Business Description
The mission of Tesla, Inc. (TSLA) is to accelerate the world's transition to sustainable energy.
It designs, develops, manufactures, sells, and leases high-performance fully electric vehicles, energy generation and storage systems, and related services.
In 2024, it has a total revenue of $97.7 billion, gross margin $17.5 billion (17.9% margin), operating income $7 billion (7.2% margin), adjusted EBITDA $16.6 billion (17% margin), and GAAP income $7 billion (non-gaap income $8.4 billion).
The breakdown of its segments in terms of revenues is:
automotive: ~78%
Model 3, Model Y, Model S, Model X
Cybertruck
Semi
Roadster
energy generation and storage revenue: ~11%
Solar Panels & Solar Roof
Powerwall
Powerpack & Megapack
services and other revenue: ~11%
Vehicle maintenance and repair services.
Vehicle insurance.
Sales of used vehicles.
Merchandise sales.
Supercharging network revenue
The critical driver of Tesla future value is actually not any of the above, but Elon Musk and Robotaxi.
Elon Musk
The CEO of Tesla, Elon Musk, is a genius. His big bets on several strategies made Tesla the top electric vehicle manufacturers outside of China (recently lost to BYD in due to BYD's lower cost strategy):
over-the-air update on vehicles
gigafactories
supercharger network
optimized automation of manufacturing process
limited number of models with reusable manufacturing processes (model 3 and model Y)
making autopilot (level-2 autonomous driving assistant) accessible to everyone even it's an unproven technology with high risk
use cameras only for autopilot that keeps the cost low, and thus making autopilot affordable for the mass
aggressive in autopilot road and condition coverage
These bets made Tesla electric vehicles affordable, long range along with reasonable access to supercharging, level-2 driving assistant capable for most of the day-to-day driving experience.
Outside of Tesla, he also made several big bets which no one in the recent history has accomplished as much as he did:
Co-founded Zip2
X.com, which made him a co-founder of Paypal
SpaceX
Neuralink
The Boring Company
Acquired Twitter (now called X), cut about 80% of employees and still keep the company running and thriving
Co-founded OpenAI
xAI (AI Grok)
Big bet on Trump 2024 US presidential campaign, and arguably one of the main reasons that Trump won the 2024 election
Found Department of Government Efficiency (DOGE) and identified bunch of high profile government waste, e.g. USAID
He is a very valuable asset to Tesla that will keep Tesla growing and growing.
Robotaxi
As of Feb, 2025, Tesla is behind Waymo, WeRide, Pony.ai, Apollo Go (Baidu) in Robotaxi services. However, with the genius of Elon Musk, Tesla's track record in executing the deployment of autonomous driving with the most road coverage (albeit only level-2), the recent FSD version 13 and 12.6, and Elon Musk's tie to the Trump presidency that dramatically reduce execution risk related to regulations, Tesla's Robotaxi dream gets much closer, and it has a fair chance to catch up on competitors and eventually be the first to provide scalable Robotaxi services.
SWOT analysis
Strengths
Led by the genius, Elon Musk
Best electric vehicles in terms of cost per performance, with long range and autopilot (level-2 autonomous driving) with the most road coverage
Brand, customer loyalty
Vertical integration from the vehicle manufacturing to the autonomous driving software
Over-the-air update for its vehicles
Extensive Supercharger network
Weaknesses
It does not have the lowest cost manufacturing compared to the manufacturers in China
Quality control issues (minor)
Profitability heavily relies on carbon credits
Haven't demonstrated the capability of level-4 or up autonomous driving, so it's questionable that it can crack the technology of Robotaxi
Opportunities
Licensing it technology to other automakers, e.g. supercharging network, autonomous driving
Continued cost reductions through economies of scale and technological advancements
Robotaxi
Tesla Optimus (Tesla Bot)
Threats
Key man risk due to the company heavily relies on Elon Musk
Elon Musk may not be able to solve Robotaxi for Tesla, or it may not be more scalable than others
Safety issues due to limited capability of level-2 autonomous driving accessible by the mass
References
Updates
2025/03/07 Brief valuation update and upcoming catalysts
This X post by Dalton Brewer gave a good list of all the catalysts besides Robotaxi in short and long-term:
Robotaxi is only months away from coming online, beginning first in Austin, Texas — this will only be one of the greatest asset value increases in history, so no big deal
FSD has just entered China with overwhelmingly positive feedback and will enter Europe soon — signs also show FSD entering Australia soon as well
The new Model Y is being produced at all 4 Gigafactories and deliveries of the world’s best selling car have begun
Cheaper more affordable models begin production within the first half of this year, greatly expanded TAM
Cybercab and Semi begin limited production this year and mass production next year
Megafactory Shanghai has begun ramping production (doubling energy storage revenue)
Tesla just announced their third Megapack factory is being built in Texas
Teslas now drive themselves autonomously from the production line to the outbound lot
Tesla signed a lease for their first showroom in India (3rd largest auto market in the world), they’ll begin importing cars there with plans to build a Gigafactory there
Model S and Model X refresh confirmed for later this year
FSD licensing agreement(s)
FSD improvements such as 3x model size scaling
Cybertruck is the best-selling electric truck and continues to ramp
Tesla doubling down on Dojo and aggressively hiring
Deregulation in the U.S.
Tesla plans on building thousands of Optimus humanoid robots this year to work in Tesla factories — next year they plan to 10x that number and sell them to other companies as well
2025/02/08 Rough valuation
Being a top EV manufacturer is worth only about $100-$200 billion. Large scale robotic commercialization is still so far ahead. Hence, investing in Tesla is a big bet on scaling Robotaxi service much better than others in terms of cost and road coverage.
Robotaxi is a trillions of dollars industry. The total addressable market will be huge once the cost goes below ride sharing services today. If Tesla really leads the technology of Robotaxi, it will be a company that is worth trillions of dollars in 5-10 years. In my speculative opinion, it is investable as long as its market cap is lower than $3 trillion dollars. Using 3.6 billion shares outstanding (including some future dilution), that is $833 per share.
Obviously, this investment belongs to the Shut Up and Hodl Basket.
No comments:
Post a Comment