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01 Sales growth remains weak, but production-sales gap reverses
In the second quarter of this year, Tesla reduced the frequency of price cuts in China. Only after the launch of Xiaomi SU7, Tesla cut prices by 14,000 yuan across all models, bringing the starting price of Model 3 below Xiaomi SU7 Pro (231,900 yuan). Instead, Tesla introduced limited-time zero down payment or zero interest financing options for Model 3 and Model Y.
Following direct price cuts, insurance subsidies, and service package subsidies, Tesla's new strategy - zero down payment and zero interest - has had some promotional effect. Although Tesla's sales growth didn't turn positive year-over-year, it finally stopped declining quarter-over-quarter, better than expected.
In Q2, Tesla's production was 411,000 units, down 14.5% year-over-year and 5.2% quarter-over-quarter. Deliveries were 444,000 units, better than the market expectation of 439,300 units, down 4.8% year-over-year but up 14.8% quarter-over-quarter.
Since Q1 last year, Tesla's production has generally exceeded sales, leading to record-high inventory in Q1 this year (production exceeded sales by 47,000 units).
In Q2, Tesla clearly controlled its production pace, with both year-over-year and quarter-over-quarter declines in production, resulting in sales exceeding production and no further inventory accumulation (quarterly inventory turnover days decreased from 28 days in Q1 to 18 days this quarter).
Of course, this is not a long-term solution. Previously, during Tesla's high sales growth phase, production capacity rather than demand limited delivery volume. Now, the need to control production levels indicates that Tesla has foreseen weak sales growth.
Notably, in the first half of this year, Tesla's global sales were only 831,000 units. Its market share in China fell below 10% to 6.8%, and its market share in the US also fell below 50% to 49.7% in Q2 for the first time (compared to 59.3% in the same period last year).
Even based on the flat target of 1.8 million units for the full year, Tesla needs to achieve an average quarterly sales level of 484,500 units in the second half, which is at a historical high and not an easy task.
02 Automotive business profit and revenue barely stable, future relies on three trump cards
In Q2 this year, although Tesla's promotional strategy changed, it didn't alter the essence of price cuts, and Tesla's predicament of continuously declining revenue per vehicle didn't change.
In Q2, Tesla's revenue per vehicle was $42,700, down $3,300 year-over-year and $2,200 quarter-over-quarter. Fortunately, Tesla's revenue from selling carbon emission credits remained strong, reaching a new high of $890 million in Q2, doubling year-over-year, which to some extent compensated for the poor performance of the car-selling business.
Finally, Tesla's automotive business revenue reached $19.9 billion, basically in line with market expectations of $19.7 billion. However, the automotive gross margin, under the backdrop of price cuts and zero down payment promotions, paid the price for stabilizing sales, still declining by 1.7 percentage points quarter-over-quarter to 14.6%.
Notably, Musk stated on the conference call that Robotaxi will have an official launch event on October 10, and this business will provide the main growth for Tesla's future automotive business.
Tesla FSD likely to enter China quickly, significantly enhancing its value
Musk directly stated that the FSD system will enter multiple countries including China and Europe in version V12.5 (with 5 times the parameter volume of the previous version, greatly improving robustness) or 12.6, and is expected to receive regulatory approval from China and the EU by the end of the year.
Previously, Tesla had stated that due to insufficient training in common scenarios, FSD V12.4 lacked smoothness in daily driving, causing a delay in release and failure to push as scheduled in July.
In the Q1 conference call, Tesla stated that after the release of V12 supervised version in Q1, FSD-related revenue growth was considerable (contributing about 1.7 percentage points to automotive gross margin), and this was only with Tesla FSD being used in North America and a few other regions.
If FSD can enter more markets as promised in the future, related revenue will bring new growth.
Tesla Robotaxi has great potential
Another focus of market attention is Tesla's Robotaxi, which will be launched in October this year.
In the US domestic market, Tesla's self-driving taxi business faces few competitors, mainly Waymo, Cruise, and Amazon's Zoox.
Tesla is fully capable of capturing a large share of the US domestic market with its advanced self-driving technology, excellent automotive products, superior brand effect, and high recognition among consumers.
03 Highly anticipated robots and AI also see rapid development
Apart from the automotive business, there's good news about Tesla's highly anticipated Optimus robot and AI.
Musk stated on the conference call that trial production of the Optimus robot is expected to begin early next year, as if the Optimus humanoid robot will be officially put into use by the end of the year. Initially, thousands of robots will undertake certain mass production tasks in Tesla factories. Subsequently, as production rates improve, the second production version of the Optimus robot will also be available for sale to external customers.
Moreover, although Tesla's capital expenditure continued to decline to $2.27 billion in Q2, down $40 million year-over-year and $500 million quarter-over-quarter, investment in AI computing power-related infrastructure is still increasing, with an increase of about $600 million in Q2. Notably, Musk stated on the conference call that total capital expenditure this year will exceed $10 billion, with the main expenditure going to AI, as Tesla needs to add and bring online a 50K GPU cluster, as well as expand FSD and improve AI capabilities.
04 Tesla's energy business is thriving, becoming the main source of short-term growth
Tesla's energy business is thriving.
Energy storage deployment doubles
Specifically, in terms of energy storage deployment, Tesla deployed 9.4GWh of energy storage products in Q2, a significant increase of 157% year-over-year and 129% quarter-over-quarter, reaching a historical high (the deployment of 13.5GWh in the first half of the year is already close to the full-year level of last year). In early July, Tesla again announced a cooperation agreement with Intersect Power, signing a 15.3GWh energy storage order, breaking Tesla's record for a single contract in the energy storage field.
Energy storage capacity doubles
In terms of energy storage capacity, Tesla's California Lathrop energy storage factory will complete the construction of new production lines this year, doubling capacity from 20GWh to 40GWh. The Shanghai energy storage super factory is also expected to start production in Q1 next year, with a capacity of 40GWh. The increase in Tesla's energy storage capacity can fully keep up with the growth rate of deployment, providing momentum for the continued growth of Tesla's energy business in the future.
Energy storage business gross margin increases significantly, revenue share exceeds 10% for the first time
In terms of energy storage business profitability, in Q2 this year, Tesla's energy business revenue reached $3.01 billion, a 100% year-over-year increase, exceeding Tesla's previous guidance of 75% year-over-year growth.
The proportion of Tesla's energy business to total revenue has climbed from 4.8% in 2022 to 12% in Q2 2024; the gross margin is as high as 25%, far exceeding the 14.6% of the automotive business. It can be seen that Tesla's energy storage business is rapidly converting the rapid growth of product sales into revenue and profit growth.
Notably, the delivery date for Tesla's Megapack products has now been delayed to mid-2025, entering a high-growth phase. In the short term, only production capacity can limit the sales volume of Tesla's energy storage products.
Tesla's pure car-selling business, even with continued price-cutting strategies, is unlikely to make progress in the short term. In the future, we can only hope that Tesla can stage a beautiful comeback with the rise of FSD, Robotaxi, and the energy business.