After hours on Wednesday, April 24th Eastern Time, Tesla released its Q1 2024 financial report. In the current quarter, Tesla not only experienced a collapse in sales, with sales falling below the 400000 vehicle mark for the first time since the third quarter of 2022, but also experienced year-on-year and month on month declines in revenue, net profit, and gross profit margin.
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Although the financial report fell short of expectations, Tesla CEO Elon Musk outlined a new business vision during a subsequent earnings conference call with analysts: the autonomous taxi Robotaxi will be released in August this year, and the previously rumored low priced new car that will be put on hold is also expected to be released next year. The news sparked a frenzy in the capital market and led to Tesla's stock price rising by 14.44% this week, with a market value increase of $67.7 billion, even after the dismal disclosure of its first quarter report.
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In fact, investors rarely noticed during conference calls that at the end of the first quarter, Tesla presented its ecosystem comprehensively for the first time under the title "MORE THAN JUST VEHICLES". At a time when the growth of traditional car manufacturing business is facing obstacles, Tesla is continuously moving towards a strategic ecological loop of "car, storage, and AI", including other businesses such as AI, FSD, and energy storage, which may be driving it into the next growth period.
Tesla Ecosystem Tesla Q1 2024 Report
Currently, in addition to declining sales, Tesla is also facing new problems. On April 26th local time, the US automotive safety regulatory agency announced that it has begun a new investigation into Tesla, covering Model Y, X, S, 3, and Cyber truck vehicles equipped with an assisted driving system Autopilot produced in the United States from 2012 to 2024. Daniel Ives, Managing Director and Senior Stock Analyst of Wedbush, stated in an email to a reporter from The Daily Economic News that the focus of Tesla is to accelerate unit growth again in the coming year.
AI computing power leap: AI training computing power Q1 increased by over 130%, with 85000 H100 pieces expected to be put into training by the end of the year
From the recent years of deep layout, Tesla is accelerating its comprehensive transformation from hardware to software ecology and services, and also demonstrating its ambition in the deep application of AI technology. Musk firmly believes that software will be Tesla's main growth driver in the next phase.
The financial report shows that Tesla invested as much as $1 billion in AI computing in the first quarter, with AI training computing increasing by over 130%. Tesla stated that the company is no longer limited by computing power and will continue to increase its core AI infrastructure capabilities in the coming months.
This transformation further strengthens Tesla's vision - not just to make cars, but also to strengthen the foundation of its AI company.
However, due to its significant investment in AI infrastructure and increased inventory levels, Tesla's free cash flow reached - $2.5 billion in the first quarter. This is the first time negative cash flow has occurred since 2020.
Tesla's AI Training Ability Tesla Q1 2024 Financial Report
During the earnings conference call, Musk revealed that Tesla has successfully installed and debugged 35000 Nvidia H100 GPUs, and it is expected that 85000 Nvidia H100 GPUs will be put into AI training by the end of this year.
The strategic consideration behind this measure is to accelerate the development of FSD and humanoid robot technology based on the massive computing power of its Dojo supercomputing platform. Musk previously predicted that the demand for humanoid robots would reach 10 billion units, far exceeding that of cars. If the ratio of robots to humans is 2:1, the demand would reach 20 billion units.
Morgan Stanley analyst Adam Jonas pointed out that Dojo has the potential to increase Tesla's market value by $500 billion, mainly driven by faster adoption rates in mobile (robo taxis) and online services (SaaS). Jonas believes that Dojo's ability to process visual data is very powerful, and it can open up "new potential markets", with a usage range far beyond automobiles, and can be used in fields such as robotics, healthcare, and safety. Essentially, any device with a camera that makes real-time decisions based on visual input can benefit from Dojo.
Tesla's Q1 2024 Financial Report
FSD: Expected to reach a qualitative milestone of 6 billion miles within a year, with annual revenue expected to reach billions of dollars in the future
"If someone doesn't believe Tesla can solve the problem of autonomous driving (FSD), they shouldn't be an investor in Tesla," Musk emphasized at the financial report meeting. This statement is also the strongest tone for Tesla's future development.
Currently, Tesla's FSD has entered the V12.3 phase. In March, Tesla pushed FSDV version 12.3.1 to North American car owners, introducing end-to-end neural network technology. This technology uses deep learning of driving data from over a million vehicles and artificial intelligence technology to influence vehicle control, such as operating steering wheel pedals, turn signals, etc., rather than hard coding every driving behavior, marking another leap for Tesla in the field of autonomous driving.
Musk once stated that 6 billion miles traveled was an important milestone in achieving qualitative change in the FSD system. In the first quarter of 2024, the total actual road mileage of Tesla's FSD system reached 1.25 billion miles (approximately 2 billion kilometers). Tesla expects that at current speeds, the cumulative mileage of FSD is expected to reach 2 billion miles by the end of May and 6 billion miles within a year.
Tesla's Q1 2024 Financial Report
In order to promote the coverage of FSD, Tesla has recently lowered the monthly subscription price and package purchase price of FSD in the United States: the FSD subscription price has decreased from $199 per month to $99, a decrease of 50.25%; The purchase price of the FSD package has been reduced by 33% from $12000 to $8000.
Tesla stated at its financial report meeting that FSD is only "one step away" from full commercial use, and once implemented, this technology will become Tesla's "cash cow", bringing it substantial profits.
A report by Goldman Sachs analyst Mark Delaney's team in November last year stated that although FSD is still in the testing phase, its annual revenue has reached $1-3 billion. The team believes that from a favorable perspective, with the growth of Tesla electric vehicles worldwide, "we believe that by 2030, Tesla's software related revenue will reach billions of dollars annually (mainly from FSD)."
However, Daniel Ives, Managing Director and Senior Stock Analyst at Wedbush, stated in an email to a reporter from The Daily Economic News that "FSD and autonomous driving are a key long-term strategy for Tesla. Although the prospects are promising, they also bring a series of regulatory and technical challenges that Tesla must gradually overcome in the coming years to achieve Musk's strategic vision." He also mentioned that accelerating unit growth in the next year is Tesla's focus.
Energy storage business: Q1 installed capacity set a record, reaching 4.1 Gwh
In addition to AI, humanoid robots, and FSD, energy storage business is also a key focus of Tesla's layout.
Since 2015, Tesla has been launching energy storage products in the United States, mainly targeting the large commercial and household energy storage markets. At present, Tesla's energy storage products include Powerwall, Powerpack, and Megapack, which have been distributed in over 65 countries and regions worldwide, with over 1500 operational sites.
In 2023, Tesla's installed capacity of energy storage products reached 14.7 gigawatt hours, a year-on-year increase of 125%. The installed capacity in the first quarter of this year reached a record high of 4.1 GWh (GWh: 1 GWh=1000 MWh).
Tesla's Q1 2024 Financial Report
The rapid growth in installed capacity of energy storage products is also reflected in the financial statements. In 2023, Tesla's gross profit from its energy generation and storage business reached $1.141 billion, almost four times that of the previous year ($288 million). The company expects that the installed capacity of energy storage will continue to grow in the future, and the revenue from energy storage business is expected to exceed that of vehicle business.
Tesla's Q1 2024 Financial Report
According to domestic media reports, Tesla's Shanghai Energy Storage Super Factory plans to start construction in May this year and complete mass production in the first quarter of 2025. This is Tesla's first energy storage super factory project outside of the United States.
It is reported that Tesla's Shanghai Energy Storage Super Factory will produce mega packs of ultra large commercial energy storage batteries. This product is based on integrated system integration and modular design, helping power grid operators, utility companies, and others to store and distribute renewable energy more efficiently. It is the world's largest electrochemical energy storage device to date. Each Megapack unit can store over 3.9MWh of energy, sufficient to meet the 1-hour electricity demand of 3600 households. More than 200 Megapacks can form an energy storage power plant that can store 1 million kWh of electricity, meeting the 6-hour electricity demand of San Francisco.
Tesla's Q1 2024 Financial Report
By 2030, Tesla's ecosystem may be like this: users can charge Tesla cars through a home charging station, which uses Powerwall as its energy source, while Powerwall's power source comes from users' Tesla solar panels or rooftops. In addition to supplying power to home charging stations, Powerwall can also provide power to the air conditioning and air purifiers in users' homes.
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