[Tesla 2024 Performance Review]
Tesla’s financial results for the fourth quarter and full year of 24 were announced. The results were plain in terms of numbers. No, it was bad from the perspective of growth stocks. In the income statement, there was little improvement in the previous quarter or year-on-year, and earnings per share fell by half compared to the previous year. Since the stock price has only doubled compared to the previous year, P/E has roughly quadrupled. Looking at this alone, it can be seen that Tesla’s stock price in the current market is somewhat excessive.
Let’s count the numbers. ’24 sales are $97B and operating profit is $7B. (Cutting below decimal point) At the current exchange rate, it is about 140 trillion won and 10 trillion won, respectively. For comparison, if you look at Hyundai’s performance in ’24, Hyundai has sales of 17.3 billion won and operating profit of 14 trillion won. However, Tesla’s market cap is $1,249B and Hyundai’s is $35B.
Hyundai Motor has more operating profit, and its corporate value is 35 times different. Hyundai Motor is also undervalued, but Tesla is also overvalued. Hyundai Motor is not receiving P/E 5 times, let alone 10 times, in the market, while Tesla is being valued 100 times based on forward and 200 times based on the ’24 EPS of $2′.
Then, is it appropriate to sell Tesla’s stock now? After the earnings report, the market atmosphere is not like that. Although an earnings miss occurred, Tesla regained the $400 mark, rising by about 4% after the close of the market. Why is that.
The most interesting part of this performance data was the fact that the average cost of producing a vehicle (COGS) fell below $35,000. This is the first time. It was over $36,000 a year ago and over $38,000 two years ago. Obviously, inflation has increased by more than 10% in the last couple of years, but the cost of producing a vehicle continues to fall. (See Figure 1)
Factory automation is the reason this can happen. Tesla drastically reduced the casting process with GigaCasting technology. Thanks to this, the production speed was 30-40% faster than before, and the number of parts decreased, resulting in cost reduction. The factory area could be reduced, and the vehicle became lighter, improving battery efficiency. In addition, Optimus began to be put into factories last year, and if this becomes a reality, it will lead to a sharper reduction in production costs.
Figure 2 shows part of Elon Musk’s retweeted video to X today, which Tesla can confirm does not require a driver when the vehicle is shipped from the factory. This will save labor costs and allow the factory to operate 24 hours a day, free of holiday allowances and night shifts.
In addition, it is possible to ship without delay, safety is rather improved, maintenance costs are reduced, and FSD driving data is accumulated. If this spreads a little more, it is possible to create a fully automated factory consisting of unmanned shipping + unmanned logistics + unmanned process. COGS The falling sound can be heard up to here.
I remember when I bought the Tesla Model 3 before. I didn’t see any Tesla employees until Ikea delivered the Model 3. I talked to a sales representative on the phone for local government subsidies, but after that, it was a system that took care of it through the web, and even when I received the delivery, I went and got it on my own. Isn’t this all a cost for legacy automakers.
In any case, Tesla’s expensive P/E 200 stock price can be justified to some extent if we take this possibility into account. Shouldn’t it be possible to make a profit of about $7B per year to $70B within a few years? Nvidia is making that much right now, and Apple is making a little more than that.
Of course, if Tesla goes this far, it must not stop at cost reduction, but it must generate sales of robo-taxi, FSD, Optimus, and ESS. Whether or not you invest in Tesla will depend on how many are feasible here.
Of course, the macro, which is currently somewhat overvalued, is also a factor to consider. Personally, I think it will last until this year, but if the macro collapses after that, it could die for several years again. Taking this into account, Tesla will also have to invest.
Apart from investment, I am cheering for companies like Tesla because I think that the AGI will eventually melt into reality only when companies like Tesla do well. Even if these innovations continue, China is likely to be the biggest threat to realistic Tesla. China is also the place where AI-based innovations such as “DeepSeek” will most likely emerge in the automobile industry. Whether Tesla can maintain this gap will be an important factor in determining its stock price in the future.
2025.01.30 Preparation