Tencent Video, Dog Mode, Sentinel Mode and other functions to related models through OTA to satisfy users' entertainment and leisure experience in various scenarios; or remote vehicle diagnosis, including remotely repairing software failures for users, greatly reducing user time costs and improving after-sales experience. Just imagine, other people's cars are driving longer and longer, but they can always use them when they buy a Tesla. Who doesn't want to own such a car?

Even for the mass production problem of fully autopilot that the industry has not overcome, Tesla hopes to achieve it through OTA. At present, all new Tesla vehicles are equipped with basic driving assistance functions, such as emergency braking, collision warning and blind spot monitoring, which can improve driving safety from multiple dimensions. Tesla's Autopilot autopilot has advanced safety and convenience functions, which can help users simplify their driving movements, in which the basic Autopilot can automatically assist steering, acceleration and braking in the driveway according to the status of other vehicles and pedestrians. According to Tesla's idea, all its new models will be equipped with the hardware needed for full self-driving, and it is also unthinkable for many car companies that they will be able to achieve full self-driving in almost all cases with the help of OTA upgrades in the future.

Not only that, OTA, Tesla also makes it possible for car companies to continue to make profits from users after the completion of the sale. In addition to selling related software products directly, Tesla announced earlier this month that it will launch a software subscription service, which will provide software products, FSD (fully autonomous driving) suites, etc., to users through paid subscriptions, of which the subscription price of FSD suite is about $100 per month. After selection, the suite will be updated and pushed through OTA, so that the relevant vehicles have full self-driving capability.

Earlier, Tesla also announced a paid upgrade and acceleration service for the model 3 long-range all-wheel drive model, which allows owners to buy a OTA upgrade for 14100 yuan, increasing the vehicle's 100km acceleration from 4.6s to 4.1s. This was previously unthinkable for many car companies, but Tesla thought about it, not only thought about it, but also did it, and really began to make a profit.

According to Tesla's previously released first-quarter results, Tesla's deferred income balance related to Internet connectivity and FSD functions as well as airborne software updates exceeded $1.5 billion. In the future, analysts predict that this new profit approach may continue to create huge opportunities for Tesla. By 2025, Autopilot/FSD 's revenue will only reach 6% of the company's total revenue, but it is expected to contribute nearly 25% of Tesla's gross profit.

It is with these bold moves that Tesla has completely subverted the way traditional cars are developed, manufactured and used, and even created a new business model. In the eyes of many people, it is more accurate to say that Tesla is a technology company than a car company, not to mention that in addition to building cars, Musk also runs a number of high-tech businesses, such as building rockets and digging super tunnels. and these are the bargaining chips that make Tesla's share price soar.

Tesla's practices have triggered a large number of car companies to emulate in the past few years, but until now, Tesla has not been caught up by the "waves", but Tesla has gone further and further on the road of "daring to take the lead." Tesla's domestic market performance and its performance in the stock market this year is a good illustration. Of course, it is undeniable that Tesla has suffered a lot of doubts and twists and turns along the way because of its boldness and radicalism, such as the "email door" that it is currently experiencing.

Recently, foreign media reported that Tesla's internal emails showed that there were serious design problems in Tesla's early model Model S battery pack, which could easily lead to coolant leakage and cause fire. Tesla noticed this problem as early as 2012, but continued production in order to ensure production. It is not clear when Tesla will fix this design defect, but it is certain that Tesla still has some problems in the quality control of new cars, which need to be improved and optimized urgently.

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