The biggest drawback of this renewable

About Tesla

Tesla’s current market cap is 525B USD. (KRW 710 trillion, USD omitted, decimal point cut) The company’s sales last year were 96B and its net profit was 14B. Net profit margin of 15%. To look into the future of the company, we need to look into some topics. To tell you a story one by one.

First, the number of units produced. Tesla currently has an annual production capacity of 2 million units. Toyota, Volkswagen, and Hyundai ranked first and third in the world, with 30 million, 9.8 million, and 6.84 million, respectively. Tesla is ranked seventh here.

Currently, Tesla is operating Gigafactories in the U.S., Germany, and China. It will build more Gigafactories in Canada, Mexico, and India in the future, and will also launch a $20,000 low-cost electric vehicle in the market. Recently, the Model 3 Highland was lowered to 50 million won in Korea and released on the market, which can be a testament to the ability to flexibly cope with sales volume depending on market conditions.

What we can see here is that Tesla will continue to increase production, and market share will also continue to increase. There is still enough pie to increase its market share. However, the operating margin that can be generated here is limited, and it is somewhat narrow to judge the company’s future based on this alone. Vehicle sales should be viewed in terms of expanding platforms to create higher added value.

For example, it is like FSD, an autonomous driving software. This year, Tesla began distributing free experience tickets for the FSD V12 version, and now Tesla is showing signs of moving to start selling FSD in earnest. Elon’s X shows that the FSD team has reached 1 billion miles, which will be even sharper.

Increasing the mileage of FSD means that the accuracy of the AI will also become more sophisticated, which can be expected to soon become more differentiated from other companies. This trend has been going on since the middle of last year, and will accelerate further after the introduction of free experience coupons this year.

For reference, if the FSD up to version 11 was based on human coding, from version 12 onwards, AI will be powered by End to End. Elon’s X, which will release a robotaxi on August 8, may be thought to have originated from confidence in it.

The next point to think about is the energy industry. 78B of the company’s 96B sales last year came from vehicle sales, 4B from vehicle sales, 8B from vehicle addition, 8B from services, and 6B from the energy industry. The 6B of the energy industry was only 2B two years ago, but its growth potential is steep.

Energy business refers to the production of BESS and the operation of large-scale solar power generation. Tesla is growing its competitiveness not only in automobiles but also in batteries and renewable energy sources.

The biggest drawback of this renewable energy is its intermittent nature, even though I am also making a living with it. Wind power only produces electricity during the day. This will adversely affect the capacity and operation of the existing grid network. Among the existing technologies, BESS and hydrogen are the only technologies that can solve this problem, and Tesla is rapidly growing its business in this BESS.

In fact, if the power industry’s intermittent problem is resolved due to the development of BESS, it is believed that electric vehicles will no longer be suitable. In the case of the United States, the LCOE of onshore wind power, that is, the power generation cost, is between $40 and $50 per MWh, and the LCOE of utility solar power is between $30 and $40.

In other words, if this is converted into won per kWh, it can produce 1 kWh of electricity at about 50 to 60 won, which is more competitive considering that the lowest electricity rate in Korea is 120 won/kWh.

Personally, I recently went on a local business trip and ran an electric car other than Tesla, and I remember it was quite inconvenient. First of all, I was a little nervous when moving the lane because there were no eight cameras, and it was a little difficult to drive because I didn’t give out the distance in cm when parking.

Additionally, there was a significant difference between a supercharger that can be charged and calculated by simply inserting a card and fiddling with the display. These days, superchargers can output 200kW per hour when they are fast, but at this point, they can charge enough to drive 200 to 300 km in just 30 minutes.

There were times when I felt good for a short time because the price rose to 80 million won after buying the Model 3, but I was also worried about how to buy the Model 3 again. As the Model 3 Highland was released at 50 million won, I was disappointed for a short period of time, but in the mid- to long-term, I felt good thinking that I could continue riding Tesla.

Tesla will definitely be my next car, provided there are no major factors such as a decrease in my income. Anyway, from this point of view, Tesla’s current market capitalization of 525B seems to be somewhat low. If FSD contributes to profits, a low-end Tesla of $20,000 comes out, and the energy business shows stable sales and profits, I think we will be able to regain the value of the big tech family.

Of course, the additional Opportunities not considered here may include the commercialization of a robot called Optimus, the unexpected popularity of Cybertrucks, the increase in demand across the automobile industry due to falling interest rates, the addition of insurance financing, and the confirmation of DoJop’s competitiveness. These various additional pipelines give Tesla the confidence to buy at this price.

Of course, it’s a little doubtful when you think about Elon, the CEO who doesn’t know where he will go. But is there a perfect investment? I think we should take some risks.

I didn’t really look into it when it was very expensive, but these days it’s a Tesla with a price I want to look into more

*Investments are made on their own according to their own judgment…
Created April 7, 2024