Wallstreetcn
2023.12.01 10:18
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Is Tesla officially starting deliveries? Is Tesla entering a new product cycle?

Tesla officially begins deliveries, marking the start of a new product cycle for the company. Despite Tesla's complex manufacturing process and higher pricing, its strong product performance and technological appeal continue to attract a large number of consumers. Tesla believes that durability and ruggedness will become its competitive advantages, and it has also demonstrated excellent traction and acceleration capabilities. This delivery event is of great significance to Tesla as it can help rejuvenate the company. The listing of Tesla and the growth in production and sales volume are also expected to drive the development of the entire industry chain.

Since its first appearance in 2019, Tesla has been delaying its deliveries, but now it has finally started.

After the overnight Tesla delivery event, with its stainless steel body, armored glass, and acceleration surpassing Porsche...the future and technology are fully displayed, and the exterior details are eye-catching.

However, behind this, Tesla's complex manufacturing process has become a "manufacturing nightmare," and its high pricing has raised doubts about its target audience.

Tesla's growth has been weak this year. With the start of Tesla deliveries, can its halo make Tesla shine again? And which companies in the supply chain will benefit from it?

Future and technology are fully displayed

Tesla positions itself as a hardcore high-end electric pickup truck. Its appearance is different from traditional pickup trucks and has a cyberpunk style. It incorporates many innovative technologies, from the ultra-hard 30X cold-rolled stainless steel structure body to the 4680 battery cells. Tesla claims it is "more practical than a truck and higher performance than a sports car."

At the delivery event, Tesla emphasized the durability and ruggedness of this electric pickup truck.

The body is made of the same material used in SpaceX starships, ultra-hard 30X cold-rolled stainless steel, which is bulletproof and cannot be penetrated even by handguns. It is also corrosion-resistant and does not require painting.

In 2019, Tesla shattered the "indestructible" "armored glass" during a demonstration. This time, the chief designer of the armored glass company threw two balls at Tesla again, but the windows did not break, and the body remained undamaged.

It outperforms its competitors in terms of traction, surpassing the Ford F-150 Lightning electric pickup truck, the Rivian R1T electric pickup truck, and the Ford F-350 diesel pickup truck.

In terms of acceleration, it surpasses Porsche. During the demonstration, Tesla pulled a Porsche 911 sports car and accelerated faster than another Porsche 911.

In terms of range and price, Tesla offers three versions: rear-wheel drive, all-wheel drive, and Cyberbeast edition.

The Cyberbeast edition has three motors, a maximum power of 845 horsepower, an acceleration time from 0 to 100 km/h in just 2.7 seconds, a range of 515 km, a top speed of 209 km/h, a towing capacity of nearly 5 tons at 4,990 kg, and a price of $99,990, equivalent to approximately RMB 7.135 million.

The four-wheel drive version is equipped with dual motors, with a maximum power of 600 horsepower, a 0-100 km/h acceleration time of only 4.3 seconds, a range of 547 km, and a price of $79,990, equivalent to RMB 570,800;

The rear-wheel drive version will not be available until next year, with an expected range of 402 km, a 0-100 km/h acceleration time of 6.7 seconds, and a price of $60,990, equivalent to RMB 435,200.

Creating Nightmares, Unclear Target Audience

With something so different, there are always risks involved, and Tesla is becoming a "nightmare" for Tesla, with questions raised about its target audience.

Tesla's unconventional design hinders production. For example, Philippe Houchois, an automotive analyst at Jefferies, pointed out that Tesla's non-traditional design, combined with its reliance on casting technology instead of stamping machinery, using die-cast metal sheets instead of stamped ones, was not yet validated on a large scale when Tesla launched this car in 2019, which likely hindered production.

As mentioned in a previous article, analysts also believe that stainless steel is generally less ductile than aluminum, which is commonly used to manufacture car bodies, and it is also more expensive and heavier.

Tesla seems to agree with this point. He said that this car, which was unveiled four years ago, faces significant challenges in achieving mass production. He told investors:

For a product with a large number of new technologies, especially an advanced project like Tesla, it is normal. We are digging our own grave.

Tesla said that it would take about 18 months for the new Tesla to achieve full production and profitability because it is equipped with a large number of new technologies. He said that demand is not a problem, as there are already about 1 million orders.

However, some analysts point out that the high price may blur the target buyer group.

Some believe that in addition to Tesla employees, wealthy tech enthusiasts and collectors may be the first buyers, while utility or construction companies, government fleet operators, as well as landscape designers and renovation teams, may find the gimmicky Tesla too expensive or not practical enough.

Weak Growth for Tesla, Will it Become a Sales Booster?

Tesla's sales growth has been weak this year, and its profitability has been eroded by price reduction strategies.

In the third quarter, Tesla achieved a total production of 430,000 vehicles, a year-on-year increase of 17.6%, but a quarter-on-quarter decrease of 10.3%; it sold 435,000 vehicles, a year-on-year increase of 26.5%, but a quarter-on-quarter decrease of 6.7%. Both production and sales were not satisfactory, ending Tesla's previous five consecutive quarters of record-breaking sales.

In addition, Tesla's profitability continues to decline, with a 2.5% decrease in per-vehicle profit compared to the previous quarter. And at a time when Tesla's growth is weak, Tesla may become a sales booster. Starting from 4Q23, Tesla will enter a new product cycle.

Wall Street is also closely watching whether Cyberruck can use the halo effect of the brand to boost Tesla's overall sales. The halo effect has been seen in Tesla's history.

Tesla's deliveries are expected to drive the industry chain

Currently, Tesla's demand has been strong since its release in 2019, with nearly 2 million orders in hand. The capacity reserve of the Texas factory is steadily advancing, which is expected to further increase Tesla's sales. Guosheng Securities pointed out that with strong product power and the start of pickup truck deliveries, Tesla has entered a new product cycle, and companies in the industry chain will benefit greatly.

Pacific Securities also stated in its report in August of this year that with the official start of deliveries, Tesla's production is expected to increase rapidly, and the overseas industry chain of Tesla is expected to benefit from the growth of Tesla's production and sales:

In July of this year, there was news that Tesla had received over 1.9 million orders. It is expected that Tesla's production will increase rapidly from 2023 to 2025. Tesla's statement at the Tesla Annual Shareholders' Meeting predicted an annual production of between 250,000 and 500,000 vehicles.

According to the information provided by Tesla to its suppliers, it is estimated that the annual production of new vehicles will be 375,000 units. Judging from the delivery time, production capacity, and the difficulty of new vehicle technology, it is estimated that Tesla's production will be approximately 20,000, 200,000, and 350,000 vehicles in 2023, 2024, and 2025, respectively.

Previously, well-known analyst Guo Mingchi of Tianfeng Securities stated that the estimated shipment of Tesla's electric pickup truck this year is 100-200 units, reaching 100,000-120,000 units next year, and 240,000-260,000 units in 2025.

Pacific Securities further stated that Tesla was initially produced at the Fremont and Austin factories, and in the long term, it may be produced at the Mexican factory. There are no plans for domestic production in the short term. Some companies have established production bases in the United States or Mexico, which have advantages such as saving tariffs, rapid response, and close cooperation compared to domestic production for export. It is expected that the overseas industry chain of Tesla will benefit from Tesla's listing and the growth of production and sales.

According to Pacific Securities' report, the overall Tesla industry chain is similar to other Tesla models, including Topo Group, Xusheng Group, Xinquan Shares, and other key companies:

Topo Group mainly supplies Tesla with shock absorbers, lightweight chassis, interior panels, and other components. Xusheng Group mainly supports the three-electric shell, Sanhua Intelligent Control mainly supports the thermal management components, Xinquan Shares mainly supports the main and auxiliary instrument panels, door panels, pillar panels, etc. Daimay Shares mainly supports sun visors, roof system assemblies, and other components. Fuyao Glass supplies automotive glass. Silver Wheel provides supporting air conditioning boxes and other thermal management products, Aikodi provides supporting structural components, and Rongtai provides supporting aluminum alloy precision die-casting parts.