"Tesla's market value can even exceed the sum of Apple and Saudi Aramco."

Musk at Tesla Q3 performance meeting once again said something amazing.

Perhaps the general environment and the downward trend of the stock market have given Tesla more "sense of crisis". After the price earnings ratio of the stock price dropped to the lowest level since the epidemic and delivered a financial report whose performance was lower than Wall Street's expectations, Musk began to disclose more about the company's future plans.

After the release of the financial report, Tesla's share price quickly rose by nearly 3% after trading, and then quickly plunged to a drop of nearly 7%. Since the beginning of 2022, Tesla's share price has dropped by 45%. Under pressure, Musk had to offer a 10 billion dollar buyback routine and harsh words.

For example, Musk obviously disagrees with the question of Tesla's declining demand, and throws out that "Tesla is developing a cheaper next generation car platform", which can reduce the cost by another 50%.

The positive signal that Musk wants to release to capital can be summarized into five major moves. Can this be the direction for Tesla to break the situation?

Big move 1: The best result, but less than expected?

The market has always been a little "harsh" on Tesla.

This time, for example, Tesla's revenue and gross profit were lower than analysts' estimates. The company's Q3 revenue was 21.454 billion US dollars, up 56% compared with 13.76 billion US dollars in the same period last year, but lower than the 21.99 billion US dollars generally expected by analysts.

The total gross profit was USD 5.38 billion, an increase of 47% compared with USD 3.66 billion in the same period last year. The total gross profit margin was 25.1%, compared with 26.6% in the same period last year. The gross profit margin of automobiles was 27.9%, compared with 30.5% in the same period last year.

However, it was a bit arbitrary just to say that it was unexpected.

First of all, the three major parameters of the report, namely, the increase in vehicle delivery, the increase in average selling price and the revenue from auto parts, all increased year on year.

At the same time, the net profit is 3.3 billion US dollars, which has already reached the scale of a giant auto enterprise, almost equal to the net profit of Daimler Group in Q2 of 22 years, only about 100 million US dollars less than BMW.

Therefore, in Tesla's view, it is not the failure of its own car, but the fluctuation of the general environment. For example, "selling carbon" is not as profitable as before. The financial report shows that Tesla's average selling price (ASP) fell 4% month on month in the second quarter.

For another example, the negative impact from foreign exchange directly swallowed up the profit of 250 million dollars. In Q2 2022, the production of Shanghai factory was limited, which also delayed the global delivery.

At the same time, the cost of battery led raw materials, copper, iron and other metal bulk commodities, international shipping logistics, warranty and urgent delivery increased. In particular, production costs are high in Giga Berlin and Texas.

At the same time, the revenue and profits of Tesla's other businesses have increased. Especially in the energy business, Tesla Energy has achieved the best gross profit so far, mainly driven by the growth of Megapack battery energy storage modules.

Big Idea 2: "Logistics" is the main blame for delivery

After analyzing the basic data of the financial report, the core concern of investors came - "Does anyone want to buy Tesla?"

In Q3 of 2012, the output of Tesla was 22000 units more than the sales volume. The industry began to question whether users' demand for Tesla cars was declining.

Interest rates are rising and the economy is falling. Inflation, energy and Asian market weakness have added some uncertainty to Tesla's future. Many analysts doubt whether Tesla can withstand the impact of the economic slowdown and continue to raise prices without affecting sales.

Because of this, Wall Street became more pessimistic about whether Tesla could deliver more than 1.4 million cars this year to achieve the goal of 50% increase in output.

However, Musk said that Tesla can guarantee an annual growth rate of 50%. But he also left a hand: "Maybe 40% can be achieved this year. A little more or less in a certain year is normal."

He emphasized that logistics is the problem of "production exceeds sales". In the United States and Europe, local truck transportation is facing difficulties, and the cost of shipping is also rising. Therefore, Tesla will start to optimize logistics, hoping to achieve closer delivery in different regions.

The current demand in China is strong, and the overall market is very good. Musk believes that the US dollar interest rate increase is prudent, so Tesla can achieve 50% growth in every market, and there will be a "crazy" delivery tide every quarter.

Big move 3: Price reduction is coming?

Looking back at the delivery target, according to the 50% compound annual growth rate announced by Tesla in July, 2022 should have hit 1.5 million vehicles. On the basis of the completed quantity in the previous three quarters, more than 590000 new cars need to be delivered in the fourth quarter.

In the third quarter, Tesla delivered 343000 vehicles, up 42% year on year. 3 and Y delivered 325000 yuan, up 40%. X and S delivered 18000 yuan, up 101%.

If you want to achieve this growth, price reduction may be a good choice. In the Chinese market, there are already such signs.

During the National Day holiday, Tesla launched a car rental program with a minimum of zero down payment in China. In other programs, rates and monthly payments are discounted. In the past September, Tesla also launched an activity with an insurance subsidy of 8000 yuan.

Referring to the past market performance, we can also find that the price has a strong driving effect on the market.

The sales volume of Model 3 in China reached the highest point in Q3 2021, which is also the time when the price is the lowest. Subsequently, the starting price of Tesla Model Y long endurance version was reduced to 339900 yuan, and the supply began to fall short of demand.

If Tesla chooses to reduce the price at this time, it will undoubtedly be a shot in the arm to boost sales.

At the meeting, Musk also said frankly that although the growth of commodity prices reached its peak in the third quarter, he believed that the prices of manufactured commodities would decline slightly. He also pointed out that the overall cost reduction is expected to occur in 2023.

In the Chinese market, which accounts for one third of its global sales, will Tesla play the card of "trading price for volume"? We'll see.

Big move 4: Market value exceeds that of Apple. What else is there?

"Tesla's market value can surpass Apple, and even exceed the sum of Apple and Saudi Aramco (the second largest in the world)." It is not for no reason that Musk dares to "speak harshly".

His latest card is to build a Model 3/Model Y with a lower cost of 50%.

Although Tesla did not disclose the specific date, the third generation platform is already on the way. Musk estimates that its cost will be half of Model 3 and Model X, and its output may be higher than the sum of all products of the company at present. "If the cost and time for Tesla to produce two cars are only equivalent to (now) producing one Model 3, this will change the rules of the game," he said.

Musk also stressed that he was not talking about Optimus Prime when he talked about Tesla becoming the number one in the world.

At the same time, Tesla also updated the progress of SemiTrucks and CyberTrucks. Semis may be delivered around December 1, with a range of 500 miles. The goal is to produce 50000 vehicles in North America. Perhaps, with the arrival of Tesla pickup Cybertruck and truck Semi, Tesla's model matrix will be expanded by two more vehicles, and its sales will also explode.

When it comes to trucks, Musk also made a joke about hydrogen: "You obviously don't need hydrogen for heavy truck transportation." Probably alluding to the market fraud of Nikola's founder.

Senior executives of the company said that preparations for CyberTruck had been made in Texas.

Big move 5: buy back and stabilize the stock price

At the performance meeting, repurchase was also one of the key points. Since the beginning of 2022, Tesla's share price has dropped by 45%.

Co founder Gary Black wrote a letter to Tesla's Board of Directors and hoped that they would buy back Tesla shares. Repos can boost any stock.

"The current valuation of Tesla's stock is the lowest P/E ratio since the outbreak of the epidemic," Black wrote in his letter. "Now that we have an investment grade credit rating, we think we should strongly consider taking the initiative to buy back at least US $10 billion of multi-year shares."

Tesla also responded.

At the board level, there has been extensive debate on the idea of repurchase. It is generally believed internally that it is meaningful to buy back shares, and the company hopes to buy back shares through the correct procedures. However, considering the very difficult situation next year, the company may buy back shares in the range of $5 billion to $10 billion in the case of economic downturn.

Musk added, "This obviously needs to be evaluated and approved by the Board of Directors. Therefore, we are likely to carry out some meaningful repurchases." Finally, he stressed that the most important thing at the moment is to focus on Tesla's long-term trend. Even if the company encounters resistance in the short term, the long-term prospects are still very bright.

Tesla is looking forward to a record breaking fourth quarter. Musk said, "It looks like we will have an epic year end."