$TSLA (+0,74%)
After the launch of the Robotaxi service and before the once again poorly expected quarterly figures, here is a small Tesla update.
Have fun!
Why growth is faltering
Tesla has experienced turbulent times While the company has enjoyed years of very high growth rates for electric cars, momentum has slowed considerably in the last two years.
After the strong increase due to the scaling of the Model 3 and Model Y, the sales figures
slightly declining since 2023 (see chart below, LTM = last 12 months).
Accordingly, the total turnover of the company just below the USD 100 billion mark for the past two years (see chart below, LTM = last 12 months).
The environment for Tesla has become tougher in recent years. Why is that?
In my opinion, it is due to a combination of the following five points:
- High interest rates and consumer restraint: Following extremely low interest rates during the pandemic, the US Federal Reserve has raised interest rates sharply - to combat inflation. This has had a noticeable impact on the automotive industry. There is a general reluctance to spend, especially on larger purchases such as a new car. Tesla's models in particular (all in the medium to higher price segment) are suffering from this reluctance. Many consumers are taking a wait-and-see approach or opting for cheaper brands.
- No new products and changes in strategy: Tesla has not launched a new volume model since the Model Y (2020). The much-discussed "$25,000 Tesla" has been postponed or canceled internally - a deliberate strategic decision in 2021/22. Instead, the company is radically focusing on autonomous driving.
- Polarization: Elon Musk is undoubtedly one of the most visionary entrepreneurs of our time - but he is divisive. His controversial appearances, political statements and simultaneous focus on other companies (e.g. X, SpaceX) mean that potential customers may distance themselves from Tesla.
- Declining incentives to buy: In many countries, government incentive programs are a key growth driver for electric car sales - including at Tesla. However, this tailwind has recently waned: In Germany, for example, the environmental bonus for commercial buyers has been canceled and the subsidy for private buyers has also ended. Subsidies are now also to be discontinued in the USA.
- Increasing competition: Chinese manufacturers in particular are pushing into the market with good technology and aggressive prices - not only in China, but increasingly also in the European market.
How Tesla reacted to the growth problems
Tesla responded to the growth problem in the core segment with some significant price reductions of its vehicles: in 2022, a car still cost well over $50,000; in the last quarter, the average sales price was only around $40,000. This puts pressure on the profit per vehicle, even though Tesla was also able to significantly reduce its production costs. On average, Tesla now earns around $4,500 (gross profit) from a vehicle, whereas two years ago it was almost twice as much.
So are Tesla's best days behind it or are we in a transitional phase until the next stage of growth takes off?
The fact is: Tesla is accomplishing the feat despite stagnating sales more operating cash flow - i.e. earning more money on the bottom line with its operating activities (see chart below).
This shows the financial resilience and how cost-efficient Tesla operates, even in a weaker market environment - probably one of the reasons why the share remains robust despite stagnating sales.
In addition, the company is financially healthier is than ever beforeTesla is sitting on around $37 billion in cash. This is offset by only $5 billion in long-term debt (see chart below) - and all this despite high investments in autonomous driving, production capacities and the product roadmap.
The bet on robotaxis and humanoid robots
While the traditional automotive business still accounts for >70% of salesmost optimists agree that Tesla's future value will depend largely on the success of the following two areas of innovation two areas of innovation innovation areas:
- Full Self-Driving (FSD) - i.e. the fully autonomous driving of Tesla vehicles
- Tesla Bot - a humanoid robot designed to relieve workers
Both areas are fascinating and full of potential (as they are significantly more profitable than the traditional automotive segment), but are still dreams of the future. Tesla is not yet generating any significant not yet generating any significant sales. The uncertainty surrounding these two areas - in combination with the stagnating core business - makes an investment in Tesla correspondingly riskier than an investment in a company whose core business is growing healthily and whose future is easier to predict.
With autonomous driving however, there has been a significant milestone significant milestone:
- Tesla autonomous cabsTesla launched the first "Robotaxis" - fully autonomous Tesla vehicles (Model Y) that transport passengers without a driver - in Austin (Texas) on June 22, deliberately slowly and overcautiously. Initial customer feedback has been overwhelmingly positive. So far, there have been no safety-related incidents, but 2-3 situations in which the car did not react well. This is, of course, a real feast for the media. The software is good, but not yet perfect.
- Driverless deliveryAccording to Tesla, a Model Y built in Austin will be delivered autonomously for the first time from June 28. autonomously to its buyer - without without a human at the wheel. It is still unclear whether this is a one-off PR event or a near-production process. Technically, however, it would be a spectacular demonstration that Tesla could usher in a new era.
The humanoid robot "Optimus" is Tesla's second major future project alongside autonomous driving. The robot is currently still under development. The long-term goal: an autonomously working robot for household, production or care - in other words, a completely new product categorythat could relieve or completely replace the human workforce. The robot is still still a few years away from a market-ready product - but it underlines the vision of positioning Tesla beyond the car business in important future industries. The speed of development is certainly worth seeing.
Conclusion
Tesla is in the middle of a strategic upheaval.
The traditional car business is experiencing weak growth, price pressure and falling profits per vehicle - while Elon Musk is increasingly focusing on future technologies such as autonomous driving and robotics. It seems as if Tesla is putting all its eggs in these basket instead of prioritizing new, more affordable vehicle segments to boost sales figures.
At the same time, the company continues to demonstrate impressive efficiency and financial strength: Operating cash flow is increasing and the balance sheet is robust - a sign of real operational strength despite headwinds. What's more, if Tesla's FSD approach does indeed scale faster than the competition, it would be a massive strategic advantage in a major future market.
- The share price has fallen by around 30% since its high and reflects many of the current uncertainties. Measured against traditional valuation ratios and the current business model, the valuation is still ambitious. Ultimately, much depends on the successful scaling of autonomous driving and robotics. Deviations from plans could have a significant impact on the share price - both positive and negative.
- The fair value of the share depends largely on whether Tesla is valued as a traditional car manufacturer or as a future platform provider for mobility and robotics. From today's perspective, these future bets can hardly be evaluated seriously - what remains is a company with a stagnating core business, a visionary CEO, great strategic leverage and correspondingly high volatility. I personally see the fair value of the share at around € 200 based on my own assumptions (realistic case).
Tesla could remain exciting for long-term investors with a high risk tolerance - but only if they are prepared to bet on the visionary Elon Musk, FSD and robotics.
Happy investing!
